"Unicorn" Club: The revelation of 1 billion dollar start-up company

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Many entrepreneurs, and of course the venture capitalists who support them behind them, want to start a company worth billions of of dollars.

Why are developers so concerned about the "hundreds of millions of dollar investment exit (Billion dollar exits)"? Historically, the benefits of top-tier VC funds come mainly from the handful of companies they hold. In addition, the traditional VC funds have developed relatively large, need to have a greater "investment exit (Exits)" to obtain acceptable returns. For example, simply withdrawing the initial capital of a 400 million dollar venture fund could mean holding 20% per cent of the two companies valued at 1 billion dollars or owning 2 billion per cent of a company valued at 20% dollars when it was bought or listed.

We're going to ask: How likely is a start-up company to have a valuation of 1 billion? Is there anything we can learn from the success stories of the past decade, such as Facebook, LinkedIn and Workday?

To answer these questions, the Cowboy Ventures team set up a database that collects some technology companies from the U.S. market, which were founded in 2003 and have recently reached a 1 billion dollar valuation in private equity and open markets. We call it "Learning Plan", and the project is still in progress.

Before reading the following, there are two points to note: First, our data is based on open sources of information, such as Crunchbase, LinkedIn and Wikipedia; second, the conclusions drawn from a momentary impression, is absolutely one-sided.

Here's what we found in the summary.

First, we found that 39 companies meet what we call the "Unicorn Club" (ie, the US software company, founded in 2003, valued over $1 billion in private equity and open markets). Unicorn The company accounts for 0.07% of the total number of VC-financed consumer and corporate software start-ups.

In the past decade, there have been four "unicorn" companies on average each year, while Facebook is a "Super unicorn" (valued at more than $100 billion super-unicorn). In recent decades, one or three super unicorn companies have emerged every ten years.

Third, "unicorn" companies in the consumer market have grown richer and have created more value overall, even if Facebook is not counted.

Four, but the enterprise market "unicorn" companies on the average to see higher market capitalisation, the private capital raised less, the return on private equity investment is higher.

These companies are generally distributed evenly among the four main business model categories: Consumer E-commerce transactions, consumer audiences, software services (Saas,software-as-a-service) and enterprise software.

Six, the average need of more than seven years to have "liquidity event", this does not include our list on the third and still private state of the company. There is a long way to go before a successful exit.

Inexperienced, more than 20-year-old entrepreneurs are outsiders to the Unicorn club. Those who are well educated, age more than 30, and have a long history of partnership with each other are often the most successful.

Eight, there has been "big pivot", and the original product model is very different from the start-up companies, the opportunity to join the "unicorn Club" is very small.

San Francisco (not Silicon Valley) is now home to the unicorn.

Ten, the Unicorn Club entrepreneurs have different backgrounds.

Here are some deep interpretations

First, welcome to the 39-member Unicorn Club: 0.07% at the top of the pyramid.

The difficulty is figuring out who the club's candidates are. More than 16,000 Internet-related companies have been financed since 2003, according to the American Venture Capital Association (NVCA). Mattermark data for the past two years are 12,291, and the New Hampshire University Business School's venture capital Research Center has data from 10,000 to 15,000 software companies each year getting seed-round investments. We assume that over the past decade 60,000 software and internet companies have raised wind investments, which means that 0.07% of them have become "unicorns", one of every 1538 companies.

Conclusion: It is very difficult to start or invest in a 1 billion dollar company, and the probability is very low. Technology news may give the impression that a winner is born every minute-but the reality is that the probability of this happening is between the chance to pick up an out ball in the major League (MLB) game and the probability of someone being struck by lightning in his life. Or, 100 times times more difficult than applying to Stanford.

But these 39 companies do prove to be achievable-they also provide something to reference.

Second, Facebook is the Super unicorn of the past decade (over $100 billion trillion in valuations). Each major technological trend will be accompanied by the birth of one or more super unicorns.

Facebook accounts for more than half of the 39 companies ' total market capitalisation of 260 billion dollars.

Other Super Unicorn companies have emerged in the past few decades. The 1990 's is Google, the company's current market capitalisation is about three times times that of Facebook, Amazon, the market value of about 16 million U.S. dollars. The 1980 's is Cisco. The 1970 's is Apple (currently the world's Most valuable company), Oracle and Microsoft, and the 1960 is Intel.

What are the similarities between the Super Unicorn companies? The 1960 's was the era of the semiconductor, the 1970 was the birth of a personal computer, and the 1980 was the birth of a new internet world; In the 1990 's, the eve of the modern internet eruption; new social media set up in early 21st century.

Every technological innovation trend is accompanied by the rise of one or more super unicorns-companies that change your life, work and investment-if you are not lucky/smart enough to be a co-founder of the company. This brings more problems. What is the most essential technological innovation in the next 10 years? Will there be one or two new super unicorn companies?

On average, there are four unicorn companies each year. But not every year this happens.

Aside from Facebook, the remaining 38 companies are valued at around $3.6 billion trillion. After writing about the Super unicorn, the data could be disappointing. But don't forget that startups tend to start with ideas that most people think are crazy, stupid or irrelevant. Only after many years of hard work and good luck have a small number of companies grown into unicorns, which is extremely rare and powerful.

The number of unicorns has not been large in the last ten years. The best is 2007 (there are 8 in 36); the least number is 2003, 2005 and 2008 (as is currently known). There has not been a company founded in 2011). From this point of view, it is not clear that the annual number of unicorn companies will change over time.

Show the data in chronological order-which companies have become more valuable, and which companies have disappeared from the list-to read the list of potential opportunities to become unicorns (valued at $1 billion trillion). Perhaps in the future it is worth further writing the article description.

In the past decade, companies facing the consumer market have created the vast majority of the total market value.

Investment in early consumer technology companies has cooled markedly in the past year. But the following points are noteworthy:

Three consumer companies Facebook, Google and amazon--are the Super unicorn companies of the past 20 years.

The consumer-oriented companies are more than the unicorn companies in the corporate market, which account for more than 60% per cent of the total market value, except for Facebook.

The 39 companies that work may seriously underestimate the value of consumer technology. Of the 14 companies in the list that are still private, 85% are geared toward the consumer market (Twitter, Pinterest and zulily, for example). Once the "opportunities for opportunity" are available, these companies will have a significant increase in market capitalisation, thus raising the total market value of the consumer unicorn.

Four, the Unicorn enterprise market-oriented companies in private equity investment in the value of higher returns.

Corporate sector The reason for the current appeal is that the companies on the list are averaging 138 million dollars in the private equity market, which is now 26 times times the amount of capital raised.

In particular, Nicira, Splunk and Tableau, the three companies that raised less than 50 million dollars in the private equity market, now have an average value of 3.8 billion dollars.

Moreover, the market capitalisation of Workday, ServiceNow and FireEye is 60 times times that of the capital they raise.

Contrary to what VCs claim is the need for more early capital for entrepreneurial start-ups, we have not found the difference in A round of financing for unicorns facing the two markets.

Consumer companies have a relatively low return on investment.

The consumer Unicorn has raised an average of 348 million dollars, about 2.5 times times more than the company's unicorn, which is now about 11 times times the total amount of capital raised.

The companies that raise a lot of private capital are Fab, Gilt Groupe, Groupon, HomeAway and Zynga.

This shows that in a world of "fast expansion" (get big fast), the creation of a hyper-successful consumer technology company will require more capital; it may mean that founders and investors have been responsible for the overvalued valuations of consumer internet companies over the past decade, and that consumer-tech companies are earning less.

Five, there are four major business models in driving value growth, network effect also played a role

We divide these companies into four business models, play an equal role in stimulating overall value growth: First, E-commerce: consumers pay for goods or services (11 companies); second, the audience: free to consumers, through advertising or other means of profit (11 companies); third, SaaS: User pays (usually " freemium "mode" or cloud-based software (7 companies), corporate customers: Companies to pay for large-scale software (10 companies).

None of the companies on the list put physical inventory at the heart of the business model. In addition, the average company will raise more investment-the ratio of valuation and fund-raising is the lowest, it is likely to lead to the recent cooling of the electricity business.

Only 4 of the 38 companies adopt the mobile priority (Mobile-first) strategy. This is not surprising, the IPhone was launched in 2007, and the first Android device will not be available until 2008.

Another common denominator for nearly half of the companies in the list is the network effect. In a social age, the network effect helps companies quickly get a large number of users, dramatically reducing the cost of capital (such as YouTube and Instagram) and quickly raising valuations (such as Facebook).

This is a marathon, not a sprint: it takes at least seven years to get a chance to "liquidity event".

There are 24 companies on the list that took 7 years to get a chance to go public or to be bought, excluding YouTube and Instagram's extreme examples, all two of which were bought over 1 billion dollars in the two years that were established.

The 14 companies on the list are still private, which will extend the average to more than 8 years.

Compared with consumer companies, corporate companies take a year to wait for the opportunity to "cash out".

Of the nine companies that have been bought, the average valuation reached $1.3 billion trillion; it is likely to be a valuation point for acquirers who prefer to take them out of the market before they are more valuable.

Seven, more than 20 years old inexperienced entrepreneurs have little chance.

The companies on the list are generally not founded by inexperienced first-time entrepreneurs, and the average age at which entrepreneurs start these unicorns is 34 years. Although Facebook's founders were founded at the age of more than 20, LinkedIn, the second-most-valued company on the list, had an average age of 36. The average age of Workday's founding team reached 52 years.

Audience-driven companies, such as Facebook, Twitter, and Tumblr, have the youngest entrepreneurs, with the average age of 30 when the company was founded. SaaS and electric quotient model companies, the team average age between 35 and 36; the average age of the founding team when the Enterprise software company was founded was 38 years.

The entrepreneurial team with many years of cooperation experience will achieve greater success.

There are 35 companies on the list who are not single founders--the average number of founders is 3. The roles they play are in the form of joint CEOs (such as Workday) to technical partners such as fab.com.

90% of the entrepreneurial team is composed of years of partnership, or school or work relationship, 60% of the entrepreneurial team have worked together, 46% of people have been to school together.

The team that worked together will create more value for the company.

Only four of the company's teams do not have a common job or study experience, but have a similar background.

The entrepreneurs of four unicorn companies are single-handedly (ServiceNow, FireEye, RetailMeNot, tumblr--, half of them), all four of which have their own "opportunity to cash out" and have a higher market capitalisation than the founders.

In the long run, most company founder CEOs will lead the company to scale, but not all founders will accompany the company to go on.

76% of the founding CEOs will lead the company to a "chance to come", and 69% of the founders are still CEOs of the company, many of them the CEO of a public company. This suggests that many entrepreneurs have a long-term vision, commitment, and the ability to start from scratch without funding, products and employees until they develop into a "unicorn" company.

31% of companies change their CEOs in the process of development, and the average market value of these companies is higher. One reason: About 40% of corporate "unicorn" companies will make the decision to change their CEO (the number of consumer companies is 25%). All the changes to the CEO before the "opportunity to change" scenario are in the corporate category "Unicorn", which is often preceded by an experienced, "branded" (Brand-name) leader.

Only half of the companies on the list still retain the founders of all the companies that were founded. On average, this figure is two to three people.

is not a novice: founders often have a wealth of entrepreneurial and technological enterprise experience.

Nearly 80% of unicorns have at least one founder who founded a similar company. Some founders had shown the DNA of their founders as early as high school. Past entrepreneurial experience or failure, or success, entrepreneurial programs are also a variety of content, there are tutoring and snacks, as well as PayPal and Twitter.

Only two of the founders had no technology/software industry experience, and only 3 of the 38 companies had no technical partners (HomeAway, RetailMeNot and Box).

Most founder CEOs have a technical college degree.

Excellent educational background: Many "top school graduates" and dropouts

Most entrepreneurs have been enrolled in rigorous universities (e.g. Cornell, Northwestern University, Illinois). There are more than two-thirds companies on the list, and at least one of its founders graduated from the top 10 universities.

Stanford ranked first, with One-third of its founders at least one graduate of Stanford University. Of the 38 unicorn companies, the founders of the 8 companies were Harvard graduates, and 5 were the founders of Berkeley, and 4 of the founders of the company graduated from MIT.

On the other hand, the founders of eight companies dropped out of college, and three of the five most valuable companies (Facebook, Twitter and ServiceNow) were founded by dropouts, but these dropouts have experience with technology companies, except Facebook.

Eight, there has been "big pivot", and the original product model is very different from the start-up companies, the opportunity to join the "unicorn Club" is very small, especially for corporate companies.

Few companies have successfully transformed. 90% of the companies on the list maintain their initial product plans.

The four companies that were transformed after the initial product release were consumer internet companies (Groupon, Instagram, Pinterest and Fab).

The Bay Area, especially San Francisco, has become the headquarters of most unicorn companies.

It is not surprising that the 39 companies on the list have 27 headquarters in the Bay Area. Perhaps surprisingly, the trend of these companies moving from Silicon Valley to San Francisco is that 15 unicorn companies are located in San Francisco, 11 in Peninsula and one in East B. (East Bay).

New York City has become the second largest base of the unicorn, the headquarters of three companies. Seattle Two, Austin Two, is the most concentrated city in the back.

X. The diversity of the entrepreneurial community in the unicorn still has a lot of room for improvement.

Only two of the founders of the company included women: Gilt Groupe and Fab, all consumer-electronics companies. There are no female founder CEOs in the Unicorn company.

Although the ethnic backgrounds of the founding team members are somewhat different, there is still a big gap in diversity compared to the number of people who get a degree in science and Technology on a university campus. It feels like it's a very important thing to break.

So what does all this mean?

For those who want to start or invest in a future unicorn, there is still a chance. These companies are just 0.07% of the top, and we don't think the above description can be used as a list of investment unicorn companies.

These are just the common denominator of all unicorn companies. In some cases, 90% companies are the same. To be reminded, most successful startups invest a lot of time and effort to stand out. Unicorns will also raise more money as the company develops-far beyond the size of a-round. The founding team has the ability to work together to achieve the company's seductive vision of completing several rounds of financing, scaling up and recruiting teams over many years, whether the economy is good or bad.

The original source from TechCrunch, by the tiger Sniff compiling