New data collected by Crunchbase News indicates that the value of global unicorns has crested the $4 trillion mark. The valuation milestone is notable not merely for its scale, but its relative size.
Compared to what? The value of the major tech companies of the West, namely the U.S. Big Five. Once they were known as Google, Microsoft, Apple, Amazon and Facebook. Today the group is known as Alphabet, Microsoft, Apple, Amazon and Meta, with the younger two of the five-company group undergoing name changes in recent years.
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Corporate branding shifts aside, it was back in 2017 that the five firms reached a combined $3 trillion in value. Back then, it felt staggering that less than a half-dozen companies could be worth so very much. A year later, in mid-2018, the group smashed the $4 trillion mark. (Note: Alex used to work for Crunchbase on the Crunchbase News team and owns stock in the company. We pull from myriad data sources here at TechCrunch but will note this particular matter from time to time when we lean heavily on Crunchbase data.)
But 2018 wasn’t the peak, as you can imagine. The five companies actually managed to double their worth to over $8 trillion when stocks crested in late 2021; since then, the total has fallen to $7.2 trillion as of last Friday’s close, Wolfram Alpha data showed.
Unicorns have seen a similar pace of value expansion, albeit offset by a few years. For example, Crunchbase News also wrote last summer that the aggregate value of global unicorns had reached the $3 trillion mark, up from $2 trillion the year before. That, by the way, is the result of all those funding rounds last year that seemed to push more and more startups into the $1 billion valuation club, earning them what is colloquially known as “unicorn” status, a term that was coined on TechCrunch back in 2013.
Up, down
The comparison between the five most valuable U.S. tech firms and a loose grouping of high-value startups on a worldwide basis might seem slightly specious; why compare the two numbers other than to enjoy playing with very large figures?
After rising in unison for years, we’re possibly seeing a divergence in their two valuation directions. The biggest tech companies are taking some lumps, with Meta in particular shedding value. In contrast, the Next Generation of Tech Leaders is, well, raising lots of money and building private-market value.
Crunchbase News data is not indicative of a slowing-down in the pace at which unicorns accrete illiquid value. We expect the value of global unicorns to rise this year, perhaps at a slower pace – if the “things are slowing down in venture land” narrative bears out and is more than venture capitalists’ hope for lower startup prices – but still in a somewhat contrary direction to the value of the five U.S. tech firms that everyone can name.
Normally at this juncture, we’d say something rude about high-priced startups, asking how much value there really is in the collection of unicorns that more resembles a horde than a cohort. But! Not today. Instead, we wonder if the value of global unicorns compared to the market cap of mega-tech companies is a fun ratio or metric to track over time. If the private markets are building lots of high-value worth, then perhaps we should see unicorns worth more than majors? At least from an antitrust regulatory perspective, that would be encouraging.
Naturally, there are huge caveats with any such comparison. The pace of unicorn liquidity will impact the ratio, meaning that a weak exit market for unicorns would better store private-market value and make unicorns look better than they might actually be. At the same time, a slow unicorn exit market should, in theory, harm the value of those companies, so there are secondary effects to any particular way we want to smooth out the comparison.
Regardless, unicorn value is higher than ever. Which implies the need for an eventual waterfall of liquidity for the companies represented by the metric.
Let’s dive into the numbers and get our heads around the unicorns that are now worth, in total, more than $4,200,000,000,000.
Records, but where to?
Looking at 2021’s data makes us wonder if unicorns can still be considered a rare species. Nearly 600 companies became unicorns last year – an unprecedented number, according to Crunchbase. This is considerably higher than 2020’s new unicorn tally of 167.
The aggregate capital raised by unicorns also reached record levels in 2021 – by far. Almost $280 billion went into unicorns last year, compared to $99 billion in 2020. And before you ask, 2020 wasn’t a bad year in that respect; its tally was superior to 2019’s and very close to 2018’s.
Interestingly, unicorns have blossomed in more than a handful of countries. For instance, there are 67 in India, 50 in the U.K, 32 in Germany and 26 in France – ahead of President Emmanuel Macron’s goal to reach that target by 2025. And while the U.S. has the most unicorns (591) by a large margin, the two biggest unicorns are actually from China – that’s TikTok’s parent company, ByteDance, valued at $180 billion, according to Crunchbase data; and Ant Group, valued at $150 billion.
With more than 200 unicorns, there’s no doubt that China knows how to mint very valuable tech companies. But it is worth keeping in mind that some of these are stuck in unicorn purgatory — wherein a public exit would have been the next logical move had politics not gotten in the way.
China politics aside, exits remain a cause of concern for unicorns. Last year did mark a record, with 141 companies exiting the club either via acquisition or IPO. That’s a lot more than in 2020, when 58 companies did so. But that’s still not nearly enough to solve the unicorn stampede we have been reporting on. And with the current IPO drought we are going through, this is unlikely to change in the near future, at least in the direction unicorns and their investors would prefer.
Why do we care?
The startup market once contained a handful of investors and so few startups that you could track well-known founders like players in a pro sports team; you got to know them by name. But the startup game has changed so much that we have to increasingly lean on aggregated information to make sense of what’s going on.
That is why we care about collective unicorn worth — the scale of the dollars involved has grown so large that the collection of billion-dollar startups is challenging the most valuable companies in history, grouped, for the valuation crown. A sign of the too-slow IPO market, yes, but also indicative of the scale of private capital that has been deployed to young tech companies. There’s optimism written deep in the unicorn numbers, just as there is future profit sketched into Big Tech market caps.
We’ll be tracking how well unicorn hope turns into public company cash flows, but today, at least, we understand how much of that there is to do in the coming quarters and years. About $4.2 trillion worth.