What is a unicorn?

April 19, 2021

What is a unicorn?

In venture capital, a unicorn is a privately held startup company that is valued at more than $1 billion. It’s a term that’s become common, but where did it come from and why are these companies called unicorns?

What are the origins of the term "unicorn"?

Coined in 2013 by venture capitalist Aileen Lee, the term highlighted the rarity of such companies at the time. Lee sorted through 60,000 software and internet companies that received funding between 2003 and 2013 and found that just 39 startups were valued at $1 billion+. 

Today, Lee is a managing partner at Cowboy Ventures, a seed-stage VC firm in Palo Alto, California. Cowboy Ventures' first investment was Dollar Shave Club, which saw a $1 billion exit to Unilever in 2016. In early 2021, they participated in a Series D funding round for Ironclad—a San Francisco-based legal tech startup and recent addition to the unicorn ranks.

Are unicorns still a rare occurrence? 

Over the years, unicorns have become decidedly less rare. Although it’s more common for a startup to reach unicorn status today than ever before, these $1 billion+ post-money valuations are still incredibly impressive. Unicorn companies are under a microscope—watched and reported on by those with an interest in the private markets' most prominent players.

How many unicorns are there? 

When we first published this article in 2019, there were 354 active unicorns globally building on the previous year’s high of 348. By the end of 2019, there were 439 active unicorn companies, including 139 new startups. In 2020, 162 new companies around the world achieved unicorn status, putting the total number of active unicorns at 538. 

So far in 2021, unicorns are off to a strong start after one quarter. As of March 24, 86 new companies, including the likes of Blockchain.com, Mambu, Rivian Automotive and Zapier, made their unicorn debut. Per PitchBook data, the number of active unicorn companies sits at 602. 

That’s a whole herd of unicorns.  

Why are so many unicorns emerging?

One explanation is the ever-increasing convergence between the private and public markets. In the past, companies often relied on IPOs to generate the capital they needed to scale operations. Today however, companies are able to raise larger amounts of private funding early on, allowing them to reach billion-dollar valuations without having to go public.

US Unicorn Deal Activity 

As of March 31, 2021

What does unicorn deal activity look like over time?

In 2020, unicorns in the US secured 238 deals and raked in $52.9 billion dollars in funding—a record-setting 2% of total venture capital. To compare, when PitchBook began tracking this data point in 2006, just five unicorn deals were completed for $6 million in venture capital. That equaled just 0.1% of total VC for that year.

So far in 2021, 3.5% of all venture capital has been invested into unicorns. $29.5 billion dollars across 107 deals has been invested into these startups as of March 31, 2021.

More on unicorns

Explore VC trends and takeaways
Download our Q1 2021 Venture Monitor report

Listen to our podcast episode about VC’s resurgence, the IPO boom and what’s in store for 2021
In a recent episode of In Visible Capital, PitchBook analysts share key findings from the Q4 2020 NVCA-PitchBook Venture Monitor report—including where unicorns stand

Read more about 2020’s unicorns
This article looks at what last year’s unicorn class says about shifts in VC funding trends

Check out how nontraditional VC investors impact unicorn activity
Read our blog post about how nontraditional and tourist investors helped fuel the ongoing globalization of the unicorn phenomenon

More on PitchBook's data coverage

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