The presence of the most coveted mythical creatures of the business world might be an indication of economic power, or even beyond - of prescient macro initiatives, pure luck or even geopolitical and proxy alignments for decades to come.
Unicorns, legendary creatures, described since antiquity as beasts (in the Western culture mostly horses) with a single large, pointed, spiraling horn projecting from its forehead are as rare in the world of contemporary business - they are privately held startup companies valued at over $1 billion. Since Aileen Lee coined the term in 2013 there were other monikers assigned to different types and sizes of companies but none had the stickiness of the 'unicorn'. Unicorns are a symbol of economic power, capitalist success and pride for their founders, employees, investors and sometimes for entire geographies and groups of end-customers.
Unicorns are decisively not the only measure of an economic success of an ecosystem but like many other things in this report, they are indicative, some might argue - extremely indicative. Unicorns are usually funneled from an ecosystem that is composed of countless smaller startups, failed projects, amount of venture capital and angel investors, availability of engineering and business talent, friendly business environment, multitude of events and meetups. The leading startup market intelligence company CB Insights claims there are 532 unicorns globally and, despite some significant changes have already occurred since their report, for the purposes of this article it will be used as a baseline.
Starting with the really big, gigantic players here are the ten biggest unicorns by size led by the Chinese company ByteDance, the company behind the globally famous social media video craze TikTok. Distant second is yet another Chinese company, the ride-sharing emperor of China - Didi Chuxing, followed by five US unicorns including the industry leaders and pioneers like Stripe and SpaceX. With respect to UiPath, a platform for robotic process automation (RPA), they are originally a Romanian company but now headquartered in NYC. Somewhat of an intruder in this US-Chinese duopoly is the Brasilian challenger neobank - Nubank. All of the top ten unicorns are in fact decacorns - privately owned companies valued at over $10 billion. The top 31 of the 532 unicorns, or almost 6%, are in fact decacorns. The Ant Group, an affiliate company of Alibaba, which in late 2020 was going for an IPO which would bring its valuation to an incredulous $313 billion is however not on this list. The IPO itself was blocked by Chinese regulators.
The missing giant, Ant Group, is a fintech company which is a category with most unicorns - 79. As much as these categories and industry verticals are loosely defined and very often overlapping this is another telling graph. Financial technology as a category is followed closely by internet software and services (77) and e-commerce (66). Artificial intelligence (AI) is catching up to the hype of recent years but so are many other verticals. Curious is the position of edtech (education technology) which is third to last but this will surely change in the coming years, especially due to the effects of the COVID-19 pandemic. Fintech has started its rise quite some time ago and it will be interesting to see which industries will take the lead next.
When it comes to top ten investors that invest in unicorns, another duopoly - starting to notice a pattern - infiltrated. This time the intruder is none other than the brainchild of the Japanese entrepreneur & investor Masayoshi Son - SoftBank. SoftBank did not only top the list with 35 unicorns invested and left the other nine positions to US and Chinese investors in a split 2:1 for the former but they reached that position in record time. Mr. Son's investing rationale has been put the test in recent years but his ability to raise, spend and earn gargantuan amounts of money seems to be as present. However, if merged, Sequoia Capital (31) and its Chinese affiliate (26), they would be a new overwhelmingly convincing top investor by number of unicorns invested. In addition to Tencent (23), the company behind the Chinese mega app WeChat, other famous venture capitalists - Accel Partners (26), Insight Partners (20), Tiger Global (19) and Andreessen Horowitz (17) - have made the top ten list of select investors by numbers of investments in unicorns.
A global duopoly, already mentioned, is a staggering representation of the only two economic and technologic superpowers by its size. These graphs are a testament to it. Of the current 532 unicorns globally, 381 or 72% are headquartered in the US and China. The remaining 28% or 151 unicorns are split between 29 other countries.The disproportion and size of the the two markets and megapowers is evident.
The situation is marginally less dominant with select investors into unicorns. Out of 684 of such investors 476 or 70% of them are headquartered in the United States or China. Hong Kong is not included in this count, but this autonomous region of China has another 16 of such select investors which would bring the total number to 492, or - 72% again. Nevertheless, it must be pointed out that with the investors the situation is a bit murkier. Many investors choose as their base a place most convenient in terms of legal and business circumstances while their limited partners (LPs) and the flow of money is of the most varied provenience, often different to their place of business.
The dominance of the United States and China is skewing the rest of the world in apparent insignificance in nominal terms. Of the vast majority of unicorns the above explained duopoly has, the US dominance is even more impressive. They host double the amount of unicorns than China - 320 for the former and 156 (160 with Hong Kong) for the latter.
If the graph for the rest of the world is zoomed in, after we take the colossuses that the US and China are, some old and some upcoming powers are topping the list - the UK and India (26 both), followed by Germany (15) and South Korea (11). Brazil follows with 9 unicorns but a relatively smaller country takes an impressive position - Israel, which dubs itself as startup nation, with 8 unicorns. The rest of the list showcases some smaller and bigger countries alike, but all very bullish on the tech sector. Moreover, there are a lot of countries missing from this list - some former powers some big up-and-coming economies, but if they want to make this list they might have to wait a bit more.