The era of soaring valuations and the “one day close” may be over, but dealmaking is by no means dead.
So much has changed since our last global unicorn report was published—inflation, rising interest rates, and unsustainable growth all contributed to the rapid cooling of a market that had been red-hot. Now that valuations have come back down to earth, it’s worth evaluating where the best opportunities lie, how shifting trends are changing the unicorn landscape, and how top VCs are closing deals despite new market pressures.
We know from our 2023 Predictions Report that almost a quarter of VCs are prioritizing help for existing portfolio companies to survive and thrive. That number has likely gone up as economic headwinds continue to hit. But for those who wish to meet the challenges of the present moment—while still finding and closing the deals most likely to become unicorns in the years ahead—our 2023 Investment Benchmark Report: Global Unicorn Edition is here to help.
Download the full report, or keep reading the first in this blog series, which focuses on unicorn trend highlights using data from our partners at PitchBook and Dealroom. Our analysis of what makes top VCs different is coming soon!
How have unicorn markets changed over the past year?
When we look at unicorn data as a whole from 2020–2022, we see something of a return to the status quo from the record-breaking year of 2021. But when we look at unicorns by location and industry, there are some interesting trends that could reveal how the market will bounce back, as it tends to after downturns like the one we’re seeing now.
India, for example, is emerging as a promising investment market. While unicorns dropped from their 2021 high, the numbers in India are still up more than 50% from the start of the decade.
In 2021, Crunchbase highlighted two important factors about the Indian startup market. First, the country’s maturing startup ecosystem has successfully moved beyond consumer apps, and a growing domestic stock market has started offering investors a new path to liquidity.
Also outside the United States, Canada and the U.K. are proving to be unicorn-friendly markets for American investors. In both, around 50% of investments come from the U.S.
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Which industries are experiencing unicorn growth?
When we look at unicorn data by industry, we see first that the global race to respond to COVID-19 is coming to an end. Investment in innovations like vaccines and virtual healthcare has dropped, and the tide is turning to reflect new global innovation needs.
Security and energy are experiencing the most growth, which reflects the broader issues facing the world today, from the ongoing war in Ukraine to fears of Russian or Chinese cyberattacks, and climate change.
For the first time in 2022, energy made it into the top five industries for new unicorns (displacing transportation as a category). The sector moved up from 12th place just two years ago, and the number of unicorns more than doubled.
See the unicorn data behind the trends
How many companies will unicorn this year? We predict the number will remain low. Those that can afford to wait for their next valuation will do so until the markets rebound. This lines up with the numbers released so far this year—find out what they are, along with more in-depth analysis on unicorns by location and industry, when you download the full 2023 Investment Benchmark Report: Global Unicorn Edition.
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