A Decacorn is a privately held start-up company valued at over $10bn, a Hectocorn is valued at over $100bn.
In 2021 and into early 2022, supportive monetary policy, turbocharged during and after peak COVID, resulted in surging public and private company valuations. Major public markets indices saw record highs and private company funding rounds hit the headlines. There were also a number of high profile Unicorn IPOs, some via Special Purpose Acquisition Companies (SPACs).
With the onset of the Russian invasion of Ukraine, in February 2022 the global macroeconomic outlook deteriorated. Public markets indices began to retreat and the willingness of investors to participate in Unicorn fundraises and IPOs significantly diminished - growth companies across the board fell out of favour.
Our analysis shows that the aggregate value of the Top 100 Unicorns as at September 2022 has increased by 36% ($440m) since March 2021. However, we note that the data on which the list has been compiled will not fully reflect the declining valuations as it is based on a “point in time” snapshot from the latest funding round completed by each Unicorn in the list over the period to September 2022.
The background of rising inflation and monetary policy tightening continues to lead to volatile valuation conditions and weigh heavily on investor sentiment - particularly for growth stocks. This will clearly present significant challenges for the Unicorns and we expect to see a reversal of the valuation surge as funding rounds complete at lower valuation levels.
These conditions will likely lead to Unicorns without robust business models falling by the wayside. All will need to consider whether their organisations are “right sized” operationally for the new landscape and their strategic aspirations e.g. for an IPO. There will need to be renewed focus on maximising the effectiveness of cash investments and spending from funds raised in the last funding round.
The path to profitability and cash generation will continue to gain increasing weight in investment decisions into Unicorns - levelling up with the more “traditional” factors such as rapid revenue growth and size of potential market which have arguably been given too high a multiple over the past few years.
We remain optimistic in the potential growth in number and scale of Unicorns given their alignment with “megatrends”, such as climate change and digitalisation, underpinning their ongoing attractiveness to public and private investors. However, the near term headwinds cannot be underestimated.
Michael Wisson
Partner, Capital Markets – PwC UK
In the 18 months to Sep-2022, the total number of Unicorns increased by 563 to 1,191 (90%) with a combined value of $3,854bn, a $1,768bn (85%) increase from Mar-2021.
At Sep-2022 the value of the Top 100 Unicorns was $1,668bn, a $440bn (36%) increase.
The Unicorn occupying 100th position was valued as $7bn as at Sep-2022 versus $4bn as at March 2021.
Top 100 Unicorns
Source: CB Insights with PwC analysis
The US dominates the Top 100 Unicorns list, accounting for over half of the constituents representing 54% of total Top 100 Unicorns value.
The value of US Unicorns in the Top 100 increased by $272bn (43%) in the 18 months to Sep-2022.
In contrast to US companies in the Top 100 Unicorns list, Unicorns located in China and its regions saw a moderate 3% increase in value, in part due to the departure of 9 companies from the list with the biggest ($62bn) being the IPO of a vehicle hire company.
A Chinese internet company retained its position as the most valuable unicorn with a valuation of $140bn as at Sep-2022, no change since March 2021.
The value of European companies included in the Top 100 Unicorns list almost doubled in the 18 months to Sep-2022 with a combined value of $171bn.
A Swedish fintech company, suffered a massive valuation drop of 78% since March 2021 and dropped out from Top 100 Unicorns list. Its valuation declined from $31bn in Mar-2021 to $6.7bn in Sep-2022 reflecting heat coming out of the Unicorns market as monetary policy tightened and investors re-appraised valuations.
Elsewhere, the value of companies in the Top 100 Unicorns list increased by $77bn (58%) in the 18 months to Sep-2022.
All Unicorns
Source: CB Insights with PwC analysis
The number of Decacorns has increased by 18 in the 18 months to Sep-2022, reflective of elevated company valuations achieved in 2021 and Sep-2022 funding rounds. The 44 Decacorns as at Sep-2022 includes:
14 Decacorns included in the Mar-2021 list, which had a combined $168bn increase in value in the 18 months to Sep-2022, and
30 new Decacorns (total value - $464bn), all previously recognised as Unicorns as at Mar-2021 with 10 appearing in the Top 100 at that time.
There were two Hectocorns as at Sep-2022:
Chinese Internet technology company – $140bn valuation remains unchanged since Mar-2021, and
American spacecraft company– $53bn (72%) increase in valuation to $127bn as at Sep-2022 resulting in a reclassification from a Decacorn to a Hectocorn.
A Chinese clothing brand experienced the highest significant increase in valuation of $85bn (567%) since Mar-21 to $100bn.