Technology Unicorns Are Growing At a Record Clip

In 2013, venture capitalist Aileen Lee coined the term "unicorn" to refer to the then-rare mythical species of billion-dollar privately held startups. Magical attributes aside, these billion-dollar private startups are becoming more common than ever today, giving consumers an array of affordable products and services in the process. However, investors betting on this unicorn derby might need to tread more carefully.

The global unicorn herd is growing at a more rabbit-like pace, with a growing variety of such companies. Today, there are over 750 such companies, with a total price of around $2.4 trillion. In the first half of 2021, know-how startups got almost $300 billion worldwide, almost the same amount collected in the whole of 2020. This cash helped to create 136 new unicorns from April to June, a new quarterly record as revealed by CB Insights.

Compared to the identical period of last year's, the funding rounds over $100 million tripled to hit $390 million. That also helped to fatten older players in the herd, with about 4 out of 34 companies now boasting valuations above $10 billion and have continued receiving more investments since the start of 2020.

Recent tech favorites aren't mainly uber-Esque marketplaces for providers with shoppers. These substitute companies are providing and growing refined merchandise in additional areas of their interest markets. About 25% of the second quarter funding went to fintech companies, with a lot more going towards synthetic intelligence, cybersecurity, and digital well-being.

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While the recipients of these funds are stretched all over the globe, Chinese and American startups are leading the fundraising tables. These two largest markets grew from 25% in 2016 to 40% during the first quarter of the year. This stream of money can be classified by two main elements – the divestment spree from early venture capital investors and bigger competitors among traders.

Stakes from early venture capital backers command the main greenback from traders determined for the pandemic-era digitization wave. The proceeds raised by new venture capital funds have hit $74 billion in America alone during the first half of the year, almost rivaling the $81 billion raised in a whole year in 2020 – but in half the time.

Bigger competitors among traders are also another purpose for hovering valuations. That's because relative newcomers investing in tech, sovereign wealth funds, corresponding pension funds, and household workplaces are encroaching personal markets formerly dominated by venture capital companies.

Over the last quarter, American non-traditional traders took almost half of around 1800 offers, collectively raising $57 billion. Many of them were inspired by the success of their predecessors, from the wider venture capital world, with their annual returns from existing investments reaching 30%. That is more than double the 10-15% compared to veteran venture capital. However, this profitable streak might end in tears, considering that the same happened two years ago after richly valued companies fizzled following their preliminary public choices.