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In Search of Unicorns

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In the land of startups, Unicorns are considered the ultimate symbols of success. However, the past year of economic challenges has been an unrelenting test for startups, which has ushered in a Unicorn funding slump.

HubSpot For Startups recently released its annual Global Unicorn Outlook Report for Startups, highlighting how companies are scaling to $1B+ valuations despite the current wave of rampant inflation, economic instability, layoffs, and more while showcasing tips for growing startups as they explore new strategies, innovative solutions, and alternative paths to success.

According to the report, there are nearly 1,400 active unicorn companies in existence today. However, while B2C brands are achieving unicorn status the fastest, new unicorn growth is down 79% YoY (2023 vs. 2022)

While the markets face rampant inflation and economic instability, layoffs and devaluations have also led to more tentative venture funding and later-stage investing (which slowed down in tandem with the IPO market). Even the most exciting and buzz-worthy companies have seen their value decline or witnessed a slowdown in their valuations.

With the VC world now moving at a slower and more tentative pace, HubSpot’s The State of Global Unicorn Startups unravels the complex and dynamic tapestry of today’s entrepreneurial landscape, where adaptability and resilience are paramount.

Highlights from the report:

Unicorn Landscape at a Glance

    • As of Q3 2023, there are just under 1,400 active unicorn status in the world. These valuable variations of unicorns have appeared:
      • 60 Decacorns (private companies valued at $10B or more)
      • 3 Hectacorns (private companies valued at $100B or more)
      • 185 Centaurs (unicorns that reach $100M in annual recurring revenue)
    • The IT sector is, by far, the leader when it comes to the number of new unicorns, followed by consumer products and services.
      • Generative AI apps generate the most VC buzz, and investors are prioritizing apps over all other types of software.
      • B2B platforms and financial services companies are beginning to see an uptick, hinting at major investment opportunities in the coming years.

Unicorn Competitive Advantages

    • Successful unicorns invest in platforms and tools while having innovation top of mind. Those who follow this strategy reach the tipping point towards $1B faster and more efficiently.
      • Businesses with technology need to have products that work at scale
        • Top unicorns—like Canva, OpenAI, and Epic Games—focus on growing their communities, leveraging AI, and using freemium strategies to bring in new users, test new features, and improve their products.
      • 75% of VCs look for companies with two or more founders since most successful scale-ups have more than one founder.
      • Startups with the most potential have a large total addressable market (TAM), and the sectors with the largest markets can claim almost a third of the top 100 unicorns.

Unicorn stock image by stoatphoto/Shutterstock

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