How long does it take the world’s richest startups to shed their status as a ‘unicorn’ company and how much money have they made in the process?
In business, a ‘unicorn’ refers to a startup with a valuation of over $1 billion, which is still privately owned.
Currently, some of the best-known unicorn companies include Reddit, Airbnb and Buzzfeed, but many former unicorns have gone on to exit the unicorn club and achieve even greater success, such as Facebook, Snapchat and Twitter.
We’ve taken a look at some of the notable unicorn companies who have ‘lost their horn’, either by taking the company public with an IPO or being acquired by a larger business, to see just how long it takes these elite companies to shed their unicorn status and how much money they managed to make in that time.
Time Taken from Unicorn to Exit
Of the 75 unicorns that we studied, the average time taken from reaching unicorn to exiting was 955 days (or two years, seven months and 13 days).
The Chinese conglomerate Alibaba spent the longest as a unicorn, taking nine years before going public with what was the biggest IPO in US history, raising $21.8bn, which more than Google, Facebook and Twitter combined.
At the other end of the scale, the company which exited the unicorn club the quickest was Lynda.com, which was acquired by LinkedIn just under three months after hitting a valuation of $1bn and is now known as LinkedIn Learning.
Most Common Exit Reasons
Around three-quarters of the companies that we studied lost their unicorn status after deciding to go public with an IPO.
An IPO allows unicorns to raise large amounts of money and boost the brand profile, making it one of the preferred exit strategies for a unicorn.
A further 21.3% lost their status when they were acquired by larger companies, while a minority (4%) allowed another company to take a majority stake in their business, rather than being bought outright.
Value upon Exit
While some companies choose to capitalise on their unicorn status as quickly as possible in order to boost their valuation, others have chosen to stay private and build up the company themselves over a number of years.
The average exit value of the companies we looked at was $11.05bn, ranging from $1.06bn for software firm New Relic to $167.6bn for Alibaba Group.
Average Valuation Gain per Month
Assuming that each company was worth exactly $1bn when they became a unicorn, we can also estimate just how much their value grew during each month that they were a member of the club.
There’s a clear winner, with the popular messaging service WhatsApp, which was bought for $22bn by Facebook just seven months after it became a unicorn, which works out at a growth of $3bn each month.
Other companies which saw huge growth during their unicorn status include Facebook, who turned down a bid of $1bn from Yahoo! in September 2006, before going on to grow at a rate of $1.47bn per month until their 2012 IPO.
Methodology
We compiled a list of 75 exited unicorns from lists at CB Insights and TechCrunch and calculated their length of time based on data from CB Insights as well as a range of other sources which you can view here.
To calculate the average valuation growth per month, we took each company’s exit valuation from CB Insights and divided it by the number of months that they spent as a unicorn.