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for Startups
Five Key Trends of Global Unicorn Startups
Introduction
The Secrets of Today’s Highest-Valued Startups —
The Global Unicorn Club
In the past ten years, nearly 1,400 startups have achieved $1B+ valuations as private companies and joined the global unicorn club. But recently, unicorn growth has slowed and there’s a “funding winter,” reflecting global macroeconomic challenges.
Today, investors want to see profitability, traction in the market, and innovative technology, along with smart GTM strategies and competitive advantages. Top unicorn companies are adopting freemium growth models and investing in their communities. To learn more about the changing startup landscape, HubSpot for Startups partnered with PitchBook to analyze the latest unicorn data and trends — here are the top five takeaways.
Takeaway 1
Software and IT unicorns are dominating across the board
software companies:
Despite a funding slump, generative AI unicorns are emerging and growing in the software space. After scaling to 100M ChatGPT users in its first two months on the market, Open AI reached unicorn status sixteen months after launch.
Takeaway 2
Top unicorns are embracing AI, freemium growth, and community — and over 20% of unicorns use HubSpot
When analyzing the competitive advantages of the top startups, three of the top fifteen highest valued unicorns share key attributes. OpenAI, Canva, and Epic Games are all leveraging freemium models, investing in community, and innovating with AI. OpenAI’s ChatGPT and Canva have both reached 100M users, and Epic Games has more than 230M PC users alone.
And of the entire herd of unicorns, 22% are using HubSpot. Among unicorns using HubSpot, 65% use multiple hubs. The unicorn tech stack largely relies on automation, AI tools, integrated apps, and full-suite platform solutions. To grow fast, startups need to virtually eliminate all manual work with automation and have easy access to data and analytics.
“The product-led model, and specifically a very robust freemium offering has been a major key to our differentiation in the sales technology market. We have 3 million users—many of them driven by a game-changing freemium offering that delivers tangible value, quickly. And AI has been a major component to how we use Apollo to prospect at speed and scale to complement a market-leading freemium offering and amazing sales team.”
Unicorn ($1.6B) and HubSpot Customer
Takeaway 3
The US, China, and India are home to the most unicorn companies
Globally, the US is home to more than half of the world’s unicorns as of Q3 2023, and other leading regions are China, India, and the UK. Since the first unicorn emerged in 2013, unicorns have come from different regions. From 2015-2019, Europe produced the most new unicorns each year; but since 2019, North America has held that position. India is quickly emerging as a unicorn hub, too, with 45% of unicorns from India reporting profitable growth. In comparison, in Europe, roughly 20% of unicorns are profitable.
Takeaway 4
It takes an average of 9 years to reach unicorn status, but slower growth may attract investors
Only one in six unicorns have the recurring revenue needed to be a strong IPO candidate, and the time to reach unicorn status is growing. In addition, new unicorn growth is down 79% year over year. The current average time to reach unicorn status is nine years, versus under six years in 2016. But in a tough economic climate, startups are looking for stable, slower growth.
In addition, slower growth and stability are attracting investor dollars. Some investors advocate for creating “camel-like businesses” that result in more sustainable growth, or “zebra-like businesses” that prioritize sustainability and community impact — both of which, in today’s VC environment, are approaches worth considering.
And according to the latest data, while unicorn status is incredibly helpful for generating funding and awareness, it doesn’t always lead to successful or rapid post-IPO growth.
Takeaway 5
VCs want founder teams, large TAMs, early investments, scalable tech, and traction
2021 was an outlier of hopeful investments post-COVID-19 and after the largest unicorn class ever came a steep drop in new unicorns. Investors now want to see profitability and positive cash flow and they’re more tentative. VCs want to avoid late stage losses and investments with more promise than actual proof of value. They’re also priotizing a more holistic investment approach, complete with founder mentorship, strategic guidance, and an in with their networking communities.
Traits of the most valuable startups as defined by McKinsey
- Multiple founders
- A substantial total addressable market (TAM)
- The right timing — not too early,
not too late in growth
- Scalable technology
- Traction in the market
See the Unicorn List
