In 2017, global investors poured an impressive \(66 billion into unicorn companies, marking a significant increase from the previous year's \)48 billion. The surge in funding was primarily driven by several large rounds of investment in the ridesharing space, including notable players such as Lyft, Grab, Ola, and Didi Chuxing. Additionally, sectors like co-working, consumer internet, and augmented reality also received substantial investments.
However, this year has seen a decrease in acquisition activity for unicorns with only seven recorded M&A exits involving venture-funded companies with private valuations of \(1 billion or more. In comparison, 2016 saw nine such acquisitions. The few exit strategies that did occur included AppDynamics (\)950 million) and Qudian ($1.3 billion).
The trend towards IPOs for unicorns continued in 2017 with fifteen venture-funded companies going public, more than double the number recorded in 2016. These companies performed well on average, often sustaining market caps far higher than their last private valuations. Top performers included several China-based unicorns such as Qudian and Sogou, as well Razer and MuleSoft from other regions.
On average, it takes 26 months for a company to go public after being valued at \(1 billion, while acquisitions occur on average 24 months post-valuation of \)1 billion. Given the backlog of companies on the Unicorn Leaderboard, we expect exits to increase in the coming years.
Steven Rossi, who manages the Crunchbase Unicorn Leaderboard, notes that more than 150 companies out of 263 on the board have been listed for over two years, thus indicating a higher likelihood of exits in the near future.
These trends suggest that while investors continue to pour money into unicorns, there is an increasing focus on exit strategies such as IPOs and acquisitions. The question remains: will these investments eventually yield returns for investors?
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