In the world of venture capital, the term Unicorn refers to any tech startup company that reaches a $1 billion market value through private or public investment.
The term Unicorn was established back in 2013 by Aileen Lee, founder of Cowboy Ventures. It points to the chances of statistical success of these companies. They are believed to be as rare and elusive as the mythical beasts themselves!
According to stats published in 2018, there were only 279 companies listed as Unicorn enterprises worldwide. Back in 2013 when Lee coined the term, thirty-nine companies were considered unicorns. In five years then, less than 250 tech companies have managed to evolve and enjoy a Unicorn valuation.
This number has grown though, and there are currently 494 companies enjoying Unicorn status. So, who are these entrepreneurial master-minds who are seeming to conquer where others have fallen? The largest Unicorn companies have become household names…services employed by us all. Think Ant Financial, DiDi, AirBnB and Stripe.
Last week, Our Week in Digital examined the stories from the tech pages and brought you all the latest from the world of the Startup. This week, we turn our attention to those elusive Unicorn companies….those who are going from strength to strength and make up the billion-dollar club.
A marriage of trade tensions with the US and a dip in VC funding has slowed down the emergence of unicorns in China. This spells more good news for the Indian tech ecosystem. Last week, Our Week in Digital reported that the Indian startup landscape was blooming. It has enjoyed a record-breaking 2019 despite there still being 2 months remaining.
India has been chasing China regarding the emergence of Unicorn startups for some time. This week though, it has been reported that there has been a reversal in fortune. New data suggests that India is now matching China in the growth of Unicorn startups.
This has partly been attributed to an upswing in investor interest in China coupled with a timely diversion in interest within the Chinese market. China has had a troublesome relationship with the US of late. Amid these growing trade tensions, we have witnessed a diversion in investor interest toward the Indian ecosystem. Analysts have mused that this downturn is attributable to the impact of this global macro-economic environment.
Examining the data in more detail, we can see just how dramatically the trends have been reversed.
How have the trends changed?
In 2018, China created more than 30 unicorns whereas India saw just eight of them during that period. However, a report published in September cited that just 7 Chinese Unicorns had been born as of June 2019 versus 30 in all of 2018. In contrast, India has produced 8 Unicorns to date this year, with many more expected to emerge in the remaining months.
China is experiencing plummeting VC investments after concerns over the valuations of its startups. Throughout the second quarter of this year, venture investment fell by 77 per cent to $9.4 billion. Meanwhile the number of deals almost halved to 692.
This drop in fortune has allowed Indian unicorns to make their mark. This has been especially notable within the logistics, grocery delivery, B2B, and mobility sectors. Indeed, the eight Unicorns recorded in the country so far this year are Delhivery, BigBasket, Ola Electric, Druva, Icertis, Dream11, CitiusTech, and Rivigo.
Analysts are optimistic that the horizon remains bright for Indian tech. Somewhat ironically, the ecosystem has been bolstered by Chinese investors looking for greener pastures. Tencent, Alibaba and Shunwei Capital are just three prominent names who have made investments in Indian startups, namely Paytm, Ola, Swiggy, Zomato, BigBasket, Meesho. In fact, according to some reports, Chinese investment in Indian startups crossed $5 billion in 2018.
Despite this though, looking at the landscape through a broader lens, India still lags behind China in the birthing of Unicorn companies. According to 2018 data from the Huran Data Institute, India takes bronze on the unicorn podium. Here China takes the top spot with 206 Unicorns. The US comes a close second with 203 and India third with 21.
So what is stopping them?
Speaking on some of the hurdles Indian startups have to overcome is Anas Rahman, MD and Chief Researcher at the Hurun Report, India.
He believes one of the largest gaps is early-stage funding. Several funds would land at Series A and B, however seed round funding opportunities are minimal. Comparatively, the US and China have a lot of high-risk capital available and as such, succeed more readily in these super early-stage rounds.
Anas goes on to say that the emerging Indian market has some significant ground to make up. He believes that India is around 10 years behind China in terms of the maturity of the startup ecosystem.
Having said that though, the results over 2019 are promising. India will likely add another couple of startups to their fleet of unicorns by the end of the year.
Watch this space!!
“Silicon slopes” – the latest Unicorn from Utah.
Patient communication software development company, Weave was the first Utah-headquartered company to graduate from Y Combinator back in 2014. Just 5 years later, Weave is set to enter a small, but growing class of startups in the “silicon slopes” to garner Unicorn status.
With Tiger Global Management leading the round, the business announced a $70 million Series D last week. This puts them at a valuation of $970 million. Existing backers, Catalysts Investors, Bessemer Venture Partners, Crosslink Capital, Pelion Venture Partners and LeadEdge Capital also participated.
Weave was founded back in 2011. Since then it has flourished, raising a total of $156 million in private funding. Weave has tripled its valuation with the latest infusion of capital.
With this latest round, Weave plans to improve their customer touchpoint on every level and exceed all consumer expectation. Brandon Rodman, co-founder and CEO remarked that;
“We will continue to invest in our customers, our products and our people to build a solid, sustainable, and scalable business.”
What are Weave doing to achieve this?
Looking in greater detail at these To-Dos, it is evident that Weave is hitting their targets.
“Invest in their people” – check!
Weave has added 250 employees to their team this year, and currently, support a headcount of 550.
“Solid, sustainable” – check!
Weave claims to have doubled its revenue in 2018 and while there isn’t any real insight into their numbers, Catalyst partner Tyler Newton has confirmed that they are “…continually impressed by their accelerated growth and results.” Indeed, just looking at the interest it has garnered amongst Bay Area investors, proves it’s likely to be posting some pretty attractive numbers!
“Scaleable” – check! Weave plan to expand its portfolio into different areas of industry. At the current time, Weave is working within the health sector and facilitate the effective communication between health professional and patient. Ultimately though, the aim is to scale up and Rodman believes the opportunities are endless.
“…if a business needs to communicate with their customer, we see that as a possible future customer of Weave”, he says.
Unicorn, WeWork, expands into e-sports.
It looks as though we can add professional gaming and e-sports to the already sprawling list of industries that Unicorn, WeWork are disrupting!
Reports released this week, suggest that WeWork has trademarked a brand called “Play By We,”. Play By We has a focus on professional gaming and gaming-related events.
The trademark was filed with the UK’s Intellectual Property Office last week. WeWork has already assigned a few staff members for Play By We. The coworking company has posted two job listings for Play By We. They are recruiting for both a content and experience manager and a delivery project manager, and have listed these vacancies being based in New York.
Why have they chosen to expand into this industry?
Professional gaming, or esports, is an industry enjoying rapid growth. It has a constant demand for the flexible event space and access to technology that WeWork is in a position to provide. WeWork has a huge brick and mortar footprint and has all the existing infrastructure in place for high-speed internet access.
This could prove to be a highly lucrative move for WeWork. Video game companies and event organisers spend millions each year throwing high-profile tournaments, conferences and other private events for esports competitors and fans.
As such, Play By We could help mould WeWork’s coworking space into specialised video game event centres, for both individual events and long-lease use.
With this in mind, perhaps the plans for Play By We were filed as WeWork looks to recover from its failed IPO attempt earlier this year.
WeWork have been hitting the headlines for other reasons recently…
At the start of 2019, WeWork had a private valuation of $47 billion and its IPO was highly-anticipated. In August, however, WeWork’s S-1 filing revealed that the company had experienced growing losses despite it’s mounting property portfolio. This downward turn continued into September. When it began its roadshow, WeWork struggled to find willing investors.
It’s unclear if Play By We will become a reality as WeWork goes through a painful period of internal restructuring. Media coverage unfavourably highlighted the leadership style of WeWork CEO Adam Neumann and his wife. This forced a delay in the plans for an IPO and pushed both Neumanns from their leadership roles.
The failed IPO left the company short on cash and forced its hand into accepting a $9.5 billion bailout from Softbank – its largest single outside investor.
Softbank has appointed a new chairman to oversee WeWork’s recovery during this period of uncertainty. While this latest venture may not be its saviour, it is certainly promising and provides an interesting twist for a company that still has a lot to prove.
Faire: The newest Unicorn on the block.
Wholesale marketplace, Faire has become the newest member of the highly coveted Unicorn club!
They have raised $150 million in a Series D round of funding bringing them to that hallowed $1billion valuation…a legitimate Unicorn!!
Faire is a wholesale marketplace that helps creators find independent retailers.
The company targets smaller local retailers with a marketplace where they can procure “unique” merchandise for their stores. It is similar to sites like Etsy, but with minimum purchase quantities in place. This detail highlights the fact that it is aimed at wholesalers rather than consumers.
What tech are they using?
The tech behind Faire extends beyond a simple marketplace and into the realms of artificial intelligence. The platform uses machine learning to automatically match local retailers with the most relevant makers for their stores. On top of this, the in-house developed algorithms serve to improve product recommendations, ranking, search, logistics, and more.
The size of Faire’s latest funding round (and it’s shiny new valuation) is indicative of the broader buying trends. In a world saturated by look-a-like products available across millions of third-party retailers, Faire is exploiting our growing thirst for being able to find unique and independent goods online. It is certainly on to something. Faire also claims it’s notching up $1 million in sales each day. It was racking up this figure each month at the beginning of 2018.
Max Rhodes co-founded Faire back in 2017. He has remarked that although this raise and valuation are major steps in their business journey, it is by no means the end of their ambitions AND is a message for online retailers everywhere;
“We view this fundraise as an important milestone for the future of retail. Our success will look like more diversity in local communities — special and unique downtowns where people can discover high-quality items sold in stores owned by their neighbours.”
With another $150 million in the bank, the company plans to scale into new markets and improve its marketplace proposition.
Also in the pipeline is to scale up the teams. Faire now boasts 150 employees spread across offices in San Francisco, Salt Lake City, and Kitchener-Waterloo. The latter underpinning its recent expansion into Canadian retail.
That’s all for this week!
Here at Ignite, we love the idea of independent retail. Our hometown of Bristol is renowned for its support of locally produced goods and even has its own currency…the Bristol Pound! Designed to be spent in locally run stores and businesses, this unique initiative has been established to drive and support small business and keep spending within the city walls!
Have you used the Bristol Pound? Let us know!