What Makes Unicorns Special? These Numbers May Hold the Answers.

VC expert Ilya Strebulaev is collecting the data on billion-dollar startups that everyone is looking for.

December 10, 2021

| by Dave Gilson
A photo illustration of a standard tall metal file cabinet, with one draw ajar, and a glow and stars exploding from that drawer.

Credit: Illustration by Alvaro Dominguez

Like their mythical namesakes, corporate unicorns are surrounded by a glow of mystery and magic. Yet beyond the hype, do we really know what makes these billion-dollar startups so unique?

That’s hard to say since there’s little comprehensive data on unicorns, says Ilya Strebulaev, a professor of finance at Stanford Graduate School of Business. He’s been trying to fill in that gap, spending the past few years compiling data on every U.S. unicorn since 1995, including virtually unknown tech firms and household names like Tesla, Uber, and the company formerly known as Facebook.

“Every single time a company becomes a unicorn, it gets into my data,” he says.

Working with his research assistants, Strebulaev has been tracking more than 530 unicorns (defined as privately held, venture-backed startups with a reported valuation of $1 billion or more). He first shared his data with his class on VC financing. “Students were really interested,” he recalls. “I said, ‘Well, let me share this more broadly.’”

He started posting some aggregate numbers on LinkedIn, where thousands of new followers have snapped them up. Among the stats Strebulaev has shared:

  • About 44% of founders were under 40 when their companies became unicorns.
  • 87% of unicorns have only male founders; 1.5% have only female founders.
  • 17.5% of unicorn founders have an MBA degree or equivalent. Fifty-six are college dropouts.
  • Nearly 60% of unicorns were headquartered in California when they became unicorns. A third of a typical unicorn’s employees are in California.

Strebulaev cautions that his data is purely descriptive and shouldn’t be used to draw sweeping correlations or conclusions. For example, he found that nearly one-fifth of unicorn founders attended Stanford. “But by itself, it doesn’t mean anything,” he says, “because if you take 10,000 venture capital-backed companies, you’ll find out that many of them have a Stanford co-founder. It tells us a lot about Stanford, but it will not show you causality about unicorns.”

There’s more to come. Strebulaev’s team has gathered data on 150 variables for each company, including information about founders and investors. He plans to continue to release more numbers while he finishes a more detailed study that compares unicorns with other VC-backed firms. When they go up against more ordinary-seeming companies, will unicorns prove to be exceptional?

Strebulaev’s previous research suggests there’s reason for skepticism. In 2017, he showed that many unicorns were massively overvalued and were not, in fact, unicorns at all. (The gap between some firms’ reported valuation and fair valuation was as much as 196%.)

The fascination with unicorns continues, yet Strebulaev wants to cut through the glow. “I wouldn’t say that I’m really that interested in the unicorns for unicorns’ sake,” he says. “I’m more interested in defining success and factors behind venture capital-backed companies. Unicorns are really only the first step.”

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