Many successful privately held companies are able to raise funds from institutional investors at attractive valuations and defer their IPOs. Almost $49 billion was raised in late stage private placements (also referred to as “mezzanine” private placements or “pre-IPO” private placements) in 2017, an 18% year-over-year increase. As in prior years, tech companies benefited most from this trend and accounted for 42% of dollars raised in these transactions. It is difficult to predict whether this year will mark a turning point in which we see some unicorns undertake IPOs. Our infographic provides a snapshot of the market for these transactions in the United States.
A recent publication by Mergermarket and Toppan provides useful data on unicorns. The United States is home to the largest number of unicorns and is, according the respondents, likely to remain so in the next twelve months.
The publication also addresses valuation issues, considering M&A exits, as well as valuations reported by cross-over funds as well as valuations of unicorns that undertook public offerings among other factors. Respondents surveyed for the publication believe that the valuations of unicorns will decline in the next twelve months. Many respondents predicted an increase in M&A activity, especially among companies in the fintech and e-commerce sectors. E-commerce companies do represent the largest segment of unicorns, so that may not be surprising.
For more, access the report here.
Since 2004, the number of companies valued at over $1 billion, known as unicorns, has grown exponentially. Pitchbook’s recently published Unicorn Report notes that unicorns currently make up one-fifth of 2017’s total deal value. There are currently 176 U.S.-based companies that are classified as unicorns. While the number of unicorns has increased, the number of financings and average deal size has declined. In 2017, to date, there have been 43 financings for U.S.-based unicorns, raising $10 billion. Last year, unicorns raised $18.2 billion in 68 deals and 2015 saw 118 deals raising $20.4 billion.
There are 17 companies that achieved unicorn status in the U.S. during 2017, to date. On average, it took 6.7 years for these companies to reach unicorn status since their founding. Looking at all U.S. unicorns, the companies have an average age of 8.8 years.
As more companies are electing to remain private for a number of reasons, including the costs associated with going public and remaining a public company, unicorn exits are scarce. In 2017, to date, there have been eight exits by unicorns valued at $8.7 billion. In 2016, there were 10 exits valued at $15.6 billion. This year, two unicorns were acquired and five went public.
Access Pitchbook’s Unicorn Report here: https://pitchbook.com/news/reports/2017-unicorn-report.