What are Private Unicorn Shares and their opportunities?
What are Private Unicorn Shares?
Unicorn companies is a term that describes an extraordinary private startup, with a valuation of over $1 billion USD. Despite the outbreak of COVID-19, the total number of unicorns around the world continues to boom.
As of June 2021, there are more than 700 unicorns around the world, with 48% coming from the US and 25% from China. Their valuation is worth over 2367 billion USD according to CB Insights.
The current biggest unicorns in the world are Bytedance, Stripe and SpaceX in order.
Reasons for investment
Unicorn companies were the winners for VC investment globally in Q1 2021, accounting for almost 40% of all VC funding.
Over $49 billion raised across 182 unicorn funding rounds just for a quarter, compared to $100.5 billion raised across 403 unicorn rounds during a full year of 2020.
From a company perspective, staying private allows them more freedom to choose its investors and to retain its focus or strategies, without the need to go public, while getting sufficient cash at the same time.
From an investor perspective, betting on the growth potentials of a mature late-stage private unicorn could bring much more attractive returns than in a public market.
For unicorns that have made exits in 2020, the IPO cohort has offered up an average of 117 percent increase [source ] between their last known valuation and their valuation upon going public. In Q1 2021, exit value has reached a record $284 billion across 667 deals compared to $472 billion across 2,219 deals during all of 2020 [source].
Opportunities to watch
The pandemic has changed how investors look at different sectors and so as the funding trends. By June 2021, the FinTech and internet software sector has taken up 15% of all unicorns, followed by 13% of e-commerce, 10% of artificial intelligence and robotics, and 8% of healthcare. [source ]
An exponential increase in demand for services in these sectors, has helped people to reimagine how these technologies and business ideas could have changed their way of living in the future.