The value of global unicorns has reached the $4 trillion mark according to new data. The relative size of the valuation milestone is notable.
Compared to what? The U.S. Big Five are major tech companies in the West. They used to be known as Google, Microsoft, Apple, Amazon and Facebook. The younger two of the five company group have undergone name changes in recent years.
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The five firms reached a combined $3 trillion in value in 2017: It felt like less than a few companies could be worth so much. The group smashed the $4 trillion mark in the middle of the year. Alex used to work for the news team at the company and has stock in it. From time to time, we will note this particular matter from time to time when we lean heavily on Crunchbase data.
It wasn't the peak of the year. The total value of the five companies has fallen to $7.2 trillion as of last Friday's close.
Unicorns have seen a similar pace of value expansion, albeit offset by a few years. For example, Crunchbase News also wrote last summer that the aggregate value of global unicorns had reached the $3 trillion mark, up from $2 trillion the year before. That, by the way, is the result of all those funding rounds last year that seemed to push more and more startups into the $1 billion valuation club, earning them what is colloquially known as “unicorn” status, a term that was coined on TechCrunch back in 2013.
The comparison between the five most valuable U.S. tech firms and a loose grouping of high-value startups on a worldwide basis might seem slightly specious; why compare the two numbers other than to enjoy playing with very large figures?
We might be seeing a divergence in their two valuation directions after years of rising in unison. Meta is one of the biggest tech companies that is taking a hit. The Next Generation of Tech Leaders is raising lots of money and building private-market value.
The pace at which the value of the company is growing is not indicative of a slowing-down. We expect the value of global unicorns to rise this year, perhaps at a slower pace, if things are slowing down in venture land.
Normally at this juncture, we'd say something rude about high-priced startups, asking how much value there is in the collection of a bunch of people. But! Not today. We wonder if the value of global unicorns compared to the market cap of mega-tech companies is a fun ratio to track over time. If the private markets are building lots of high-value worth, then maybe we should see more of them. It would be encouraging from an antitrust regulatory perspective.
There are huge differences with any comparison. The ratio will be impacted by the pace of unicorn liquidity, meaning that a weak exit market for unicorns would better store private-market value and make them look better than they actually are. The value of those companies should be harmed by a slow exit market, so there are secondary effects to any particular way we want to smooth out the comparison.
The value of the unicorn is higher than ever. The need for a waterfall of liquidity for the companies represented by the metric is implied.
Let's take a look at the numbers and see if we can figure out the total value of the unicorns that are now worth more than $4,200,000,000,000.
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