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April 3, 2015

What does a unicorn look like? The billion dollar startup club

I spent the weekend booking accommodation for an upcoming family trip and realized quickly just how disruptive the Airbnb / Homeaway model is. A few years ago, we would have spent 10 nights crammed in a hotel room. Now we’re taking over homes and apartments for just about the same price. The value I get from this is huge. That AirBnB is rumoured to be valued at over $20billion is perhaps not surprising (though admittedly figuring out why it’s worth nearly 10x more than HomeAway is less clear).[1]

That $20 billion valuation would rank AirBnB third in valuation amongst billion dollar startups. Xiaomi and Uber are both over $40billion. According to the Wall Street Journal there are currently 80 ‘unicorns’ or billion dollar firms.

I decided to take a look through their list to see what makes a billion dollar idea (and lost my afternoon as a result):

  • 48 of 80 are consumer rather than B2B focused.
  • 30 are e-commerce platforms.
  • 6 are financial technology companies.
  • 4 actually make a physical product.
  • 4 are health or life-sciences related.
  • 2 are energy related.


Geographically, 55 are based in the US, 9 China, 5 India, 3 UK, 2 Germany, 2 South Korea and 1 each in Singapore, Sweden, the Netherlands and Canada.

The most common investors amongst this cohort are Sequoia Ventures, Kleiner Perkins, Tiger Global, T. Rowe Price and Andreesseen Horowitz (this directly from the WSJ).

Finally, of the 56 North American companies, a quick scan shows just 7 that have spent time in an accelerator. Worth highlighting is that 4 of those were hosted by Y Combinator. Aside from those, there’s a high premium amongst the unicorn cohort on pretty deep industry experience.

[1] Some additional thoughts on AirBNB – If you’re a hotel owner, however, it shouldn’t necessarily send you running. When I travel for work I’m still staying in a hotel. According to the US lodging association, 41% of travel is for business. That leaves the other 59% up for grabs. However, of that portion, 50% are staying just one night which I will imagine makes them quite unlikely to venture away from a hotel. We’re left with a high-water mark of approximately 29% of hotel stays that are up for grabs in the market. In the US that translates to upwards of 1.45 million room nights (in Canada: 127000 room nights). Recent moves by AirBnB to build partnerships in certain markets (Amsterdam, San Fran and Portland) whereby the company will charge an additional tourist tax to contribute to public coffers does, however, makes any hotel industry hopes of more legislation against these types of services unlikely.

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