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Biggest may not be Best

January 27th 2017

The most valuable private global companies reflect the battle at the top of the world economies.  The US still leads (just) with taxi firm Uber, valued at $68bn, reckoned to be the world’s most valuable private company.  Next is Chinese smartphone maker Xiaomi ($46bn), Didi Chuxing (think Uber in China, at $3bn), then private bookings Airbnb ($29bn), and finally US software and services firm Palantir Technologies ($20bn).  This lineup is replicated down through the list, as the majority of the rest are based in the US (55%), followed by China (21%), India (4%), the UK (4%), Germany (2%), and South Korea (2%). Beyond these, no other country has three or more private companies valued at more than $1bn.

Fifteen private companies (8% of the global unicorn club) are considered decacorns, being worth more than £10bn.  Approximately 32% of the companies included in the global unicorn club are valued at exactly $1B, which is either curious or slightly suspect, depending on your point of view.

According to CB Insights figures, 40 companies became unicorns last year.  But the real test of a unicorn – when you actually see if it’s a unicorn or a donkey – is when it IPO’s and then settles down at a price where everyone is comfortable.  2016 was a tricky year with a number of IPO’s pulled at the last minute and others showing that the unicorn status was itself somewhat imaginary.  Only 12 startups passed the magical $1bn mark, a fall of 70% on the previous year.

However, for 2017, analysts are predicting a rebound.  Greg Becker, CEO of Silicon Valley Bank is quoted in The Times as saying that as many as 45 US technology startups could IPO this year, three times as many as in 2016. 

But it’s away from the unicorn limelight that most money is made.  Last year about $700bn was invested in around 8,000 deals in the US, hence average just less than $100M per deal.  Europe was estimated to be £271bn, according to Regent.  Adding in the rest of the world easily takes the total past $1trn.  These deals may not be unicorns, but they provide the great majority of the investor returns.

It just shows you don’t have to be big to be beautiful.

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