Ben Thompson of Stratechery wrote an interesting piece highlighting how the well-known “Babe Ruth effect” in venture capital also applies to unicorn valuations. We decided to use the CB Insights Unicorn List to see if our unicorn data showed a power law-type distribution similar to the one revealed by Thompson’s analysis.
Having previously analyzed the impact of the Power Law in venture capital returns, we weren’t surprised to see that the power law is alive and well when it comes to unicorn valuations.
Overall we found that:
- Uber and Xiaomi account for 21.4% of the cumulative valuations of all unicorns.
- The next 8 unicorns account for a further 25% of all value. (These are the decacorns sans Uber and Xiaomi, including Snapchat, Flipkart, and Palantir.)
- Overall these top 10 Unicorns are worth $184B, more than the next 70 combined.
Breaking down the total funding for all 113 unicorns on the list (as of June 22, 2015), we observed a relatively close correlation between funding and valuation, which both slope down steadily. But outliers include DJI Innovations, which has raised relatively little given its $10B valuation, and Stripe, which to date has raised “just” $190M and is currently valued at $3.5B.
See the full breakdown below (click on the image to enlarge).