10 months ago
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It’s getting harder and harder to be a young unicorn in the slowing venture market.
With overall unicorn numbers way down — fewer than 100 joined The Crunchbase Unicorn Board in 2023 — the number of new early-stage unicorns has also dropped off significantly. Only 29 unicorns were minted last year after an early-stage funding round — defined as seed, Series A or Series B — an analysis of Crunchbase data shows.
That’s the lowest total since 2019 and a 62% decline from 2022, when 77 early-stage unicorns were minted. It’s also a steep 73% drop from 2021, when 107 such unicorns were created.
Slowing pace
While the number of early-stage unicorns declined last year, it apparently got even more difficult to grow that horn as the year went on. While18 young unicorns were minted, only 11 got their horns — or $1 billion or more valuation — in the second half of the year.
Many that did get minted last year were — surprise! — AI related.
A quick look at the data reveals more than a third of all early-stage unicorns minted last year were related to generative AI in some way. Those include:
- Character.ai, which in March closed a $150 million Series A at a $1 billion valuation led by Andreessen Horowitz.
- Adept AI, which also in March raised a $350 million Series B led by General Catalyst and Spark Capital at a reported post-money valuation of at least $1 billion.
- CoreWeave, an AI cloud infrastructure company, raised a $200 million Series B extension in May from Magnetar Capital — just weeks after the startup raised $221 million — that valued it at $2 billion.
- In June, Typeface raised a $100 million Series B led by Salesforce Ventures 1 at a $1 billion valuation. The company’s AI platform helps with enterprise content creation such as product shots, blog posts, social media ads and job posts that meet brand specifications.
- In October, China-based generative AI startup Baichuan raised around $300 million in a Series A from investors including Alibaba and Tencent at a $1.3 billion valuation.
- In September, Germany’s Helsing, an AI-enhanced defense tech company, raised a Series B round worth approximately $225 million at a $1.8 billion valuation.
- In December, Paris-based Mistral AI, an OpenAI and Anthropic competitor, reportedly raised approximately $415 million in a round led by Andreessen Horowitz and Lightspeed Venture Partners that valued the company at $2 billion.
What it means
With the general decline in unicorns being minted, it is not shocking to see fewer unicorns getting minted early on in their funding lives.
Most companies are seeing their valuations significantly sliced — Bolt’s valuation reportedly just fell from a high of $11 billion to just $300 million — so young companies early in their funding years are unlikely to garner the high, perhaps unwarranted, valuations many did just a couple years ago.
Many investors are looking more deeply into companies’ financials and eyeing cash flow, profitability and sustainable growth — metrics not usually associated with companies still in the seed and early series funding range.
However, investors do seem eager and willing to still affix high price tags to all things AI — even to young companies still finding their place in the market.
Perhaps it is because AI is a truly transformative technology that will lead to one of the biggest shifts in history — or maybe they just haven’t learned from past mistakes.
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Illustration: Dom Guzman
