Scale-Up 2020 Unicorn Report Pinpoints Top Unicorns and Details Investment Avenues
Silicon Valley-Based Unicorns Valued at $2B-$5B Generate the Best Returns
Scale-Up VC, a vanguard venture capital firm based in Palo Alto, has recently published Investing in Unicorns in 2020 — a thoroughly researched report analyzing the unicorn market. Sorting through the field of over 500 unicorn companies worldwide, the report examines the market from a macro-perspective to identify which indicators promise the greatest growth potential, which present the greatest risks, and to give incoming investors practical guidance on how to enter the market for unicorn equity.
The report reaches two key conclusions. First, the unicorns set to deliver optimal return on investment are those valued between $2 billion and $5 billion, outside the healthcare sector, and based in Silicon Valley. Second, a few secondary-market brokerages have recently started promoting unicorn funds, and these are the best means for incoming investors to overcome the obstacles that hinder new entrants and to penetrate this booming new market.
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More specifically, the report:
- Analyzes why the number of unicorns has grown by over 1200% in just seven years.
- Considers what that market growth means from an investment perspective, namely that the challenge is shifting from finding a potential unicorn at the seed stage to finding the few existing unicorns with growth potential of 400% or more.
- Details pitfalls of the unicorn market, like the risks and temptations presented by “paper unicorns” and “inflated ponies.”
- Discusses why China’s unicorn boom is qualitatively different from the American upswing due to incalculable regulatory risks, apprehensive founders, and quasi-official nationalization schemes.
- Uses qualitative and quantitative analysis to confirm that Silicon Valley remains the true unicorn nursery, as it has been for the last four decades.
- Explains how to balance the growth potential of those unicorns with relatively low valuations and the proven performance of unicorns with higher valuations.
- Lists barriers to entry that newcomers to the secondary market typically face, how the market is changing, and how to penetrate it.
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Alex Lazovsky, Co-Founder and Managing Partner of Scale-Up VC, explains the motivation behind the report: “In the tech world they say that information is most powerful when it’s free, and we’ve recently invested substantial time and energy to better understand the unicorn market. That knowledge is too valuable to keep to ourselves, when it could help so many family offices, early-stage VCs, and angel investors who are still grappling with the vast and fluid unicorn market. In order to maximize everybody’s gains and help the market to mature, we wanted to share what we’ve worked so hard to learn.”
With thorough analysis of pros and cons, the report is a valuable resource for experienced investors looking for a digestible market overview as well as for rookie investors seeking reliable guidance and practical advice.
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