First month of 2017 sees three freshly minted unicorns. Two are from China

At a time when funding and mega deals in the region including China are expected to maintain a somber performance this year, carrying forward the trend from 2016, China has presented a positive surprise giving the world two of its latest unicorns — startups with valuations over $1 billion — among the three that made an entry to the list last month.

In the first month of calendar year 2017, three companies stepped into the unicorn club: China based question and answer website Zhihu, China’s office space company URwork and US-based cloud video conferencing company Zoom Communications, according to the CB Insights data.

This is perhaps an indicator that 2017 is off to a better start then last year. In the first quarter of 2016, only five new unicorns had arrived.

It may be interesting to note that China which has increasingly become an important investor and even target investment option globally, now commands 21 per cent of global unicorns. Even though the size is an achievement in itself, the country still lags way behind US which has 55 per cent of unicorns.

About 4 per cent of the billion-dollar companies are based in India , 4 per cent in UK and just 2 per cent each in Germany and South Korea. No other country has three or more private companies valued at over $1B, says CB Insights data.

Marcelo Ballve from CB Insights told DEALSTREETASIA, that 2017 ‘actually be a year in which we see less Chinese unicorns created than the peak in 2015’.

He explained that it is early days, and therefore the patterns could not yet established. In terms of funding, mega-deals of $100 milion plus or more to China-based companies slowed down in 2016 compared to the previous year, which was an exuberant year for VC funding, including in China. “We expect to see that trend continue this year,” Ballve added.

The most valuable company in the e-commerce/marketplace category, a segment that has 18 per cent of the unicorns, is Airbnb ($29 billion), while Infor and Dropbox are the two most valuable companies operating in internet software & services, worth $10 billion and $9.4 billion, respectively. Stripe ($9.2 billion) is the most valuable private fintech company, the data noted.

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Uber still remains the most valuable private company in the world, valued at $68 billion followed by Xiaomi at $46 billion, Didi Chuxing at $34 billion, Airbnb at $29 billion and Palantir Technologies valued at $20 billion.

In total, there are about 183 private companies around the world as of January 2017 this year are valued at over $1 billion, and are together worth approximately $657 billion. Forty of these private companies became unicorns last year and China accounted for 12 of these.

“There are still less than 50 unicorn companies from China, which is roughly half the amount that are based in the United States…At that rate, even if the United States and its largest tech hub in Silicon Valley stopped creating unicorns, which is unlikely, it would still take China a good number of years to catch up,” Ballve said.

The largest share of the world’s unicorns (18%) are in e-commerce and/or operate an online marketplace. Rounding out the top three most crowded markets for unicorns are: internet software & services (14%) and fintech (12%).

The list of unicorns

 

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