Leading Unicorn VC Firms and The Long Tail

We often get the question about “Leading Unicorn Venture Capital Firms”. And emerging fund managers are sometimes taken aback when we are unfazed about their two unicorns in their portfolio and continue our due diligence. Business Insider just published an article about early-stage investors with billion-dollar outcomes.

[DISCLAIMER BELOW]

[EDIT 5/28/2019, 08:38 PDT — I fixed a mistake in the second table of active # of Unicorns. I had pasted in the wrong column, that should be fixed now, thanks to Michael C. for pointing it out!]

The Big Picture: 1,142 Investors and 818 institutional VC Firms with Unicorns

Pitchbook shows 1,142 investors, of which 818 are venture capital firms with institutional funds, that had at least one startup valued more than $1 billion USD at exit or at current valuation (as of 05/19/2019). More than 70% of the venture capital firms are US-based.

pie chart distribution of VC firms with Unicorn exposure (Source: Pitchbook, as of 05/19/2019)
Distribution of VC firms with past or current Unicorn exposure (Source: Pitchbook, as of 05/19/2019)

A surprising large number of 97 VC firms can already each show ten or more unicorns in their exit track record. There is also a long-tail of 936 VC firms [!] that have one to four Unicorn exits in their track record.

bar graph of Unicorn exit distribution per VC firm (Source: Pitchbook, as of 05/19/2019)
Distribution of Unicorn exits within a single VC firm (Source: Pitchbook, as of 05/19/2019)

The number of active portfolio Unicorns within VC firms is even longer-tailed:

bar graph of active Unicorn portfolio companies per VC firm (Source: Pitchbook, as of 05/19/2019)
Distribution of active Unicorn portfolio companies within a single VC firm (Source: Pitchbook, as of 05/19/2019)

Venture Capital Firms with Most Prolific Unicorn Exit Track Record

Here are the top-1o VC firms with the most unicorn exits. Not surprisingly, most of them are late-stage firms that can deploy capital later in the game. Some firms such as Sequoia Capital, KPCB, or Accel have growth funds and continue investing at unicorn status into some of their early-stage startup portfolio.

Table with top ten VC firms with most unicorn exits (Source: Pitchbook, as of 05/19/2019)
Top10 VC firms with most unicorn exits (Source: Pitchbook, as of 05/19/2019)

Venture Capital Firms with Most Active Unicorns

Likewise, the top-10 VC firms with the highest number of unicorns in their active portfolios have late-stage growth funds.

table of VC firms by highest number of active unicorns in their portfolios (Source: Pitchbook, as of 05/19/2019)
Top10 VC firms with highest number of active unicorns in their portfolios (Source: Pitchbook, as of 05/19/2019) [EDIT 2019-05-28-08-38-PDT: I had the wrong image in here first, that should be fixed now. A link to the previous *wrong* image is here for archival purposes)

BUT: Does a Top10 list makes sense?

Partially. Participation on potential value creation at these firms is phenomenal. Many of the firms above made the first bet at an early stage, and continue to deploy capital into still-growing unicorns.

But look at Meritech, for example: Ranking #15 on the list of VC firms with most unicorn exits, 21.7% of all of their exits were unicorns! 24.5% of their active portfolio are unicorns! and only 6.6% of all of the investment rounds they participated in were above $1 billion valuation. When it comes to efficient capital deployment, the absolute number is less relevant than the percentage of lift an LP commitment can create.

table with non-top10 ranked VC firms by highest number of unicorn exits
other non-top10 firms and their number of unicorn exits (Source: Pitchbook, as of 05/19/2019)

DISCLAIMER

Past performance is no indicator of future returns. Having a Unicorn in ones portfolio says nothing about actual returns. Maybe you only invested $200k at the seed stage, thought this was a dog, and were washed out in later rounds. Maybe you invested at $6 billion valuation and exited at $2 billion. In fact, I know of several examples where a VC fund had three to six unicorns in their track record but the fund was only a 3rd quartile performance fund… It’s all about portfolio construction and concentration in the winners.

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