The State of Unicorns
Part II: The Year of the Unicorn
The second episode in a three-part series about the tech-driven global boom of unicorn companies
That technological disruption has been the primary driver of the recent boom in unicorns over the past few years is a truth evident in the numbers. Apart from forcing innovation in most other industries, the standalone technology and telecommunications sector, in itself, in fact, enjoys the highest percentage share in the sectoral distribution of global unicorns – over 19%.
PricewaterhouseCoopers reports the number of fintech unicorns grew more than fourfold, from 36 in 2016 to 159 in 2021, at a CAGR of 35%.
Consumer Financials
Outside the direct tech sector, most of today’s venture capital funding is being poured into aspects such as industrial tech, health tech, media, entertainment and digital commerce; with fintech having the largest share of the lot. The platformisation of consumer financial services has been absolutely central to this. PwC writes: “the growth of the platform economy and e-commerce created an unprecedented need for seamless, cross-border, highly scalable digital payments.”
“The payments phenomenon is most clearly represented by the evolution of Square (which changed its name to Block in December 2021): the company entered the pandemic with a seller ecosystem from its card swipe business, then changed course to capitalise on digital commerce, digital banking, and wealth management through the scaling of its cash app, which launched in 2013.
In SEC filings, Block reported $435 million of cash app revenue in 2018; by 2020, this had grown to $6.0 billion, and it is at $9.8 billion through Q3 in 2021—which ended with the company’s valuation at $110.6 billion.”
‘Buy now, pay later’ (BNPL) products, mortgages, digital banking, wealth management and insurance have been instrumental in giving birth to an increasing number of unicorns over the years; with digital banking unicorns rising from two in 2016 to 18 in 2021, wealth-tech from four to 22 in the same period.
The digitisation of the global economy is also facilitating digital currencies towards going mainstream, with 22 cryptocurrency-associated unicorns being born in the same specified period. These companies, now creating digital wallets and exchanges for digital assets shall be central to the core innovation of tomorrow.
The Future of Vehicles? Electric
In 2020, initial pandemic pressures depressed demand to push down the sales of global electric vehicles. Yet, it ended up rising about 40% year-on-year. With the reopening of economies driving demand through 2021, this number rose to an astonishing figure – almost 100% – fuelled also by additional factors such as rising consumer uptake, incentives, and even government mandates.
Lithium battery makers, charging network providers and energy storage companies have been involved in directly supporting this sector by promoting industrial tech as well. Over 80% of the 17 global EV unicorns are either in the United States or in China, with both of these countries being early movers in this space. PwC opines:
“The birth of electric vehicles was the first step in the creation of new ecosystems that will engage not only the automotive sector, but also energy, logistics, and financial services. The result will be transportation that is platform-based, offering services to consumers and enterprises. This evolution will occur over the current decade as the speed of charging technology accelerates.”
Although electric vehicles are set to continue to boom, the commercialisation of autonomous vehicles is still a while away. In order to achieve the requisite maturity and scale, it will require both regulatory and cultural acceptance.
Yet, there are as many as 21 unicorns involved with autonomous vehicles born just in the past few years US-based Waymo, Rivian Automotive and Faraday Future, and Chinese Xiaopeng Motors are some of these unicorns – with all of them having a valuation of over $1.5 billion.
