When the term unicorn was first used to describe a tech startup valued at $1 billion or more there were just 39 in the United States; today, there are over 925 unicorns around the globe — twice as many as two years ago.
It’s not just unicorns that are multiplying; venture capital firms now have nearly $100 billion in funds under management and are closing more deals with the next wave of startups.
Simply put, there’s a lot of pent-up demand to fund the next unicorn, especially in a hyper-active investment market.
Easier said than done.
However, Dropbox Co-founder Drew Houston once said, “Don’t worry about failure; you only have to be right once.” This is particularly true for founders, but for investors who need to be right at scale the story looks a little different.
In fact, research from Affinity, the relationship intelligence platform for venture capital firms, found that while there are over 400 firms that have invested in a unicorn over the last five years, 74% have only “been right” once. The story changes for the top firms with the top 20 investing in 43% of all unicorns. These firms have something in common: relationship intelligence.
In its new report, “The Relationship Intelligence Benchmark Report — Unicorn Edition,” Affinity looked at data of nearly 950 unicorns from 2017-2021. Across the Affinity platform, over 500,000 new introductions were made to startups and 45,000 deals per month tracked.
It’s all in the data
Highlights from Affinity’s research include data points about unicorns:
- 62% of unicorns were founded in the U.S., specifically the San Francisco Bay Area — a trend that has concentrated over the last five years.
- The average valuation of a unicorn today (2021) is $7.48 billion, up from $2.3 billion last year.
- Over the last five years, just 2% of unicorns reached the IPO stage.
Additionally, Affinity research illustrates that:
- 74% of VC firms have invested in one unicorn, but only 6% have invested in five or more.
- Top VC firms managed 22% more deals last year (over 6,000) compared to 2020 and held 16% more external meetings (50 per day on average).
- Top VC firms have vast networks (2,293 per person) and make an average of over 2,500 introductions annually.
It’s those relationships that play an important role in finding unicorns.
Relationships are key
Affinity has built relationship intelligence based on the analysis of over 18 trillion emails and 213 million calendar events. Today the platform powers over 500,000 new introductions and tracks 450,000 deals per month, automatically capturing much of the data fueling the relationship intelligence that drives those deals. More than 1,700 Affinity customers worldwide are doing three key things to keep them competitive:
- Managing data efficiently: Freeing VCs from manual CRM data entry leaves them with more time for strategic endeavors, meeting key contacts—and hunting unicorns. According to a Forrester Report, nearly 70% of executives with CRMs believe that “customer, prospect, and account data comes from too many sources to easily make sense of it.” And manual data entry—from one source or a hundred—causes productivity to nosedive. As a result, plans to leverage automation to improve productivity are widespread.
- Tracking deals accurately: Faulty, incomplete, and siloed data leads to missed opportunities. And a pipeline clogged with emails, notes from business meetings, and the news and financial data that inform a deal can lead to unreliable record-keeping. Successful VCs have gained confidence by moving beyond the spreadsheet. They track their deal pipeline on a centralized platform that ensures contact and company profiles are accurate, enriched with information from key third-party sources, and always visible to the entire team.
- Finding the right relationships easily: Relationships are foundational for every VC—whether you’re unicorn hunting or just looking for your next deal. The most successful VC firms are moving beyond customer relationship management to relationship intelligence about their entire professional network. An automated relationship intelligence platform can help you find the right relationships, nurture them long-term, and open the doors that lead to successfully closed deals.
For additional information, download the full report.