Unicorns
Thrive, Ribbit lead VCs with the highest unicorn batting average
February 16, 2022
There are around 1,000 billion-dollar VC-backed companies globally—more than 50 are valued at $10 billion or more—and an entire class of crossover investors almost exclusively targets these pre-IPO companies.
Given all that, it would seem like the unicorn designation doesn't mean much. But for early-stage VC investors, investing in a startup that will grow into a billion-dollar company is often a badge of honor—separating exceptional investors from the rest of the pack. The highest performing of these bets can also return an entire fund's worth of capital.
So when it comes to home-run investments, which early-stage investors have the highest batting average?
In this analysis, we examined US VC firms that made early-stage investments in companies that were valued at $1 billion or more in subsequent rounds. The chart shows both the total number of these investments, as well as the share that they represent as a percent of the firm's overall portfolio. Read more about the methodology below.
The chart underscores a few facts about what it takes to back unicorns before they get their horns. For starters, it helps to be large: The leading firms—both in terms of company count and as a share of the total portfolio—managed more than $5 billion.
Investors that backed unicorns-to-be at exceptionally high rates tended to cluster their investments in similar categories, indicating high conviction around certain themes. For example, let's look at Thrive Capital, Ribbit Capital and Benchmark, which were at the head of this group.
Thrive has invested in a large number of direct-to-consumer brands that went on to become unicorns, including ecommerce names like Warby Parker, Harry's and Glossier, as well as consumer healthcare brands Oscar, Hims & Hers and Capsule.
Ribbit Capital is a dedicated fintech investor, so it's no surprise that the firm’s early-stage hits included names like Robinhood, Coinbase, Brex, Cred and Nubank. Meanwhile, Benchmark's holdings cluster around cloud-based software platforms such as Confluent, Cockroach Labs, Docker and Benchling.
Another group of firms showed an ability to back a large total number of unicorns-to-be, although those investments represented a smaller proportion of their overall portfolio.
Andreessen Horowitz has backed more than 50 of these companies in a range of industries, representing more than 7% of its portfolio. Part of what has allowed a16z to do so is a large investment team, which now numbers more than 70 according to its website.
Likewise, General Catalyst and GV have both amassed a large portfolio of unicorns through sector-agnostic early-stage investments with the help of large investment teams.
The two extremes showcase that a range of early-stage strategies can be leveraged to build stakes in tomorrow's most valuable companies.
Methodology: To obtain a selection of competitive investors, the analysis was limited to US VC firms with at least $100 million in assets under management and at least 50 total portfolio companies. To avoid capturing VCs that frequently invest in unicorns-to-be that are near the $1 billion valuation mark, we excluded firms whose median round size in that dataset was greater than $50 million.
The chart in this article was updated on Feb. 24 to include Playground Global, which had been omitted due to a calculation error.
Featured image by Vershinin/Getty Images
Given all that, it would seem like the unicorn designation doesn't mean much. But for early-stage VC investors, investing in a startup that will grow into a billion-dollar company is often a badge of honor—separating exceptional investors from the rest of the pack. The highest performing of these bets can also return an entire fund's worth of capital.
So when it comes to home-run investments, which early-stage investors have the highest batting average?
In this analysis, we examined US VC firms that made early-stage investments in companies that were valued at $1 billion or more in subsequent rounds. The chart shows both the total number of these investments, as well as the share that they represent as a percent of the firm's overall portfolio. Read more about the methodology below.
The chart underscores a few facts about what it takes to back unicorns before they get their horns. For starters, it helps to be large: The leading firms—both in terms of company count and as a share of the total portfolio—managed more than $5 billion.
Investors that backed unicorns-to-be at exceptionally high rates tended to cluster their investments in similar categories, indicating high conviction around certain themes. For example, let's look at Thrive Capital, Ribbit Capital and Benchmark, which were at the head of this group.
Thrive has invested in a large number of direct-to-consumer brands that went on to become unicorns, including ecommerce names like Warby Parker, Harry's and Glossier, as well as consumer healthcare brands Oscar, Hims & Hers and Capsule.
Ribbit Capital is a dedicated fintech investor, so it's no surprise that the firm’s early-stage hits included names like Robinhood, Coinbase, Brex, Cred and Nubank. Meanwhile, Benchmark's holdings cluster around cloud-based software platforms such as Confluent, Cockroach Labs, Docker and Benchling.
Another group of firms showed an ability to back a large total number of unicorns-to-be, although those investments represented a smaller proportion of their overall portfolio.
Andreessen Horowitz has backed more than 50 of these companies in a range of industries, representing more than 7% of its portfolio. Part of what has allowed a16z to do so is a large investment team, which now numbers more than 70 according to its website.
Likewise, General Catalyst and GV have both amassed a large portfolio of unicorns through sector-agnostic early-stage investments with the help of large investment teams.
The two extremes showcase that a range of early-stage strategies can be leveraged to build stakes in tomorrow's most valuable companies.
Methodology: To obtain a selection of competitive investors, the analysis was limited to US VC firms with at least $100 million in assets under management and at least 50 total portfolio companies. To avoid capturing VCs that frequently invest in unicorns-to-be that are near the $1 billion valuation mark, we excluded firms whose median round size in that dataset was greater than $50 million.
The chart in this article was updated on Feb. 24 to include Playground Global, which had been omitted due to a calculation error.
Featured image by Vershinin/Getty Images
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