🦄 Unicorns are reaching billion-dollar status earlier than ever

Since 2023, 68% of new unicorns reached billion-dollar valuations at Series C or earlier, versus 48% during 2013-2022. Three major shifts in the venture capital ecosystem are driving bigger bets, sooner:

1️⃣ AI is rewriting the rules for venture

In 2024, AI startups dominated unicorn creation, with 32 new AI unicorns representing nearly half of all new unicorns. AI has reshaped the venture landscape, capturing a record share of funding (37%) and deals (17%) last year. Investors expect faster value creation and are willing to price in future potential earlier with nearly 3 in 4 AI deals (74%) being made early-stage as investors look to get in on the ground floor. 

2️⃣ Investors face FOMO

The fear of missing out is driving investors to take bigger bets sooner. Increased competition for investments into category-leading companies are driving valuation premiums. As investors look for the winners in a tighter market, FOMO on the next big thing may be trumping traditional valuation discipline.

3️⃣ Slow funding market = more "dry powder"

2024 marked an 8-year low in global dealmaking. Capital is simultaneously scarcer overall and more concentrated in fewer deals. This leaves to investors with more "dry powder" to deploy into the most promising companies. While total startup funding has dropped by about a third since 2021, the best companies are still getting funded – just earlier and bigger with early-stage valuations hitting a record-high median of $25M in 2024. 

We now have a two-speed market where the average startup faces tougher fundraising while standouts are skipping traditional growth stages entirely.