After a long period of flying high, venture capital backed companies with post-money valuations of $1 billion or more, otherwise known as Unicorns, came back to earth in the first quarter, according to the latest Morningstar Unicorn Market Monitor.
“After having the wind at its back for several quarters, the unicorn herd is now facing challenging headwinds,” said Morningstar Indexes Senior Product Manager Sandy Beharry. “There has been more deal activity in specific verticals such as Artificial Intelligence, however, the shortage of capital is a major concern for the late-stage market in 2023.”
According to the latest version of the quarterly commentary based on the Morningstar PitchBook Global Unicorn Indexes, unicorn fundraising hit a 21-quarter low in the first three months of 2023, with just $15.9 billion in deal value across an estimated 85 deals.
Down rounds, or funding rounds in which a company expects a lower valuation than it had on the prior round, are also up according to the monitor, with 19% down rounds in the first quarter relative to 11% in 2022, indicating many unicorns aren’t able to weather a challenging market.
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