Venture capital-backed companies valued at $1 billion or more, commonly referred to as Unicorns, continued to proliferate in 2022 despite a challenging global market environment, while IPOs for Unicorns have become more rare, according to the first Morningstar Unicorn Market Monitor, created by Morningstar Indexes.
In 2022, venture capital-backed companies raised $508.7 billion as compared to $180 billion raised through public market offerings. Yet Unicorns were not immune from the market turbulence last year, as unicorn funding rounds dropped 67% from the first quarter to the fourth quarter and just 27 global unicorns went public through initial public offerings in 2022.
Notably, of the 27 global unicorn companies that went IPO in 2022, 26 came from the Asia-Pacific region. And notable departures from the Morningstar PitchBook Global Unicorn Indexes in 2022 included FTX, Celsius and BlockFi, all cryptocurrency firms that filed for bankruptcy.
Sanjay Arya – Head of Index Innovation, Morningstar:
“Despite the market turmoil in 2022, the structural shift in capital markets from public to private markets continued. Unicorn fundraising in 2022 was down from its record heights in 2021 but still logged its second-highest year.”
Kyle Stanford, CAIA, Senior Venture Capital Analyst, PitchBook:
“We saw many unicorns exercise fiscal caution in the latter half of the year as investors shifted their focus from ‘growth at all costs’ to profitability. Not only did we see companies bypass fundraising in order to not risk a hit to their valuations, but capital has fled the late-stage venture market, lowering the opportunity for many companies to raise new financing and creating a gap between the capital needs of unicorns and amount available in the market.”
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