The Takeaway
Only 32 new unicorns emerged globally in Q1 2024, bringing the total number of billion-dollar private venture-backed companies to 1,343 in the Global Unicorn Index. Only five unicorns went public, including Reddit and Astera Labs, as market environment for companies seeking to go public continues to be challenging.
The late-stage venture market continues to be an incredibly investor-friendly market--an environment where VCs are being more selective, favoring companies with solid financials and strong operating models. Down rounds in Q1 were close to record high as 19% of the new deals were below their previous valuation.
Despite $312bn in unallocated capital (dry powder), nontraditional investors including hedge funds and mutual funds, have retreated from the market. These investors are willing to pay premium for illiquid, private companies, due to favorable exit markets offering quick and lucrative returns.
In the first quarter of 2024, economic and geopolitical uncertainties, coupled with ongoing inflation, posed challenges for the late-stage venture market. Despite this, the Morningstar PitchBook Global Unicorn Index, a key indicator for late-stage ventures, saw a 4.14% increase.
Challenges persist in late-stage venture market with limited exit options and concerns over maintaining high valuations. Despite VC firms holding a significant amount of unallocated funds, the reduction of nontraditional investors is limiting capital availability and driving pressure on valuations.
©2024 Morningstar. All Rights Reserved. The information, data, analyses and opinions contained herein (1) include the proprietary information of Morningstar, (2) may not be copied or redistributed, (3) do not constitute investment advice offered by Morningstar, (4) are provided solely for informational purposes and therefore are not an offer to buy or sell a security, and (5) are not warranted to be correct, complete or accurate. Morningstar has not given its consent to be deemed an "expert" under the federal Securities Act of 1933. Except as otherwise required by law, Morningstar is not responsible for any trading decisions, damages or other losses resulting from, or related to, this information, data, analyses or opinions or their use. References to specific securities or other investment options should not be considered an offer (as defined by the Securities and Exchange Act) to purchase or sell that specific investment. Past performance does not guarantee future results. Before making any investment decision, consider if the investment is suitable for you by referencing your own financial position, investment objectives, and risk profile. Always consult with your financial advisor before investing.
Indexes are unmanaged and not available for direct investment.
Morningstar indexes are created and maintained by Morningstar, Inc. Morningstar® is a registered trademark of Morningstar, Inc.