Late Stage Mature Pre IPO Unicorns -

Growth Firms, Not VCs, Are The Most Active Investors In New Unicorns This Year, And They’re Doubling Down

From Crunchbase News

An unprecedented number of companies have joined Crunchbase’s private company unicorn board already this year: Less than halfway into 2021 there are 166 new companies, compared to 163 for the whole of 2020.

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Based on our analysis, New York-based private equity firm Tiger Global Management is the most active investor in the 2021 crop of new unicorns as well as in private unicorn startups overall — and that’s not only with the most portfolio companies, which one could expect, but also by the number of investments.

Tiger now has twice as many unicorns in its portfolio as the next-biggest unicorn investor: Silicon Valley-based Sequoia Capital, which has not been as active an investor in the 2021 batch.

$2.8T in value

The current Crunchbase Private Unicorn Board hosts more than 820 companies collectively valued at $2.8 trillion that have raised a total of $560 billion over time.

The fastest companies to become unicorns in 2021 were Chinese semiconductor company Moore Threads, Germany-based delivery company Gorillas, audio app Clubhouse, and proptech company Pacaso, both based in San Francisco, as well as Israel-based cybersecurity firm Wiz.

The three leading sectors for these new unicorns are financial services, health care, and privacy and security.

Investors in 2021 unicorns

Let’s take a look at the most active investors in the new crop of 2021 unicorns.

The most active overall so far this year has been Tiger Global Management, with equity in 45 of the 166 new unicorns. While its investments in unicorns dates back to 2013, the firm has been investing at a faster clip than usual in 2021.

The second-most active has been Insight Partners, another growth-equity investor, but with just half the count at 22 new unicorn portfolio companies.

Multistage venture firm Accel has been the third-most active, with 19 portfolio companies.

One interesting difference: Accel tends to invest earlier, with an initial investment at seed or early stage, whereas Tiger generally makes its initial investment in a company starting at Series C or Series D.

Investors in current private unicorns

Venture firm Sequoia Capital, traditionally one of the most active investors in unicorns, has been less prominent in investing in new unicorn startups so far in 2021, Crunchbase data shows.

For current unicorns that have not yet exited, Sequoia is an investor in 61 companies, followed by Andreessen Horowitz, with 56 and Accel at 53. But Tiger Global leads this category by far, with 124 unicorn portfolio companies out of the 824 on the list.

Leading rounds

When reviewed by number of rounds led, the lineup for the top three unicorn investors stays the same.

Interestingly, inside rounds have increasingly become part of the playbook for these investors, with Tiger Global leading 35 investments, three of those in Lattice. It has also led or co-led two funding rounds each in Chargebee and Infra.Market.

Insight Partners has led three rounds in both OwnBackup and Chargebee. It has also led two rounds in Quantum MetricSalesLoftSift and Sysdig.

Accel has led four rounds in Sentry, three in Sysdig and Public, and two each in The Zebra and Webflow.

Andreessen Horowitz is at No. 4 for rounds led and has led three rounds each in Skydio and Clubhouse, as well as two in both Dapper Labs and Deel.

The increased pace of investors leading follow-on rounds in the same portfolio companies is indicative of a number of trends. With larger fund raises alongside opportunity funds, investors are doubling down on portfolio companies that demonstrate growth. The strategy isn’t new, however: The most notable follow-on lead funding round was Sequoia Capital’s investment in WhatsApp’s Series B in 2013, following its 2011 Series A lead. The firm benefited hugely, as the sole institutional investor, when Facebook acquired the company in 2014 for $19 billion.

Lead in seed

The startup accelerator Y Combinator has the highest count of seed investments in unicorns. Through its Continuity fund, Mountain View, California-based Y Combinator has invested in 14 of these companies in subsequent rounds.

Boulder, Colorado-based Techstars, another accelerator program, has the next highest count, with six portfolio companies, and is followed by Accel and San Francisco-based SV Angel, each with five investments at seed.

Accel, Index Ventures and Andreessen Horowitz dominate for leading early-stage rounds in new 2021 unicorn companies.

But three growth equity firms — Tiger Global and Insight Partners again, as well as Coatue — have led on the late-stage side.

The strategy for venture capital is to invest early and keep investing in winners. The mandate for growth equity is to invest in as many growth-stage companies as possible before they hopefully go public.

In general, the most active new unicorn investors of 2021 have a greater number of portfolio companies, and led more rounds at both the early and late stages, compared to even last year.

SPACs have grown in prominence in recent years as a continuation of these late-stage funding trends, which allowed companies to stay private longer and grow their revenue. The bar for going public has been raised in part due to all the money coming into private companies.

With a pipeline of companies that could go public, and with valuations for tech companies climbing in the public market, expect billion-dollar funds to keep piling in.