The Unicorn Puzzle
Working Paper 30604
DOI 10.3386/w30604
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From 2010 to 2021, 639 US VC-funded firms achieved unicorn status. We investigate why there are so many unicorns and why founders grant investors privileges to obtain unicorn status. Unicorns rely more than other VC-funded startups on organizational capital and network effects. Unicorn status enables startups to access new sources of capital, and growth in available funding causes the number of unicorns to increase. As a result, unicorns can stay private longer, which enables them to grow their organizational intangible assets with less expropriation risk and better capture the economies of scale on which their business model relies.
Non-Technical Summaries
- Unicorns — startup businesses that are valued at at least $1 billion before going public — essentially did not exist before the 2000s...