Skip to content

CFDs are complex financial instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money. CFDs are complex financial instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

What are the world's unicorn companies?

Despite some notable poor unicorn IPOs in 2019, interest in the planet’s biggest startups is showing no sign of waning. Here’s a deep dive into the world of unicorns: including what they are and how to invest in them.

Airbnb Source: Bloomberg

What is a unicorn company or startup?

A unicorn company or startup is a new business that is valued at more than $1 billion and is privately owned – meaning they aren’t listed on stock exchanges. Some well-known current examples include Airbnb, Robinhood and Stripe in the US, or Transferwise in the UK.

The term was coined by Aileen Lee, a venture capitalist, in an article written in 2013. She used it to describe the relative rarity of such companies, estimating that just 0.07% of software startups from the 2000s would reach valuations above $1 billion.

Unicorns may be rare, but decacorns – startups with a value of $10 billion – are rarer still. And only a handful of hectocorns, which are worth over $100 billion, have ever existed. Notable examples include Google and Facebook, which both surpassed $100 billion in value before their respective initial public offerings (IPOs). In her original article, Aileen Lee referred to these companies as ‘super unicorns’.

Take your position on Google and Facebook with a free demo account. You’ll get $10,000 virtual funds to trade across thousands of global stocks.

How many unicorn companies are there?

There are currently 452 unicorn companies according to CB Insights, an angel investment database. Those 452 startups have a combined value of around $1.3 trillion, roughly equal to that of Apple: the largest listed company in the US.

The total number of unicorns around the world is exploding. Aileen Lee’s original TechCrunch article noted that just 39 existed in 2013, with four born each year in the prior decade. In 2018, there were 151 new billion-dollar startups. Despite some notable exits from the unicorn list in 2019, 142 companies joined.

World's biggest unicorn companies

The exact number of current unicorns varies from source to source. That’s mostly down to disagreements over what constitutes a startup. For example, some claim that Ant Financial is the only hectocorn in existence today – but CB Insights doesn’t include the Chinese fintech giant on its list at all.

List of the world’s biggest unicorn companies

  1. Bytedance
  2. Didi Chuxing
  3. Stripe
  4. Airbnb
  5. SpaceX
Valuation When did it join the unicorn list?
Bytedance $75 billion 07/04/2017
Didi Chuxing $56 billion 31/12/2014
Stripe $35.25 billion 23/01/2014
Airbnb $35 billion 26/07/2011
SpaceX $33.3 billion 01/12/2012

Source: CB Insights, 2020

Bytedance – $75 billion

Bytedance is a Chinese software company. It was founded in 2012 by Zhang Yiming, and is best known for its content platform Toutiao (or ‘Headlines’ in English) and social media app TikTok.

Toutiao shows personalised news and information feeds to its users, using machine learning to tailor content to each reader’s personal preferences. TikTok enables users to create and share short music or looping videos. TikTok hit 1 billion downloads in 2019.

Bytedance’s value comes from a $3 billion investment in October 2018, led by SoftBank. Uber's IPO in 2019 left Bytedance as the largest remaining unicorn by some margin.

Learn more about the Bytedance IPO and how to trade it

Didi Chuxing – $56 billion

Didi Chuxing, known by its users as DiDi, provides a variety of transport options via its app. These options include Uber-style taxis, private cars and shared rides as well as bike sharing, vehicle rentals and more.

The company is the leading private transport in China, with 550 million users and millions of drivers as of 2018. In 2016, it acquired its biggest rival, Uber China. It was rumoured to be planning an IPO in 2019 but didn’t end up following US competitors Lyft and Uber by floating.

Didi Chuxing and Bytedance are both headquartered in Beijing. China may be home to the world’s biggest unicorns, but the US still has more overall – with 196 to China’s 165.

Stripe – $35.25 billion

The biggest unlisted startup in the US is currently Stripe, which makes software that enables businesses to make and receive payments online.

Patrick and John Collison founded Stripe in 2009, and the company was worth $100 million by the time of its Series A investment in 2012. It joined the unicorn list in 2014, and by 2016 was valued at $9 billion. Peter Thiel, the entrepreneur and co-founder of PayPal, was an early investor.

The company has been described as ‘ripe for an IPO’ in 2020.

Airbnb – $35 billion

Airbnb is an online platform where members can advertise their living spaces as short-term lodging.

For many years, Airbnb and Uber were the poster-child ‘sharing economy’ unicorns. But while Uber opted to list in 2019, Airbnb held fire. The business has announced plans for an IPO at some point in 2020.

Unlike many unicorns, Airbnb is actually a profitable business – the company made $93 million in 2017. It’s also relatively old, hitting a valuation of $1 billion all the way back in 2011.

But Airbnb’s valuation has somewhat flatlined in recent years. The business crossed the $30 billion mark in 2016 but has only added $5 billion in value since. In that time, Stripe has grown by around $26 billion.

SpaceX – $33.3 billion

SpaceX has a lofty goal: to reduce the cost of space travel and eventually enable the colonisation of Mars. It has made significant strides towards that ambition since its launch in 2002, including successfully reusing an orbital rocket in 2017. The company plans on launching the first crewed mission for its Dragon 2 craft in May 2020.

Space travel isn’t cheap, so perhaps unsurprisingly SpaceX is heavily dependent on outside capital, raising over $1 billion in 2019 alone. The company does make money too, though – mostly from a contract with NASA.

How are unicorn startups valued?

The value of a unicorn company is usually calculated based on its most recent round of funding. If a venture capitalist puts $100 million into a business in exchange for 5% equity, for example, they’ve valued it at $2 billion. Alternatively, sometimes unicorns are priced when they are acquired by someone bigger: for example, when Facebook bought Instagram for $1 billion.

It’s worth noting that the quoted size of a unicorn tends to be a ‘post-money’ valuation. That means it takes any recent investment into account.

But how do investors determine the value of a new business? Unlike with established companies, they’ll usually take a long-term view and focus solely on future potential. Unicorn investment is rarely tied to the profit a venture is making now – it’s all about what they can do years down the line.

Occasionally, that approach can backfire. SoftBank, a leading investor in WeWork, took a nearly $4.6 billion hit when the company failed to float in 2019.

Venture investing and unicorns

The spectacular growth in the number of unicorns in the world is partially down to a surge in venture capitalism, creating a sharp rise in the amount of private capital available for startups. The increasingly popular ‘get big fast’ strategy has also contributed. The last decade saw a push to invest heavily in companies while they are young, so that they get big fast and outmuscle potential competitors.

Some argue that venture investors are getting overenthusiastic when pricing businesses, inflating the price of startups that should be valued in the millions. Instead of carrying out proper risk analysis, they are diving in out of a fear of missing the next big thing.

Only time will tell us whether the unicorn boom is a bubble or not. If today’s big startups go on to secure significant profits for their investors, they’ll be looked back on as a smart opportunity well taken. If they go the way of WeWork, then the unicorn boom will be remembered alongside the dotcom bubble as an example of investor folly.

Unicorn companies summed up

  • A unicorn is a startup company that is worth over $1 billion
  • The world’s biggest examples today are Bytedance, Didi Chuxing, Stripe, Airbnb and SpaceX
  • Private investors can only take a position on unicorns when they choose to list

This information has been prepared by IG, a trading name of IG Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.

Act on stock opportunities today

Go long or short on thousands of international stocks with CFDs.

  • Get full exposure for a comparatively small deposit
  • Trade on spreads from just 0.1%
  • Get greater order book visibility with direct market access
Learn more

See opportunity on a stock?

Try a risk-free trade in your demo account, and see whether you’re on to something.

  • Log in to your demo
  • Try a risk-free trade
  • See whether your hunch pays off
Log in now

See opportunity on a stock?

Don’t miss your chance – upgrade to a live account to take advantage.

  • Trade a huge range of popular stocks
  • Analyse and deal seamlessly on fast, intuitive charts
  • See and react to breaking news in-platform
Log in now

See opportunity on a stock?

Don’t miss your chance. Log in to take advantage while conditions prevail.

Take advantage

Live prices on most popular markets

  • Forex
  • Shares
  • Indices

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

Plan your trading week

Get the week’s market-moving news sent directly to your inbox every Friday. The Week Ahead gives you a full calendar of upcoming economic events, as well as commentary from our expert analysts on the key markets to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

<h3>How much does trading cost?</h3>
<h3>Find out about IG</h3>
<h3>Plan your trading</h3>

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.