Unicorn Financings – First Half 2018

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Background

We analyzed the deal terms of 83 financings for privately-held, U.S.-based companies valued at $1 billion or more—known as unicorns—that raised money in 2017 and the first half of 2018. We included comparative data covering unicorn financings from 2014 through 2016, finding that while deal volume in H1 2018 has rebounded from depressed 2016 levels, and venture deals continued to grow in size with an increasing concentration of investment dollars into a fewer number of companies, the average amount of capital raised has decreased compared to 2016.

Key Findings

Number of 2017 Financings Rebounds Over 2016, Continues Pace in 2018

• Deal volume through H1 2018 is on pace to match levels reached in 2017, a year when unicorn financing activity rebounded from depressed 2016 levels.
• However, the amount of capital raised has declined in H1 2018 compared to H1 2017.

Average Financing Amount Declines

• The average amount of capital raised in unicorn financings decreased in 2017 compared to the prior year, and continued to decline in H1 2018.

Percentage of Up Rounds Increases

• After a prolonged decline starting in the last quarter of 2015, the percentage of up rounds increased throughout 2017.
• There continue to be very few down rounds.

Dual-Class Common Stock Financings See Uptick

• Dual-class common stock structures have become more prevalent in recent years, especially among tech unicorns.

IPO Downside Protections on Upswing

• IPO downside protections, and blocking rights in particular, were used much more in 2017 and H1 2018 than in prior years.

Upside Benefits Increase

• The percentage of unicorn financings that provided investors with IPO protection above the unicorn round price increased in 2017 and H1 2018 compared to 2016.

Download the full report covering top-line trends for unicorn financings from 2014 through H1 2018.

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