AI, cybersecurity topped unicorn leaderboards in 2023

Cybersecurity and AI were the top-performing industries for unicorn companies in 2023, defying a difficult fundraising year that saw many startups slash their valuations.

According to the Morningstar PitchBook Global Unicorn Vertical Indexes, the value of cybersecurity unicorns grew 24.3% and AI unicorns grew 22.9%. The indexes provide daily valuation estimates using a model that incorporates prices for private startups and comparable public companies.

Our index of global unicorns, which tracks the overall performance of all VC-backed startups valued at over a $1 billion, rose 12.77% in 2023. Despite this performance, only 81 companies achieved unicorn status last year, a decrease from 330 companies in 2022.

Cybersecurity’s success can be attributed to companies like Wiz hitting a $10 billion valuation in February, Keyfactor notching a $1.3 billion valuation in November and Prove Identity surpassing a $1 billion valuation in October. The continued rise of public cybersecurity companies like Palo Alto Networks and CrowdStrike also contributed to the index taking the top spot.

Of all the new unicorns last year, 44% were AI and machine-learning specialists, riding a wave of interest in generative AI. Blockbuster fundraising pushed these unicorns to new heights: Inflection AI raised $1.3 billion in June, and Anthropic landed a $4 billion investment from Amazon in September. OpenAI secured a $10 billion investment from Microsoft at the beginning of 2023.

Agtech was the worst-performing unicorn index in 2023, declining more than 20%. Two companies included in the index, Bowery and Indigo, were major contributors to the downturn as both have seen valuations plummet.

Indoor farming specialist Bowery conducted multiple rounds of layoffs as Fidelity, one of its leading investors, wrote down the value of the company’s shares by 85%. Boston-based Indigo, a crop protection specialist, also reportedly saw its valuation drop substantially, although it raised $250 million in August.