Early-Stage Unicorn Growth Slows Down in 2023

It’s getting harder and harder to be a young unicorn in the slowing venture market.

With overall unicorn numbers way down — fewer than 100 joined The Crunchbase Unicorn Board in 2023 — the number of new early-stage unicorns has also dropped off significantly. Only 29 unicorns were minted last year after an early-stage funding round — defined as seed, Series A or Series B — an analysis of Crunchbase data shows.

That’s the lowest total since 2019 and a 62% decline from 2022, when 77 early-stage unicorns were minted. It’s also a steep 73% drop from 2021, when 107 such unicorns were created.

Slowing pace

While the number of early-stage unicorns declined last year, it apparently got even more difficult to grow that horn as the year went on. While18 young unicorns were minted, only 11 got their horns — or $1 billion or more valuation — in the second half of the year.

Many that did get minted last year were — surprise! — AI related.

A quick look at the data reveals more than a third of all early-stage unicorns minted last year were related to generative AI in some way. Those include:

What it means

With the general decline in unicorns being minted, it is not shocking to see fewer unicorns getting minted early on in their funding lives.

Most companies are seeing their valuations significantly sliced — Bolt’s valuation reportedly just fell from a high of $11 billion to just $300 million — so young companies early in their funding years are unlikely to garner the high, perhaps unwarranted, valuations many did just a couple years ago.

Many investors are looking more deeply into companies’ financials and eyeing cash flow, profitability and sustainable growth — metrics not usually associated with companies still in the seed and early series funding range.

However, investors do seem eager and willing to still affix high price tags to all things AI — even to young companies still finding their place in the market.

Perhaps it is because AI is a truly transformative technology that will lead to one of the biggest shifts in history — or maybe they just haven’t learned from past mistakes.