On 101 Y Combinator unicorns

Valuations

As I’ve discussed in the past, startup valuations tend to follow a steep power-law curve and the latest Top Companies are no different.

Age

Venture investing is a long-term endeavor, as we can see when we break down YC unicorns by their batch year:

Geography

Most investors have certain geographic targets, constraints or expertise, so it’s important for us to understand which geographic regions YC Top Companies tend to hail from.

  • North America, and particularly Silicon Valley as we’ll discuss below, is responsible for the vast majority of YC unicorns and minicorns
  • Part of what made 2016 so special was its international unicorns
  • Asia (particularly India) and LATAM are responsible for most of YC’s international success
  • International YC startups tend to take longer to mature from Top Companies to unicorns (if they do at all) as evidenced by how much more colorful the minicorns chart is compared to the unicorns chart
  • New York (6% of unicorns and 9% of minicorns)
  • Los Angeles (3% of unicorns and 4% of minicorns)
  • Bengaluru, India (3% of unicorns and minicorns)

Industry

If we look at unicorns and minicorns by industry side-by-side, we can see clearly which startup technology sectors are most up-and-coming:

  • Financial technology (aka ‘fintech’) is the second most dominant sector (21% of unicorns and 16% of minicorns)
  • Consumer is the third most dominant unicorn sector (8%) but healthcare beats it out for the minicorns (9%)
  • The major new emergent sectors for the minicorns are machine learning (8%) and marketplace (7%), so I’d expect to see disportionately more unicorns in these sectors in coming years

Conclusion

While no amount of data analysis can replace the trained eye of an experienced investor, it’s a useful way of overcoming individual biases and understanding objectively which factors tend to be correlated with YC startup success.

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Jared Heyman

Jared Heyman

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Tech guy and investor. Founder at Rebel Fund and previously Pioneer Fund. Chairman of Infosurv and CrowdMed (YC W13). Former Bain consultant. Data nerd.