 | | (Jenna O'Malley/PitchBook News) | | | Nearly a decade after the term "unicorn" was coined, venture capital's best and brightest companies may have finally outgrown what the ecosystem can sustain. Their rise was a product of business models that engineered growth with cheap money, and the financial conditions that made this model possible have changed profoundly.
Starting in 2021 and continuing for much of this year, the top 10% of US startups could reliably expect a unicorn valuation. Not anymore. The rate at which new unicorns are being formed globally has dropped precipitously after a truly exceptional 2021, in which 584 VC-backed companies secured a valuation of $1 billion or more.
Flush with cash from recent boom times, unicorns have avoided down rounds and are extending financial runways by cutting costs. Serious damage has been limited to a small handful of companies, but Klarna's 85% valuation haircut earlier this year showed how tenuous these former valuations can be. For now, these companies are in a kind of limbo, increasingly shunned by the crossover investors they rely on for cash and unable to access public markets.
A new suite of indexes from PitchBook and Morningstar captures how resilient unicorns have been, but all signs point to a coming reckoning. The population of unicorns, which symbolizes a fantasy of perpetual growth, may soon shrink.
This is The Weekend Pitch, and I'm James Thorne. You can reach me at james.thorne@pitchbook.com or on Twitter @jamescthorne. | | | | | | | |
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Capital returns for funds investing in real assets reached a post-global financial crisis peak in the year ended Q1 2022. What level did rolling one-year IRR for real assets—including oil and gas, infrastructure, agriculture, metals, and timber—reach?
A) 45.9%
B) 22.5%
C) 17.3%
D) 7.6%
Find your answer at the bottom of The Weekend Pitch! | | | | | | Trouble may lie ahead for European VC valuations | |  | | (Dancing_Man/Shutterstock) | | | European pre-money VC valuations across all stages are still pacing above the records set in 2021, but their upward trend may not last.
Down rounds are becoming more frequent and reports of layoffs and cost cutting are still surfacing. While startups may be absorbing falls internally via reduced revenues and growth rates, if market conditions continue, median valuations may be affected.
PitchBook senior analyst Nalin Patel dives into the state of European VC valuations in Q3 in this recent report. | | | | | | PE, VC buffeted but unbowed | | As VC and PE investors battle macro headwinds in 2022, the dealmaking opportunities have gone to those who can tame the turbulence. Who led the pack in Q3 to discover the opening in the clouds?
The latest edition of our interactive Global League Tables sheds light on the most active private market investors. Explore them all by region, industry, deal type and more—along with rankings for advisers, acquirers and law firms. | | | | | | Keep an eye out for these insights and research reports coming out this week. - Q3 2022 Allocator Solutions
- Q3 2022 Emerging Tech Indicator
- Q3 2022 Agtech Public Company Comp Sheet and Valuation Guide
- Q3 2022 Global Private Markets Fundraising
- Q3 2022 AI & Machine Learning Update
- Analyst Note: Introducing VC Growth
- Q3 2022 Retail Fintech Report
- November 2022 Global Markets Snapshot
| | | | | |  | | (Kodda/Getty Images) | | | Answer: B)
Rolling one-year IRR for all real assets funds hit 22.5% through Q1 2022. For oil and gas funds, one-year IRR was 45.9%, for infrastructure funds it was 17.3%, and for metals, timber, and agriculture it was 7.6%. | | | | | |
This edition of The Weekend Pitch was written by James Thorne and Chris Noble. It was edited by Chris Noble and Sam Steele.
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