Ask Georges: How has geographic distribution of unicorn startups changed over time?

By Vinay Iyengar and Lauren Xandra on November 10, 2022

In 2013, 70% of startups worldwide with a valuation of $1B or more, or “unicorn” startups, were based in the United States. As we approach 2023, the U.S. is home to just over half of unicorn startups globally, reflecting what we see as a unique inflection point, with more opportunity and reward for great ideas that come from anywhere.

Our take:

It’s no longer a race between the U.S. and China. One of the biggest drivers of unicorn startups’ proliferation is flow of capital.  China’s share of unicorn startups was steadily rising until 2018, when the gap in share between the U.S. and China narrowed to roughly 10 percentage points. However, that gap has since significantly widened, with China’s share of unicorn startups down to less than 20%, coinciding with COVID-19 lockdowns and the resulting economic fallout.

It’s a race between the U.S. and everywhere else in the world. From 2018 to 2021, the number of unicorn startups emerging around the world surpassed the number of unicorn startups in the U.S. Here is what the unicorn startup breakdown looks like in other countries around the world:

India is becoming the world’s fastest-growing unicorn startup ecosystem, following the U.S. and China. India is home to nearly 1/4 the number of unicorn startups as China today. In 2022, the Indian startup economy crossed a significant milestone as it added the 100th Indian startup to its list of unicorns.

Although the U.K. is still ahead of other unicorn startup hubs such as Israel, Canada, and Brazil, its recent downward trend line suggests the next ten years could look very different. Consistently, we have seen a correlation between the amount of early-stage funding into a region and the number of unicorn startups that emerge. Research by Tech Nation and Google for Startups found that in 10 years (from 2011 to 2021) seed and pre-seed venture capital investment in the U.K. fell from 15% to only 4.8% of the total tech investment mix, running the risk of stifling future tech leaders. This is especially important in light of increased global competition. Take for example how only within the past few years, Brazil entered the mix as a leading center for unicorn startups.

Impactful businesses are being built all over the world at record pace. Some of the common traits of unicorn startups are their ability to exploit unknown market niches and serve end users with a disruptive alternative that meets their needs. At Two Sigma Ventures, we’re thrilled to support startups who are pursuing those same ambitions in unique ways, all over the world–from Nelo* helping to usher in a new era of mobile payments in Mexico, to Remote* making it easier to hire great people, everywhere.

The above analysis was created for our Ask Georges series, where Georges Doribot, our AI team member and proprietary research tool, helps us unpack key trends in the startup landscape.

Thanks for reading. But please don’t just read. Respond and disagree; join us in asking “what if’s” and “why not’s”, and in directing any questions for Georges here.

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