Finance Professor at
@Stanford
. Founder & Director, Venture Capital Initiative at
@StanfordGSB
. Startup financing, Silicon Valley, corporate innovation
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Where Were Unicorn Founders Born?
New result on immigrants & US economy
For 1,078 founders of 500 US unicorns, I identified founders' countries of birth. Conclusion: Over four out of ten unicorn founders are first gen immigrants.
@StanfordGSB
#startups
#immigration
#unicorn
Universities in 🇫🇷France produced 46 US unicorn founders.
🥇 INSEAD leads with 10 unicorn founders.
🥈 Université Paris Dauphine, EPITA, ESCP Business School, HEC Paris each boast 3 unicorn founders.
Did these results come as a surprise to you?
#Education
#entrepreneurship
20 years at Stanford!
On July 1st 2004 I came to Stanford as an assistant professor of finance. I still remember that first drive along Palm Drive!
A big THANK YOU to all who made my life at Stanford special: my colleagues, my students, my friends, & my family!
#stanford
How quickly do startups become unicorns?
For a sample of 531 US unicorns, on average, it takes ~seven years for a startup to become a unicorn since founding. Three out of four companies became unicorns within nine years of their founding.
@StanfordGSB
Venture Capital Initiative
New research reveals that 458 non-US universities have produced at least one unicorn founder, and 45% of US-based VC-backed unicorns have at least one founder who studied or worked at a university outside the US. Check out the top non-US universities on the list! 🎓
#startup
Israel Institute of Technology graduates are 25 times more likely to become a founder of US unicorn.
Tsinghua and Reichman Universities are next with 11.3, followed by INSEAD, Ben Gurion and Tel Aviv Universities.
#theventuremindset
#israel
#unicorns
Stanford has 1.49 unicorn founders for every 1,000 undergrad students.
@MIT
(1.32) and
@Harvard
(0.97) follow. Other US universities with 10+ unicorn founders have an average ratio of 0.22. The average for all US universities is 0.03.
#stanford
#stanfordgsb
#venturecapital
Curious about unicorn founders' former affiliations? IDF professionals stand out with 3x higher odds of founding a unicorn, topping our dataset. Other notable organizations: Livermore National Laboratory, US Air Force, Howard Hughes Medical Institute, NASA.
#founders
#startups
Startup success is positively related to number of co-founders. Single-founder startups are 38% less likely to become a unicorn; 3/4-founder startups are 74% more likely. These striking results are from a large study on VC-backed startups.
#VC
#Stanford
Which university in your country produced the highest number of US unicorn founders? Check out the list of the leading universities in 20 countries. Did your alma mater make the cut? 🏫
#startup
#education
#success
#MBA
Israel-founded and US-based VC-backed startups are 9X more likely to become a unicorn than chance would allow. Other US “unicorn motherlands” are India (6.5X) and UK (2.5X). One conclusion: the most promising startups from these countries move to US.
#VC
#stanford
#startup
My Harvard Business Review article on what makes the venture mindset so unique has just been published online!
“Make Decisions with a VC Mindset” addresses the key and often overlooked issues of how to improve the quality of high-stakes decisions in any organization.
Read the
16% of US unicorns founded by
#MBA
holders studied at non-US business schools.
@INSEAD
in France leads with 8 unicorns, followed by
@CollerTau
in Israel with 6 and
@LBS
in the UK with 3. Israel leads with 12 founders, followed by
#France
,
#India
,
#UK
, and
#Australia
.
Who is Acquiring Unicorns?
Out of 396 exited US unicorns, 135 (34%) were acquired, mostly by US public companies. All acquirers of 2+ unicorns are shown.
Takeaway: Large companies are actively acquiring unicorns.
@StanfordGSB
#unicorns
#startups
#venturecapital
#acquisitions
Top US startup hubs are San Francisco, Silicon Valley, and New York, with 294, 189, and 147 unicorns, respectively. Over 15 hubs have more than 10 unicorns each, such as
#Seattle
,
#Denver
and
#Austin
. We will keep an eye on these regions. Stay tuned!
Back to school! I'm excited to start teaching the new cohort of
@StanfordGSB
students enrolled in 2 courses this quarter: Angel & Venture Capital Financing, and the Economics of Private Equity Industry with amazing co-teachers Brian Jacobs and Dipanjan Deb.
#teaching
#stanford
Excited to share I am writing a book! Coming out in May’24, published by Portfolio |
@penguinusa
The book is about how every decision maker—in any sector—can up their game and help their company reach new heights by learning from venture investors.
I have an amazing co-author
How long does it take for college graduates to found a unicorn startup? On average, it takes 11 years after graduation for 23 colleges with most unicorn founders.
@BYU
and
@UW
graduates take <6 years, while
@UCLA
,
@UCBerkeley
, and
@Technion
graduates take >15 years.
#unicorn
Two people whom I admire,
@m2jr
and Peter Ziebelman, have teamed up to write an inspirational book for the new generation of startup founders and investors, Pattern Breakers. And it is a great companion to my book The Venture Mindset, as the photograph amply shows!
Mike is a
We compared the work experience of unicorn founders and of matched random sample startup (RS) founders.
@Columbia
,
@Cornell
,
@UCSanDiego
: 3-4 times more likely to produce a unicorn founder than RS founder.
@Harvard
,
@UCBerkeley
: less likely to produce a unicorn founder than RS
Startups raising more
#capital
have a higher chance of becoming
#unicorns
regardless of rounds. 0.8% for <$20M total raised, 6.2% for $120-140M, and 5.3% for $180-200M. Note that the probability declines after 140M. Likely indicates inefficient use of funds in such
#startups
.
146 unicorns from our sample of 1,100 US unicorns have at least one founder with a graduate degree from
@Stanford
.
@Harvard
is next at 97;
@MIT
has 80.
The highest ratio of 4.6 unicorns per random sample startup, however, belongs to
@Cambridge_Uni
.
#stanford
#stanfordgsb
Responses from 120 VCs in the IT sector reveal what leads to startup failures:
👥 Team (60%)
⚙️ Industry (10%)
⏰ Timing (8%)
💼 Business model (7%)
💡 Tech (6%)
🍀 Luck (4%)
📈 Market (3%)
👔 Board (2%)
#venturecapital
#startups
#technology
I am delighted to recommend May Contain Lies, authored by my friend and a very insightful economist
@aedmans
. The book launches in the UK today and is slated to release in the US on May 14 (check out the first comment for the links to purchase the UK and US editions!)
Alex’s
#Startups
with larger seed round
#funding
have a higher chance of becoming
#unicorns
. 1.1% chance for >$100K, 2.2% for >$3.3M, 10.3% for >$12.5M. A larger rise likely gives startup heads up and
#investors
likely push
#capital
to promising startups.
A median unicorn took 7 years after founding to achieve the $1B+ status.
Unicorns from 2020/21 cohort take the same time to achieve as the pre-2020 group. Startup growth is very idiosyncratic, not just market-dependent.
#VC
#stanford
How Do Unicorn Exit?
In a sample of 531 US unicorns, 396 (75%) have exited as of Jan 1, 2022. An exit event could mean a public listing, acquisition, bankruptcy, or liquidation. Conclusion: Unicorns face a lot of outcome uncertainty. Thanks
@StanfordGSB
VC Initiative for support
Unicorn-wise, states are not created equal. The US national average: 1 out of 101 VC-backed startups are unicorns. It is much higher in UT (1/61, ~70% above average), CA (1/72, ~40% above). And much lower in PA (1/270), MI (1/476), OH (1/500), IN (1/1667).
#VC
#Stanford
Before each
@StanfordGSB
course, I study my students' profiles and am amazed by their achievements. Meeting them in person is always inspiring. Shaping their future is a great privilege. Understanding their journeys helps me connect effectively. Just one reason why I love
How Many Times Do Companies Raise Funding Prior to Becoming Unicorns?
Based on my analysis of 531 US unicorns, an average (median) company raised ~6 (5) rounds before becoming one. But there is a lot of variation.
@StanfordGSB
.
#venturecapital
#unicorns
#startups
#funding
Education is a key in the startup world! Unicorn founders are 6x more likely to hold a doctoral degree, 3x more likely to hold a master’s degree, and 2x more likely to hold a bachelor’s degree than an average US person over 25.
#unicorn
#us
#vc
#startup
Computer science (423), engineering (243) and economics (207) are the most popular undergraduate majors among unicorn founders.
Being a computer science major increases the chance of achieving unicorn status by 50%, economics by 30%.
#stanford
#stanfordgsb
#venturecapital
36% of 933 US
#unicorns
with >1 founder went to same university. Sociologists call such homophily “birds a feather flock together.” Startups with
#homophily
have higher exit values at avg $4.2B vs $3B without.
Did you know that Tel Aviv University produced more US 🦄 founders with math bachelor’s degrees than MIT!
# of US 🦄 founders among math undergrad alumni:
🇮🇱 Tel Aviv University – 9
🇮🇱 The Hebrew University - 8
🇺🇸 Harvard - 8
🇺🇸 Stanford - 8
🇺🇸 MIT – 7
More here:
Thank you to all the 200+ inspiring Stanford students who have just completed one or both of my classes, Angel & VC Financing (co-taught with
@brianjacobsvc
) and Economics of Private Equity (co-taught with DJ Deb).I look forward to staying in touch and helping you on your journey
#Tech
giants
@Google
,
@Microsoft
&
@IBM
produced 8% of unicorn founders. Top 10 firms employed 19% of 2,791 identified
#unicorn
#founders
. However, with almost 6,000 organizations represented in our records, unique backgrounds are welcome for founders. VCs, take note! 👀
Key takeaways from my paper on alumni networks & VC financing:
1⃣ 1 in 3 VC deals involve founders & partners who share an alma mater;
2⃣ This preference is driven by information advantage, not favoritism;
3⃣ Such investments lead to an IPO with a 33% higher chance.
More at
What graduate program’s students are most likely to achieve unicorn status if they found a VC-based company? Yale’s graduate program has the highest likelihood (1.8x the average). Stanford (1.4x), MIT (1.4x), Columbia (1.3x) and NYU (1.3x) follow.
#startups
#innovation
More than 1 in 6 companies in the S&P 500 were VC-backed prior to their IPO. As of June 1, 2024, 92 companies, or 18.4%, of the S&P 500, were VC-backed. The total market cap of these 92 companies was $20.5 trillion, representing 43.6% of the total cap of the S&P 500.
#vc
#tech
Stanford ranks first among all universities by unicorn production from 2017 to 2021. Stanford was top each year 2018-2021, Harvard 2017.
Stanford and MIT were in the top 5 every year, and Harvard and UC Berkeley four years out of five.
#startups
#innovation
#tech
In the last 15 years, the average unicorn’s stock price 180 days after an IPO is lower than on the first trading day by 12%. On average, investors pursuing this strategy lose money.
#startups
#venturecapital
#innovation
New study on corporate VCs (CVCs): Over 50% of CVCs have a planning horizon of <2 years; many CVCs are evaluated on a quarterly basis. Only for a quarter of CVCs horizon >5 years. US companies are more short-term. Do parents shoot themselves in the foot with short-termism?
#cvc
Unicorn Exit Valuations & Capital Raised
For 396 US unicorns exited as of 1/1/22, average (median) ratio of exit valuation to capital raised is 21 (8). Yes, valuation is over 20x to capital. 22 were valued < capital.
@StanfordGSB
#unicorns
#startups
#venturecapital
#valuation
Unicorn
#founder
dropout rate is only 4%, much lower than the national average of 36%. However, they attend universities with lower
#dropout
rates, so not much different from their peers. Exceptions exist:
@Harvard
founders are 3x more likely to be dropouts.
An average US
#unicorn
raises the first
#VC
round 7 months faster than an average random
#US
VC-backed company: 1.7 vs 2.3 years. The chances of becoming a unicorn are: 38% higher for companies raising VC round in the founding year, and 26% lower for those taking >1 year.
Together with
@will_gornall
, we have developed a framework to assess the value of private VC-backed companies. “Squaring Venture Capital Valuations with Reality” has become the most downloaded paper on my
@SSRN
page with more than 22,000 downloads:
Innovation at its peak! 🌟
7 of top 10 US firms by cap -
@Apple
,
@Microsoft
,
@Google
,
@Amazon
,
@NVIDIA
,
@Tesla
,
@Meta
(FB) - born of VC, reshaping society & economy.
Impact: $10T+ growth in a decade, 25% total. VC-backed firms = 41% of US cap, 62% of total public co. R&D
Which undergraduate programs are more likely to “produce” unicorns?
@Stanford
leads the way with 91 unicorns having founders who attended their undergraduate program. However,
@TechnionLive
has the highest ratio of unicorns per random company (19.6)
#unicorn
#undergraduate
Big public companies are the most active
#unicorn
buyers, with
@Meta
buying 5, Alphabet 4, and AT&T 3. 27 companies have acquired 2+ unicorns, responsible for over 37% of all
#acquisitions
. 56% of companies-acquirers have themselves received
#VC
funding.
60% of US unicorn founders studied in public universities.
Here's a peek at top public schools:
🎓 UC Berkeley: 115 unicorn founders
🎓 UCLA: 52
🎓 University of Michigan: 46
Princeton, Brown and Dartmouth are outpaced by 5 public universities.
Public or private? Which
Alumni connections in VC deals vary even among similarly prestigious schools. While 45% of
@harvard
-investors-involved VC deals have Harvard founders,
@MIT
sees a lower 20% of connected deals. MIT VC investors, why might this be? Share your thoughts!
#vc
#alumni
#founder
The advanced copies of the book are here! We’ve received only a small case from our publisher, and it was hard to hide a smile 😊 What a magical feeling to hold the book in your hands!
Now, we want to share this positive moment with YOU and celebrate together. Subscribe to our
Top 3 business schools by likelihood that a startup founder from that school will achieve unicorn status:
1️⃣ Columbia Business School - 3.3x more likely than average
2️⃣ NYU Stern - 2.5x
3️⃣ Harvard Business School - 1.6x
#education
#entrepreneurship
#founders
#startups
Every twelfth US unicorn was founded outside the US.
The US is the world’s immigration hub. Not just for people, but also for companies. Nearly 100 US unicorns started in another country.
Check out where the globally founded US unicorns are coming from!
#business
#startups
VC-backed companies are 8% more likely to become a unicorn if one of its founders has affiliations with one of the top 12 universities.
@Stanford
is associated with 11% of all unicorn founders, and founders connected to Stanford are 50 percent more likely than average to achieve
Almost 30% of Corporate VCs got disbanded or became inactive in the last three years. Of all S&P500 companies, 94 had active CVCs in 2020. By June 2023, 9 got disbanded and at least 20 became inactive (no investments since 1/1/22).
#cvc
#vc
#VentureCapital
#SP500
180 days after an IPO, the average absolute return on the unicorn’s stock is –10% and the median is –23%, with some companies losing over 90%. From our data on 293 US VC-backed unicorns that went public.
#business
#ipo
#unicorn
#stock
#venturecapital
Among all non-US universities, Cambridge and Oxford master’s programs have produced the most US unicorn founders: 14 and 13, respectively. Tel Aviv University ranks third with 9, and the University of Toronto claims 7.
#startups
#innovation
#technology
66 out of 3,025
#unicorn
founders have founded 2+ unicorns. The
#biotech
sector sees the most serial unicorn founders, with Richard Klausner leading the pack at 4. 3 people founded 3 unicorns & 62 people - 2 unicorns each.
#founder
#startup
#VentureCapital
#California
unicorns are different. Almost half of all
#US
unicorns are based in CA. These companies exit at a higher
#valuation
($4.2B vs $2.6B avg) and have a higher chance of going public (54% vs 50%).
Post-IPO returns of US unicorns are negative, average of -11%.
There is a huge variation, with some dropping by 94% and others increasing by 108%. 30% have positive returns. Energy sector has highest avg. return at 20%, B2B unicorns have avg return of -62%.
#vc
#us
Top Business Schools for Unicorn Founders!🎓🦄
208 unicorn founders earned MBA degrees from (2000 to 2015), 85% in the US. Avg. 1.65 unicorns per 1,000 students from top 11 schools, just at 0.02 for all others. Standouts:
Stanford - 4.2 per 1,000 🏆, Harvard - 2.9 🥈,
MIT Sloan
Confession time: I wear a different tie for every session of my
@Stanford
courses on venture contracting, startups, and innovation! Some ties only come out every few years. Apply to
@StanfordGSB
to see them (or follow for future tie pics!)
A startup's chances of becoming a
#unicorn
increase with the amount raised in Round A, similar to Seed Round. The result is economically significant for both small and large cheque sizes. Further
#research
is needed to establish causality.
Future
#unicorns
consistently raise more money than matched Random Sample
#startups
at all stages, from seed to later rounds.
Potential explanations:
- funding helps win the competition;
- quality signaling.
Honored to have been one of the ENCORE committee members to have awarded Nvidia the 2023 Stanford GSB Entrepreneurial Company of the year award!
Nvidia’s CEO Jensen Huang is one of the most venture-minded CEOs I have ever met.
#ceo
#vc
#company
Roughly 1/6 of the 608 US unicorn founders who got their undergrad degrees outside the US did so in Israel.
Israel Institute of Technology has the best odds ratio of a graduate achieving unicorn status, 21.
Reichman University is next at 10.5; The Hebrew University 5.9.
32 unicorns canceled their IPOs (out of 246 that went public).
This is what happened to them subsequently: 20 were acquired, with 15 at >$1B. 7 went public, 3 went out of business, and 2 are private as of 02/22.
@StanfordGSB
#unicorns
#startups
#venturecapital
#ipo
Founders in their 30s have a 1% higher than average chance of achieving unicorn status. Those in their 20s have a 6% higher chance. Other age groups are less likely: 50s and teens have a 25% lower chance, and 40s have a 17% lower chance.
#vc
#startups
#founders
#unicorns
Healthcare startups are vital for innovation and the economy. Among US VC-backed unicorns, 126 founders hold medical degrees (MD or medical PhD). Among med schools, Stanford leads with 11 founders, Johns Hopkins 10, Harvard 7.
#medschool
#vc
#unicorn
For each state, we aggregated the post-money valuations of companies at the time they became unicorns — either as private companies or upon an "exit". CA leads — almost $680 billion, six times that of the second place (NY) and eight of the third (MA).
#unicorn
#vc
#venturecapital
Race/ethnicity of
#startup
founders doesn't significantly affect chances of becoming a
#unicorn
, except for all-Asian teams, who have a slightly higher chance. Black and Hispanic founders are underrepresented, and equal representation would lead to 400+ more unicorns worth $1.5T.
Unicorn exit valuations vary widely, w/ many under $1B & some over $10B. Exit type also affects valuation, w/ direct listings having highest mean of $11B. IPOs, Acquisitions, SPACs & Out of Business follow w/ $4, $2.5, $2, & $0.04B respectively.
#unicorn
#valuation
#finance
How Different Are People in Corporate and Institutional VC?
Quite different. Amanda Wang and I identified 306 investment professionals working at 74 CVCs. We then matched CVCs with IVCs and 336 partners there.
Thanks to
@StanfordGSB
#CVC
#corporateinnovation
#venturecapital
Early
#funding
rounds for VC-backed
#startups
often spell the end, with over 50% failing after Seed/Series A. Only 1 in 10 survive to Round D.
#Unicorns
, on the other hand, raise multiple rounds, with 95% reaching Round B & 40% reaching Round E.
#vc
MIT Sloan Management Review has just published my article on corporate VCs: “Steer Clear of Corporate Venture Capital Pitfalls.”
We discuss practical dos and don’ts on how to get corporate venturing right.
A must read for every corporate executive and each VC.
Read the article
Which undergrad programs produce the most unicorn founders? Out of 2,639 founders of US VC-backed unicorns, 30% graduated from top 20 colleges.
@Stanford
leads with 121,
@MIT
follows with 86,
@Harvard
is third with 73. Two Israeli universities also made the list.
One of the takeaways from
@StanfordGSB
VC class: venture capitalists are accustomed to hard and unglamorous work. Founders must put themselves in the shoes of a VC, know the questions they may ask, and identify their own weak spots. Check other takeaways:
An exciting milestone! We have expanded our database beyond U.S. unicorns. 🌐🦄. We are now following 1,698 global unicorns to analyze international trends, make cross-country comparisons, and keep up with the global entrepreneurial landscape. Share your research ideas with us!
What is the Post-Money Valuation (PMV) at Unicorn Round?
For 531 US companies, an average (median) PMV is $1.7B ($1.3B) at unicorn round.
~a third had PMV <$1.1B. NB: In private rounds, almost always PMV < fair market value.
@StanfordGSB
#unicorns
#venturecapital
#startups
Over half of US unicorns (54%) have exited as of Mar 2023 via public listing, acquisition, bankruptcy or liquidation. IPOs are the most common exit (52%), followed by acquisition (30%). Some also exited via SPAC (14%) or direct public listing (6%). Only 3% failed outright.
The age of unicorn founders at IPO can range widely, from 23 to 85!
The average founder age at IPO is 45.
Justin Waldron, Zynga co-founder, was 23 when the company went public.
William Davidow from Berkeley Lights and Rodney Perkins from Procept BioRobotics were both 85.
Startup location matters. 15% of US unicorns changed HQ between founding and securing $1B+ valuation. CA, NY, MA & TX were popular choices. Recently, CA startups move to TX, FL & NV.
#ca
#ny
#ma
#tx
#fl
#nv
#us
#unicorn
#startup
Tech unicorns on average gave IPO investors the highest returns: 66% average and 26% median return 180 days after an IPO. However, the investors who bought IT unicorn stocks at the end of the first trading day lost 2% on average.
#stanfordgsb
#venturecapital
#startups