MA Thesis

Determinants of the Startup Value: What Makes a Startup a Unicorn



Published in:

Kyiv School of Economics


determinants of the startup value

Today, there are many methods of investing your own savings available. Even ten years ago, buying shares on the stock exchange or investing in startups seemed like something very distant. Now, thanks to interactive online platforms, anyone can feel like an investor or shareholder. This openness has led to a boom in investment, including venture capital. And as a result, a record increase in the number of billion-dollar startups, the so-called unicorns. In the first five months of 2021, 166 new unicorns have already appeared. This is more than for the whole of 2020 and is very close to the record 2018 when 173 of them appeared. Considering that this is the result in less than half a year, it is highly likely that this year will be a record year for the number of new billion-dollar companies. In addition, the time it takes for a startup to reach a billion-dollar value has also changed. The venture capital market is looking more and more long-term, so interesting business models are getting high marks much faster than they used to be. So in May 2021, the PIPE startup raised a new round of investments valued at 2 billion. Everything would be usual, but it was founded in 2019, and the service was launched in the middle of 2020. A year after the end of work on the product, the startup is already worth 2 billion. Also, a great example is the new social network Clubhouse, officially launched at the end of 2020. In April 2021, the company attracted a round of 4 billion valuation, phenomenal growth. Considering that startups are growing faster, the number of unicorns is breaking records, and venture capital investments are booming, an obvious question arises - how to make money on this and how to comb out a unicorn at an early stage, investing tens of thousands at the exit to get tens of millions?