There has been much discussion about the high valuations of venture backed companies, and especially the “unicorns”, companies with a valuation of a billion dollars or higher.
However, as the investors in these companies generally receive preferred stock, rather than the common stock that is issued in IPOs and held by public company investors, unicorn valuations are not directly comparable to public company valuations.
To better understand unicorn valuations we analyzed the terms of 37 US based venture backed companies that raised money at valuations of $1 billion or more in the 12 month period ending March 31, 2015.
The average valuation of the companies we analyzed was $4.4 billion, the median valuation was $1.6 billion, the average percentage increase per share from the prior financing round was 180%, and the median percentage increase per share from the prior financing round was 100%. Of these financings, approximately 25% were led by traditional VC investors and approximately 75% were led by investors who were not traditional VCs (e.g., mutual funds, hedge funds, sovereign wealth or corporate investors).