3 Things Founders & VCs Should Know About Building Billion-Dollar Startups During Market Uncertainty

  1. Short-term secular market cycles don’t appear to have a major impact on the number of billion dollar startups formed in a given year. In fact, the total number of billion-dollar startups remained relatively consistent during the Financial Crisis and its recovery.
  2. There are meaningful differences in the number of consumer vs. B2B unicorns formed, with B2B consistently outnumbering consumer unicorns across periods. However, when a startup was formed in the market cycle doesn’t appear to have a big impact for either B2B or consumer companies, reflected in the relatively stable number of each formed between 2006 and 2012.
  3. The startup and venture capital markets appear to follow their own cycle due to the longer-term return profile of the asset class, which may explain the muted impact of the market cycle itself on the formation of billion-dollar companies.
  1. During the Crisis and its recovery, there was little deviation in formation across the periods for B2B unicorns.
  2. For Consumer Companies, there was a slight increase during Bad and Stable Times, and a slight decrease in Good Times and Recovery Times.
  3. B2B Unicorns consistently outnumbered Consumer Unicorns by almost 2 to 1across periods in the Crisis and its recovery.
  4. There were a larger number of public unicorns formed at the beginning of the period, but we believe this reflects time to IPO, rather than any impact of the cycle itself.

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