Unicorn Startups in 2024: AI Is Taking Over

Unicorns, defined as privately owned companies, valued at over $1 billion, are no longer such a rare sight. AI startups, in particular, are now quickly growing and reaching impressive success shortly after being created.

OpenAI, the San Francisco-based company behind ChatGPT, is currently worth $80 billion, making it the world’s third-largest unicorn startup by market valuation after ByteDance and SpaceX.

The huge AI hype of the past 2 years, along with the fact that OpenAI is now the third largest privately held company in the world motivated our team at BestBrokers to analyze the most recent dataset on Unicorn startups from CB Insights.

We wanted to see what kind of companies managed to enter this mythical group in 2024 and discovered that out of the 28 startups that have reached Unicorn status this year, 12 or nearly 43% are AI ones. Additionally, 8 are Fintech- or Crypto-focused businesses.

Artificial Intelligence Taking Over the Unicorn Herd in 2024

Many of the private companies reaching unicorn status this year are, unsurprisingly, AI startups. Of the 28 companies that saw their market value surpass $1 billion by the end of May 2024, 12 are either developing artificial intelligence systems – generative AI, large language models, etc. or are at least heavily implementing them into their main products and services.

One of these is Sunnyvale-based Figure, developing general-purpose humanoid robots. The company was launched in 2022 and after raising $854 million in venture capital and angel investor funding from the likes of Intel Capital, OpenAI Startup Fund, Bezos Expeditions and the Amazon Industrial Innovation Fund, it is already worth $2.68 billion.

Another interesting AI unicorn is Cognition AI, a company from San Francisco, which has created AI software that functions as a software engineer. This is AI, which can code and potentially develop new AI on its own one day. The company was founded in 2023 and so far, it has raised $196 million. Its market value is estimated at $2 billion.

Perplexity.ai is one of the latest additions to the AI Unicorn herd. The company, threatening Google’s monopoly on internet search, has raised another $62.7 million in its fourth round of funding, surpassing $1 billion in valuation in April 2024.

The largest privately held companies in the world

The number of privately held Unicorns reached 1,241 in May 2024, with Chinese social media giant ByteDance leading the chart by market valuation. The company behind TikTok is followed by U.S.-based spacecraft maker SpaceX and the company that brought AI to the masses – OpenAI. These are the other companies that make up the list of the 10 most valuable Unicorns as of May 2024:

Which countries are home to the most Unicorns?

The United States has more unicorns than any other country and this has always been the case. In 2024, the U.S. is home to more than half of all unicorn startups, 662. Interestingly enough, many of these companies were started by immigrants or were started elsewhere but later relocated to the U.S. SpaceX, Databricks, and Stripe are just a few examples.

The U.S. is responsible for 662 unicorns with a combined worth of more than $2.153 trillion, followed by China with 169 unicorns valued at $641.7 billion, and India, which is home to 71 unicorns worth $192.24 billion.

Silicon Valley, New York and Beijing – The Unicorn Capitals in 2024

Location is one of the most important things to consider when starting a business; not only because of the potential customer base, local infrastructure and supply chains. According to recent research cited in the Wall Street Journal, startups’ odds of success increase in tech hubs. This is especially true for companies located or moving to Silicon Valley, which has an “entrepreneurial ecosystem” according to researchers.

So, it is hardly surprising that San Francisco is the world’s unicorn capital. It is home to 175 of these businesses, particularly those in the Enterprise Tech industry. Many of today’s hottest Fintech, crypto and AI startups have their quarters in or outside San Francisco. New York follows with 118 unicorns, Beijing ranks third with 65, London is in fourth place with 42 unicorns, and Shanghai is 5th with 38.

Why Do Companies Stay Private?

Not many companies manage to reach a valuation of $1 billion or more. Those that do will sometimes go public through an IPO or acquisition, but many company founders find staying private an enticing option for many reasons. On average, companies remain unicorns for eight years, according to a 2023 analysis by Ilya Strebulaev and the Venture Capital Initiative at Stanford.

It is a common misconception that companies’ founders prefer private to public companies so they can keep their finances private. While this is a valid reason that hardly needs an explanation, there are many other factors in play. Those who choose to remain private can exercise greater control over their business; they have more autonomy and answer to fewer shareholders. Of course, there are also fewer requirements for reporting whereas public companies in the United States, for instance, are subject to the rules of the Securities and Exchange Commission (SEC).

Until a couple of decades ago, IPOs or initial public offerings were the best way to raise capital. However, now many businesses are turning to venture capital funds and the private market. This allows them to choose their investors rather than sell shares to the public, which inevitably means having to meet shareholders’ high expectations.

If we look at the specific years when companies reached a $1 billion value, it becomes clear that the past couple of years have not been the best for private companies. The year 2021 was when the most unicorns were born, 502 across various industries. Then, in 2022, another 255 private companies reached $1 billion value. Since then, the number of new unicorns has been falling – 69 startups joined the list in 2023, and by the end of May 2024, only 28 companies earned the prestigious status.

Bear in mind that these figures do not reflect the total number of unicorns around the world. They simply show how many privately held companies reached a market value of $1 billion or more.

Methodology

To visually represent the current state of unicorns, the team at BestBrokers analyzed raw company data from the business analytics platform CB Insights. We looked at figures as of May 2024 and grouped the unicorns in the database by country, industry, and valuation. Note that the statistics are updated regularly and changes might occur.

Companies that reached Unicorn status in 2024 – Raw Data

* Data as of May 2024

Unicorn Startups in 2024: AI is taking over