North American landscapes are favored by unicorns.

In a groundbreaking analysis, Jochen Butz and investment manager Kay Gallus of HQ Trust have delved into the dynamic world of unicorns – startups valued at over $1 billion – and the impact of Initial Public Offerings (IPOs) on their exit activity.

The study, which focused on the past few years, reveals that IPOs have become the primary exit channel for these high-valued companies. This trend is particularly evident in the US, where over 70 new unicorns emerged in 2020 alone, contributing to a global total that grew from 75 to over 650 in the same period.

Interestingly, the majority of mega-deals, those valued at $10 billion or more, are concentrated in North America and Asia, which have produced over 85% of the world's unicorns. Europe, however, lags behind in the production of unicorns compared to these regions.

The analysis also sheds light on the venture capital market, indicating that companies achieving high valuations are held longer in portfolios compared to the early 2000s, with holding periods stabilizing at around ten years between founding and IPO.

However, the success rate in venture capital investments remains modest. On average, 65% of all deals return less than the invested capital. This underscores the importance of investing in the best venture capital managers, as it can lead to a higher number of successful investments and more monetarily successful investments.

Non-traditional investors, such as sovereign wealth funds and investment banks, are increasingly involved in the largest transactions, a trend that is likely to continue shaping the landscape of unicorn exits.

The analysis examined venture capital transactions in the major investment regions: the US, Europe, and Asia. The findings of the analysis were summarized by Kay Gallus, who also provides insights into the venture capital market.

Despite the growth in the number of unicorns, the search results did not provide the name of an investment manager who works together with Jochen Butz at HQ Trust and has analysed the development of unicorns in recent years.

In conclusion, the robust IPO environment is significantly impacting future exit activity for unicorns, with the trend showing no signs of slowing down. As the world of unicorns continues to evolve, it will be interesting to see how these trends develop in the coming years.