Only 1 in 6 unicorns are true IPO candidates today

Centaurs can go public as soon as the IPO window opens. Unicorns could wind up nowhere

There are more than 1,000 private companies with billion-dollar valuations backed by venture capital that need to go public. Fewer than one in six are IPO candidates, however.

Data from Bessemer Venture Partners’ State of the Cloud 2022 report breaks the unicorn market into two categories. (Notes here on TechCrunch+ from Bessemer partner Mary D’Onofrio.)

The first comprises unicorns that have reached the $100 million annual recurring revenue (ARR) threshold, which Bessemer dubs “centaurs.” The other group contains unicorns that have not yet reached that revenue marker.

Per Bessemer, the number of centaurs is growing over time — last year, we had 60 companies cresting the revenue benchmark, up from around 40 in 2020 and 35 in 2019. Those numbers may appear impressive, but when contrasted with the fact that more than 500 unicorns were minted last year, there is a yawning gap between companies valued as IPO-ready and those that actually are.

Doing some loose math, 60 companies reaching the $100 million threshold last year compared with 520 new unicorns works out to around 11.5%, or fewer than one in eight. However, Bessemer estimates that there are 150 private startups with $100 million in annual recurring revenue or similar, out of around 1,000 unicorns, meaning that around 15% of unicorns have met the mark — just under one in six.

(For reference, I am using $100 million as an IPO-ready revenue benchmark, which I don’t think will prove controversial, and $1 billion as a valuation indicative of public-market scale value, which, again, should not engender too much argument. More on both in a moment.)

How did we wind up with so many unicorns and so few IPO-ready private technology companies with IPO-scale valuations?