No company reaches unicorn status without outside help, which typically comes in the form of equity funding. This form of financing allows companies to raise capital through the sale of equity or preferred equity in their company to external investors. Unicorns based in Asia Pacific and North America received the lion’s share of funding given to unicorns worldwide. Certain industries also tend to attract more equity funding than others. As of January 2020, unicorns operating in the transportation and logistics, and finance, insurance and real estate sectors received almost half of the total equity funding given to unicorns globally. Ant Financial and Didi Chuxing both raised 18.5 billion U.S. dollars in capital, making them the most successful current unicorns in terms of equity funding volume.
The end game for any investor is to see a return on investment (ROI), and the world of funding unicorns is no different. With unicorns being valued so highly, the dream is to see the highest valuation change from the point of funding to the point of exit. For unicorns to de-horn and join the rest of the herd there are two strategies. The first, and by far the most popular, route is through Initial Public Offerings (IPOs). The other way that a billion dollar plus company can exit the unicorn club is through being acquired by another company. It is safe to assume, as the number of unicorns has risen over time, so has the number of exits. The largest exits ever involving a unicorn was the IPO of the Chinese e-commerce, retail, internet and technology giant Alibaba in 2014.
