Private equity data collector Pitchbook is out with a fascinating look at which unicorn companies were the fastest to $1 billion in valuation and which were the slowest.  (For newbies, a unicorn company is one with a private valuation of $1 billion or more).

Before taking a look, which 10 companies would you guess show up on the top 10 fastest?  Which would you guess show upon the top 10 slowest to a billion?

Fastest to $1 Billion

The fastest company to unicorn status is Desktop Metal.  It took Desktop Metal 1 year and 9 months to reach unicorn status since its founding in October 2015.  Along the way, Desktop Metal raised about $277 million from venture capitalists.

In second place is Grail, a biotech firm developing an early cancer detection test.  Grail also took 1 year and 9 months to reach unicorn status since its founding in January 2016, raising $1.3 billion along the way.

In third place is Essential, a manufacturer of smartphones and mobile phone accessories.  It took Essential 1 year and 11 months to reach a $1 billion valuation since its founding in November 2015, raising $330 million along the way.

In fourth place is Letgo, an online marketplace for buying and selling used goods.  It took Letgo 2 years from January 2015 to reach unicorn status, acquiring $475 million in venture capital funding along the way.

In fifth place is Zoox, a provider of self-driving vehicles and control systems.  Zoox took 2 years to reach a unicorn valuation since its founding in July 2014, amassing a valuation of $3.5 billion and $302 million in venture capital funding en route to unicorn status.

The bottom five members of the top 10 include Katerra (2 years and 1 month, $1.1 billion in venture capital funding); Illumio (2 years and 3 months, $267 million in venture capital funding); Instacart (2 years and 4 months, $1 billion in venture capital); Opendoor (2 years and 8 months, $320 million in venture capital funding); and Airbnb (2 years and 11 months, $3.4 billion in venture capital funding).

racehorses Source: Pitchbook

 

Slowest to $1 Billion

Shifting to the tortoises, the companies that took the longest to reach unicorn status.

The top tortoise (or bottom, depending upon your perspective) is Vice, a digital media company.  It took Vice 19 years to reach a unicorn status after its founding in 1994.

In second place is Intarcia, also taking 19 years to reach a $1 billion valuation.  The developer of medical technology therapies that target chronic diseases raised $1.4 billion since its founding in 1995.

In third place is SMS Assist, taking 17 years to reach unicorn status after amassing $259 in venture capital funding since its founding in 1999.

In fourth place is Xavidxchange, an invoice automation and bill payment processing software.  Xavidxchange was founded in 2000, and didn’t reach unicorn status until 2017, garnering $568 million in venture capital funding along the way.

In fifth place is Proteus, a digital feedback system intended to monitor health.  It took Proteus 16 years since its 1998 founding to attract $388 million in venture capital funding and eventually reach its $1 billion valuation.

The bottom five members of the tortoise club include Deem (15 years), Medallia (14 years), MarkLogic (14 years), Payoneer (12 years), and Unity (11 years).

Tortoises Source: Pitchbook

 

Conclusion

Overall, Pitchbook provided an interesting view of the companies that took the longest to reach unicorn status and the companies that reached $1 billion in valuation the fastest.

{ 0 comments }

This past week Pitchbook released a fascinating look at CEO pay relative to employee pay for private companies backed by private equity (PE), venture capital (VC), or corporate venture capital (CVC).

If you follow politics and the newest rule changes on requirements for public companies, you know that beginning this year public companies are required to release data on the pay of their chief executives relative to the typical employee (median pay).

The Pitchbook study plays along with this requirement, but instead of focusing on public companies, Pitchbook’s study focuses on, as just mentioned, CEO pay relative to the median employee pay for companies backed by PE, VC, or CVC.

Take a Guess

Before looking, take a guess at what the ratio of CEO pay to median employee pay is at PE, VC, and CVC-backed companies.  Would you guess a ratio of 5?  That would mean that for a company with a CEO making $1 million per year, the median pay for an employee would be $200,000.

CEO Pay to Median Employee Pay with All Employees Included

The following is the first look at the figures.  Perhaps surprisingly (presuming you’re one of those individuals that thinks CEO pay is astronomically higher than non-CEO pay), the ratio of CEO pay to median employee pay at PE, VC, and CVC-backed companies is far from the 5 ratio suggested previously.  Instead, at the median, the typical CEO earns about $300,000 per year while the median employee pay is about $150,000.  This is a CEO/median employee pay ratio of 2.

Interestingly, at the maximum, the CEO pay to median employee pay ratio is on the low end at about 1.8 ($1.1 million/$600,000).

pic1 Source: Pitchbook

CEO Pay to Median Employee Pay with Non-Director Employees Included

In addition to the traditional reporting – i.e. including all employees – Pitchbook also released figures on the compensation of CEOs compared to non-director employees.  Unsurprisingly, the ratios are larger with this comparison. As reported in the following figure, the median ratio is about 3.8 ($300,000/$80,000).  This is a fair bit larger than the CEO pay to all employees median pay of 2.

Perhaps even more interesting than the jump in the pay ratio at the median is the pay ratio difference at the maximum.  For private companies backed by PEs, VCs, and CVCs, the ratio reported by Pitchbook comes out at about 5.5 ($1,100,000/$200,000).

If one believes some of the figures reported by public companies, the average CEO pay to median employee pay for public companies is a massive 204.  Perhaps it is beneficial to have PE, VC, and CVC backers?  Individuals running PEs, VCs and CVCs generally have a stronger incentive to control costs associated with corporate executives.

pic2 Source: Pitchbook

Conclusion

In an interesting look at CEO pay to median employee pay at companies backed by PEs, VCs, and CVCs, Pitchbook’s reported figures suggest a much lower ratio of CEO pay to median employee pay compared to public company ratios.  Why this is so is a topic for another day, but it does suggest some interesting dynamics in play when it comes to executive pay at public companies compared to private companies.

{ 0 comments }

A couple of weeks ago we looked at ranking areas close to the San Francisco, California area according to the amount of investment from venture capital (VC) investors and the return (based on the median return on invested capital).

This week we are looking at the same two numerical rankings – amount of attractive VC investment and median return on investment capital – by U.S. cities.

Attracted Investment Capital

Before looking, which city would you guess comes out on top for attracted investment capital?  You probably guessed the San Francisco-Bay area as the top place for venture capital dollars and you’d be right.  According to Pitchbook, the San Francisco-Bay area attracted a whopping $144 billion from 2010 to 2017, far ahead of second place.

Of course, anyone with any knowledge of the early-stage investing world knows that the San Francisco-Bay area dominates the funding world.  The harder part is guessing the other top 15 metropolitan areas.  Can you guess second place?

Perhaps not surprising, the second place area for venture capital money from 2010 to 2017 was the New York-Newark-New Jersey area.  During this period, the New York-Newark-New Jersey area garnered a quite respectable $55 billion.

In third place was the San Jose-Sunnyvale-Santa Clara, California area.  Businesses in this California area attract almost $53 billion from 2010 to 2017.  Fourth and fifth places went to the Boston-Cambridge-Newton area, capturing $45 billion worth of venture capital attention and the Los Angeles-Long Beach-Anaheim area, capturing over $29 billion in investment capital.

The other five cities in the top 10 include San Diego-Carlsbad ($13 billion), Seattle-Tacoma-Bellevue ($12 billion), Chicago-Naperville-Elgin ($11 billion), Washington D.C.-Arlington-Alexandria ($10 billion), and Austin-Round Rock ($8 billion).

Overall, there is no lack of venture capital money available for firms with potentially profitable products and ideas.

map1

Median Return on Invested Capital

The previous section focused on the dollar amount of capital invested in companies headquartered in certain broadly defined geographical areas.  Now, let’s look at the return on investment for invested VC capital by geographic area.  Before looking, take a guess at which area is on top.  Would you guess the San Francisco area again?  The results might surprise you.

Interestingly, in the top spot is the Chicago-Naperville-Elgin area, with a return of 8.5x.  The venture capitalists’ returns in the Chicago-Naperville-Elgin far outpaced second place Seattle-Tacoma-Bellevue, which offered venture capital investors a return of about 5.9x.  Still a healthy return, just not tops.

The other three members of the top 5 return club include companies headquartered in New York-Newark-New Jersey area (4.8x), the Philadelphia-Camden-Willmington area (4.7x), and the Los Angeles-Long Beach-Annaheim area (4.7x).

Perhaps surprisingly, the San Francisco-Bay area does not come into play until sixth place, with a median return on invested capital of 4.6x.

map2

Conclusion

In an interesting look at the attraction of investment capital by U.S. metropolitan areas, some unsurprising and surprising results show up.  The San Francisco-Bay area continues to dominate the investment capital dollars, although the area drops to sixth in overall return on invested capital.

The results on median return on invested capital are perhaps more surprising than the results on volume of invested capital.  Firms headquartered in the Chicago-Naperville-Elgin area offered investors the highest return of any area at 8.5x.

Overall, the venture capital world is alive and well heading into 2018.

{ 0 comments }

How Do the Bay Area’s Returns Vary By City?

April 3, 2018

Pitchbook, the private equity and venture capital data provider is out with a fascinating look at venture capital returns and venture investments by city within the Bay area (broader San Francisco area). Before looking at the map of amount of funds investment and the associated returns, take a guess at which cities you think would […]

Read the full article →

Who are the 20 Most Valuable Startups in the U.S.?

March 19, 2018

Pitchbook is out with their most recent list of the 20 most valuable venture capital-backed companies in the U.S.  We will take a look at which  companies show up on the list. The Top 5 The following is the top 5 most valuable companies backed by venture capital funding in the U.S.  Interesting, even after […]

Read the full article →

What are Global Ltd. Partners Most Concerned About in 2018?

March 5, 2018

We’re a couple months into 2018, and Private Equity International is out with survey results on the question – “What are global limited partners (LPs) most concerned about in 2018″? Before looking at the results, what would you guess the LP responses are?  Would you guess a recession?  Perhaps trade wars?  A terrorist attack?  A […]

Read the full article →

What are the Top 25 Private Equity Firms and How Much Did They Raise Recently?

February 19, 2018

Private Equity International is out with their annual PEI300 report, which details the top 300 private equity firms by amount raised.  Before looking, which companies would you guess would be on top? The Broader View Before taking a look at the list of the top 25 private equity firms, how much would you guess the […]

Read the full article →

Are Unicorns Frequently Overvalued?

February 6, 2018

A couple of professors out of Stanford University and the University of British Columbia are out with a new, fresh look at the intricacies of venture capital valuations (Squaring Venture Capital Valuations with Reality, National Bureau of Economic Research Paper #23895).  Their topic is unicorn valuations, and specifically whether so-called unicorn valuations are frequently overvalued.  […]

Read the full article →

The 2017 Startup Graveyard

January 23, 2018

Pitchbook  is out with a fascinating look at the so-called 2017 “startup graveyard”.  There are 11 companies on Pitchbook’s list. Let’s take a look. The Startup Graveyard On top of Pitchbook’s list of notable 2017 failures is Jawbone.  Jawbone manufactured speakers and wearable technology, and at one point had a valuation of $1.5 billion, with […]

Read the full article →

Taking a Look at 2017 Mergers and Acquisitions in Emerging Technology

January 8, 2018

The 2017 year is over, and as such, what better time than now to take a look at how things performed in 2017.  The topic is mergers and acquisitions (M&A) in emerging technology. Top Corporate Acquirers Since 2007 Before looking at the 2017 figures, which corporate acquirer would you guess comes out on top since […]

Read the full article →
Real Time Web Analytics