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The Funded: New unicorns have become very, very rare

Silicon Valley Business Journals

After years of burgeoning numbers, new unicorns have suddenly become scarce.

In January, no Bay Area venture-backed companies joined the ranks of those valued at $1 billion or more. That marked the second time in four months that no new unicorns were added to the local herd.

The San Francisco-Silicon Valley region’s not alone in seeing unicorn birth rates plunge. Worldwide, just four venture-backed startups crossed the $1 billion valuation mark last month, and only one of those, a Boston-based cell engineering company, was based in the United States, according to PitchBook Data.

The collective worth of the four new unicorns was only $6.2 billion. That’s the fifth-lowest monthly total for new unicorn valuations since 2016, according to PitchBook.

Things have changed dramatically over the year. In January 2022, the Bay Area birthed 17 new unicorns.

Indeed, the region and the world is likely to see a culling of such billion-dollar companies. Globally, there are 971 startups worldwide that are valued at between $1 billion and $2 billion, according to data from CB Insights. With startup shares trading at a discount of 50% or more from their price at their last valuations and investors increasingly forcing companies to accept a reduction in their valuations as a condition to get more cash, those startups’ unicorn status could be in jeopardy.

The last unicorn born in the Bay Area was BillionToOne Inc., a developer of a cancer test. Although it’s valuation hit only $1 billion after its mid-December funding round, it may have a better shot than most at retaining its worth. That’s because it raised it new funds at a time when investors were already putting pressure on valuations.

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