Key takeaways
42%
Of new unicorns created in H1 are AI companies
More AI companies are becoming unicorns, and they’re doing so at earlier stages than non-AI companies. Investor enthusiasm for the technology is one factor that’s buoying total venture investment levels and median valuations.
3 to 1
The rate at which seed deals are outpacing Series A deals
This imbalance is creating an investment bottleneck that may worsen as seed-stage companies sacrifice growth — a key metric for Series A investors — for the sake of runway.
42%
Year-over-year increase in median late-stage tech valuations
Beyond the AI investment boom, factors driving this recovery include strong public market performance and top-tier companies coming back to market to raise.
AI unicorns are more precocious than their peers
New AI unicorns skew young: 30% are “early-stage” companies, compared to just 11% of their non-AI counterparts.
While generative AI represents a technological sea change, the market’s optimism may be approaching bubble territory. While we remain AI optimists, the velocity and size of investments warrant caution.
The “Series A crunch” is in full swing
The percentage of seed startups able to raise Series A funding in a timely manner is falling across the board.
The investment boom of 2021 brought with it capital excess. Many of the seed startups that reaped the benefits are now burdened with higher-than-justified valuations in a market with far less venture capital to go around. To graduate, they now need to overdeliver.
More tech unicorns are unprofitable and shrinking
While most VC-backed tech unicorns are well capitalized and have seen improvements in profitability, a growing minority are unprofitable and face declining year-over-year sales.
Some unicorns with weak underlying business models have been exposed as capital costs rose and the tougher economic environment means slower sales. A subset of this cohort may become zombies, others may be purchased at a discount or fail.
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