They used to be the stuff of fantasy, much like the mythical creatures they were named after. Between 2003 and 2013, each year only averaged the birth of four “unicorns” – private startups worth $1 billion or more. However, in recent years, these billion-dollar businesses have become increasingly common.
To gain a better understanding of trends among unicorn companies in 2016, we gathered data about various industries and businesses and utilized Alexa’s competitive intelligence tools to analyze the growth in website traffic based on unique visitors to unicorn websites. Which industries have the most – and the most successful – startups? Which countries are home to the most billion-dollar businesses? And which specific unicorn companies are galloping past the competition? We have all the details.
MOST COMMON INDUSTRIES FOR UNICORNS
Separating unicorn companies by industry reveals an extremely uneven breakdown. As you can see above, a full quarter of unicorns are within the E-Commerce/Marketplace industry. One shining example of an E-Commerce unicorn company is Jet.com – the fastest startup in history. The online retailer, which relies on real-time pricing algorithms to deliver deals to customers, took only four months to achieve a $1 billion valuation in 2015.
Internet Software and Services (sometimes called Software as a Service, or SaaS) is another unicorn-heavy industry. It comprises nearly a fifth of these billion-dollar businesses. Financial Technology (FinTech) boasts around a tenth of all unicorn companies, including Rong360, a Beijing-based provider of customized financing and loan services, which took only seven months to gain unicorn status. (The company tied with tech firm APUS Group for second-fastest for achieving unicorn status.)
FAST-GROWING INDUSTRIES FOR UNICORNS
However, the picture changes when looking at industry growth rather than number of unicorn companies. Tracking the growth percentage of unique visitors to unicorn company sites in early 2016 yields some surprises: The Cybersecurity industry took the top spot for highest growth, with a traffic increase of almost 50%. Some peg Cybersecurity startups as a different beast altogether: cockroaches rather than unicorns. Why? Because they are hardy and can survive difficult financial times by switching gears to focus on consulting. After Cybersecurity, the Real Estate category experienced 36% growth in visitors, and the Big Data industry grew almost 27%.
On the other end of the spectrum, some industries had decreased web traffic in early 2016. Education technology claims the bottom spot, contracting by 16%. Entertainment, on-demand apps, and E-Commerce/Marketplace categories also saw a reduction of visitors – the last of which may be attributed to the conclusion of the holiday shopping season.
TOP COUNTRIES FOR UNICORNS
The vast majority of unicorn companies are headquartered in the U.S. – in fact, with 138 billion-dollar startups, it has over three times as many as second-place China. Germany, India, and the U.K. have relatively few. Most U.S. unicorns are located in the tech-heavy San Francisco Bay Area. However, some experts predict that 2016 will see a culling of the herd in Silicon Valley.
Looking at the traffic growth for unicorn companies in each country tells a different story. The U.S. is on top with an over 20% rate of growth. Many familiar names populate the list of American unicorn companies, from social-bookmarking site Pinterest to vacation property–rental site Airbnb. On the other hand, China is dead last with almost 23% decreased rate of unique visitors. In fact, China’s shaky financial status has had experts wondering whether the country would see multiple “dead unicorns” in 2016.
TOP INDUSTRIES FOR UNICORNS
Based on web traffic growth, a few unicorn companies stand out from the pack. The only unicorn in the aerospace category, SpaceX saw a rate of growth twice as high as the No. 2 company. Founded by Tesla CEO Elon Musk, SpaceX is a manufacturer of rockets and spacecrafts focused on someday enabling people to live on other planets. Starting in January 2016, the site’s rate of visitors skyrocketed. In early January, a Scientific American article proclaimed two of its upcoming missions among “the space missions to watch in 2016.” A week later, the company made headlines for the fiery explosion of an unmanned rocket during a landing attempt.
In second place for visitor growth is Adaptive – a biotech firm that specializes in the immune system and cancer research. Secretive virtual reality startup Magic Leap has captured people’s interest (and garnered funding) with its plans to develop a “cinematic reality” device. Its site tied with Adaptive for visitor growth rate. Among various social companies, Snapchat saw the highest growth – which we will explore in greater depth below.
SNAPCHAT: ANALYZING A UNICORN
To gain a better idea of factors that can spark site growth for unicorn companies, we zoomed in on Snapchat – a messaging and social media app with more than 100 million daily active users. The premise (especially popular among teens): messages and photos that disappear once sent.
One reason for the site’s increase in popularity: In July 2015, Snapchat dedicated its live stream to the Muslim holy city Mecca, sparking more than a million tweets on the subject and propelling the site’s global rank to increase by 10%. Additionally, when a September 2015 Reddit post alerted people that famed record producer DJ Khaled had joined Snapchat, the site enjoyed a boost in popularity. Khaled’s popular videos chronicled everything from his hot tub to his meals – and on one memorable night, he got lost while riding a personal watercraft and Snapchatted the experience. The Reddit thread sparked an increase in site traffic, which propelled the site’s ranking to increase by 8%. Three months later, a New York Times article about Khaled’s foray into Snapchat further boosted the site’s popularity.
Snapchat’s visitors are predominantly young – people aged 18 to 24 make up the highest percentage of the audience, followed by those aged 25 to 34. The app launched in 2011, and by the first quarter of 2015, it had a 38% usage rate among U.S. teen internet users – third behind only Facebook and Instagram.
FASTEST-GROWING UNICORN SITES
The top 20 fastest-growing unicorns based on site traffic are a unique mix. SpaceX saw the most dramatic increase in visitors, followed by biotech company Adaptive. In January 2016, Adaptive announced a collaboration with drug company Pfizer, which gained the company publicity. In third place was virtual reality firm Magic Leap. Among the other top-growing sites, the types of businesses vary (from a shopping app to a recipe-kit delivery service).
UNICORN SITES WITH DIMINISHED TRAFFIC
The 20 sites above, on the other hand, experienced the lowest rate of unique visitors in 2016. Fantasy sports competition site FanDuel topped the list for decreased traffic. DraftKings – another fantasy sports competition site – took fourth place. This is likely due to the football season’s drawing to a close (or perhaps also because it has been now banned as gambling in some states). Other sites that experienced reduced traffic include an online loan provider, an online furniture shop, and a ride-booking service.
LEADING THE PACK
The above glimpse into growth trends of unicorn companies yielded several interesting takeaways. The U.S. is home to the lion’s share of the unicorn population. When it comes to billion-dollar businesses, certain industries stand out for having the most: E-Commerce, Software as a Service, and Financial Technology sectors. Looking at site analytics reveals some serious traffic growth among the Cybersecurity, Real Estate, and Big Data industries, and a few specific companies stand out when it comes to site growth.
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For the list and details about each of the unicorn companies, we collected data from the website https://fleximize.com/unicorns/. We then categorized each company by industry. Next, using http://www.alexa.com/, we analyzed the growth in unique visitors for each company over the last 90 days. To analyze Snapchat, we used Alexa’s Tools to discover which inbound links corresponded to a jump in global rank and web traffic.
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