Learnings to date about the “Unicorn Club”: With big caveats that 1) our data is based on publicly available sources, such as CrunchBase, LinkedIn, and Wikipedia, and 2) it is based on a snapshot in time, which has definite limitations, here is a summary of what we’ve learned, with more explanation following this list*: We call it our “Learning Project,” and it’s ongoing. To answer these questions, the Cowboy Ventures team built a dataset of U.S.-based tech companies started since January 2003 and most recently valued at $1 billion by private or public markets. So, we wondered, as we’re a year into our new fund (which doesn’t need to back billion-dollar companies to succeed, but hey, we like to learn): how likely is it for a startup to achieve a billion-dollar valuation? Is there anything we can learn from the mega hits of the past decade, like Facebook, LinkedIn and Workday? For example – to return just the initial capital of a $400 million venture fund, that might mean needing to own 20 percent of two different $1 billion companies, or 20 percent of a $2 billion company when the company is acquired or goes public. Plus, traditional venture funds have grown in size, requiring larger “exits” to deliver acceptable returns. Why do investors seem to care about “billion dollar exits”? Historically, top venture funds have driven returns from their ownership in just a few companies in a given fund of many companies. Follow her on Twitter entrepreneurs, and the venture investors who back them, seek to build billion-dollar companies. Previously, she joined Kleiner Perkins Caufield & Byers in 1999 and was also founding CEO of digital media company RMG Networks, backed by KPCB. Editor’s note: Aileen Lee is founder of Cowboy Ventures, a seed-stage fund that backs entrepreneurs reinventing work and personal life through software.
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