STAGE 6 - UNICORNS WHY UNICORNS ARE IMPORTANT The term “unicorn” has become widely adopted worldwide as a label for tech startups that achieve significant scale with a market capitalisation of $1 billion or more. The network effects of the digital economy mean that they exist in increasingly winners-take-all markets and grow with astonishing speed, creating large numbers of jobs both within the company and as part of the larger local ecosystems that surround them. Companies that achieve this scale are relatively rare, but are vital to the creation of a vibrant startup ecosystem. Their impact is to spawn hundreds (or thousands) of new entrepreneurs who have been employees of the unicorn, many of whom will go on to form their own startups and invest in others. 62,63 The PayPal Mafia - a nickname given to a group of alumni of PayPal, the payments company that went public in 2002 and was acquired by eBay — has its hands in the creation of many of today’s most valuable private tech companies including; Linkedin, Youtube, Yelp, Palantir, Yammer, SpaceX and Tesla. VALUE OF MULTIPLE UNICORNS According to the Crossroads 2015 report, there are currently around 2,400 companies listed on the ASX with a combined value of A$1.65 trillion, of which software companies comprise 4% by number and 1.4% by value. In contrast, the top 150 companies in Silicon Valley are all technology based and have a combined market capitalisation of A$2.4 trillion, exceeding that of the entire ASX. 46 EXPONENTIAL UNICORN GROWTH The modern digital revolution is disrupting and dividing the world of work on a scale not seen for more than a century. This third great wave of industrial revolution is rapidly disrupting traditional markets. Relative digital newcomers are capturing vast swathes of market share from incumbents at unstoppable speed, and the number of these unicorn startups is growing by the week. TOP 10 ASIAN TECH UNICORNS BY VALUATION 64 Xiaomi China Coupang China Coupang China $45B $5B TOP 10 AUSTRALIAN TECH COMPANIES GLOBAL DISTRIBUTION OF UNICORNS Source: Crossroads 2015 46 Source: CBinsights Unicorn List 64 SEEK REA Group Atlassian Carsales Campaign Monitor Wotif OzForex Kogan Freelancer aconex Flipkart India Lufax S.Korea $6.3b $6.3b $3.5b $2.5b $1.0b $0.7b $0.6b $0.4b $0.3b $0.3b $10B $7B $3B $4B $3B Dianping China Ele.me S.Korea United States China India United Kingdom Germany Sweden South Korea Israel Singapore Canada $15B $10B DJI China Meituan China $15B Didi Kuaidi China 62% 15% 5% 4% 3% 1% 1% 1% 1% 1% According to data from CBinsights, the number of private tech companies valued at $USD 1 billion or more worldwide has surged so much this year that on average 1.3 unicorns have been created every week in 2015. 64,65 WA’S UNICORNS Whilst WA can lay claim to having the highest number of companies listed on the ASX in Australia, we are yet to witness our first software Unicorn arising from the West. Nevertheless, two companies, iiNET and Amcom were born on the sunset coast. Whist they are typically classified as Telecommunication firms, this report recognises them as local unicorns based on our belief that these firms lay the ground work and provide the ciritcal factors for any successful unicorn breeding to occur. Their growth patterns and financial success mirror those seen in successful software unicorns from across the globe. CAMPAIGN MONITOR $1B+ Estimated valuation based on current funding The latest member to join Australia’s elite Unicorn club, Campaign Monitor secured $250m in venture funding from Insight Venture Partners in 2014. Founded by Ben Richardson and David Greiner in 2004, the business was bootstrapped for 10 years until its latest funding round. The startup now employs 150 staff in 20 countries, and has more than 150,000 paying customers including Apple, Facebook and Spotify using the service sending 1+ billion emails every month. IINET $1.56B Acquisition cost of iiNet by rival TPG in August 2015 iiNet was founded in 1993 by Michael Malone and Michael O’Reilly, who started the business in a suburban garage in Perth. iiNet provides Broadband and IP telephony communication services to consumers and business customers. In August 2015, iiNet was acquired by rival TPG for $1.56 billion, one of the largest telecommunication deals in Australian history. 30
THE INCREASINGLY CROWDED GLOBAL UNICORN CLUB: PRIVATE UNICORNS SINCE 2009 65 Source: CBinsights Unicorn List Mar-09 May-09 Jul-09 Sep-09 Nov-09 Jan-10 Mar-10 May-10 Jul-10 Sep-10 Nov-10 Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14 Jan-15 Mar-15 May-15 Jul-15 Sep-15 31
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