VC-backed unicorns are losing their horns
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New valuation data from PitchBook suggests that more than one-quarter of VC-backed "unicorns" have lost their horns, even if still being marked at more than $1 billion by their venture capitalists.
Why it matters: Most limited partners aren't able to access top-decile firms. If they conclude that there are better investments elsewhere — such as passive indexes without high fees or illiquidity risk — that's where they'll go.
- The losers would be a generation of emerging VC fund managers and the founders they would have backed.
Catch up quick: In late 2014 we first discussed "undercorns," companies once valued at $1 billion or more by VCs but now valued below that threshold. It was a new phenomenon and relatively unusual (much rarer than unicorns would become, which presents its own terminology quandary).
- According to PitchBook, the undercorn herd now is running rampant.
Inside the numbers: The research firm says that a majority of undercorns haven't raised new funding in years, often a warning sign in its own right.
- PitchBook reached its overall conclusions by developing a new valuation framework whose inputs include: Number of employees, private peers that did raise new funding, and public peers. In short, it's a backdoor mark-to-market.
The big picture: The estimated aggregate valuation of unicorns hasn't actually changed too much — $4.4 trillion vs. $4.7 trillion at the end of 2025 — because the top 10 companies account for around 52% of value (up from only 18.5% in 2022 and the highest such figure in a decade).
- That means average VC industry returns won't be dragged down by a rise in undercorns, but median returns are another matter.
What they're saying: "Unicorns are the VC market's crown jewels," says PitchBook analyst Andrew Akers. "A lot of those valuations probably are at least 50% lower than what's on the books."
