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Hey look, unicorns are rare again!

Unicorn births declined 89% in Q1 from their peak, the worst result since Q3 2017

Investors are no longer minting nearly two unicorns per day. In fact, we’re down to barely more than one new mythical horned horse per week.

Welcome to the new venture normal, where it seems stories of previously well-funded startups imploding will be more common than news of mega-rounds.

Tracking the global venture slowdown is a twofold task: First, you have to monitor the slowing flow of venture dollars into startups, and second, it involves watching valuations contract as pre- and post-money valuations wilt under stricter investing conditions.

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Declining valuations at tech companies big and small and the dearth of capital are together creating a parched startup landscape. From falling early-stage valuations to late-stage investment and valuations being decimated, it’s tough out there for startups.

PitchBook data concerning new unicorns underscores how bad things are now: A measly 18 unicorns were minted in Q1 2023, compared to 163 new unicorns in both Q3 and Q4 2021.

The last time we saw the rate of new unicorns that low was back in Q3 2017.

To put this into clearer context, the first quarter of 2023 saw new unicorns being created at a pace only fractionally better than the average quarterly rate in 2016. You know, the final year of the second Obama administration.

A different era, in other words.

How did we get here? Late-stage rounds got smaller but it wasn’t only that. Investors finally realized just how incorrectly they were pricing late-stage value creation during the recent venture peak.

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