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New study of unicorn founders finds most are ‘losers’ while female founders are on the rise

A new study of founders of so-called “unicorns” (companies worth more than $1 billion) finds that most of the company’s founders are “losers,” often from top 10 universities, and include female founders The number of people continues to rise, but there is no obvious monopoly on seed-stage VC financing.

Defiance Capital conducted the study (“Unicorn Founder DNA Report”) on 845 unicorn companies and 2,018 unicorn founders to examine the “unicorn founders’ DNA” between 2013 and 2023. DNA”, focusing on the US and UK (excluding EU/Europe), defining the common characteristics of this type of founder.

The study found:

• 70% of unicorn founders are “losers” (immigrants, women, people of color).

• In the past, unicorns had only male founders, but this is changing and by 2023, 17% of unicorn founders will be women.

• 53% hold degrees from the world’s top 10 universities.

• 49% of unicorn CEOs have STEM degrees (64% of female founding CEOs have STEM degrees), and 70% of founding teams have STEM degrees.

• Apart from SV Angel (6.4%) and YC (10%), no other VC fund has invested more than 2.8% in unicorns (Sequoia Capital). This suggests that the market for investing in potential unicorns at Seed is fully fragmented, meaning outlier VC funds have just as much chance of investing in unicorns at an early stage as established funds.

The study further found that unicorn founders are predominantly white, but one-third of unicorns have an Asian founder. In fact, 38% of unicorns have at least one non-white founder: 82% of unicorns have at least one white founder, and 62% have first- or second-generation immigrant founders . Only 3% of unicorn founders are black.

Only 21% of immigrant and female founders raised funds from the top ten venture capital firms. Female founder teams were two years younger than all-male teams when they launched unicorn companies (32 vs. 34).

Serial founders (50%) are more likely to successfully build a unicorn, but only one in five unicorns has a single founder.

Over the past decade, all top seed funds have been comprehensive funds, and the seed fund market is highly fragmented. Only 28% raised money from top VC seed funds (market share above 1%).

Only 34% of unicorn founders worked at an elite employer before launching their unicorn company, suggesting that a McKinsey or similar background is not a prerequisite for success.

The study also identified three dominant factors in the “DNA” of unicorn founders.

1. There is no “Plan B”

2. “A chip on your shoulder”

3. unlimited confidence

Research has found that many unicorn founders are forced to develop a growth mindset, where values, work ethics and ambitions are established in childhood.

Most people have personal experiences of feeling unfairly treated or restricted in their native environment.

The study looked at these characteristics of communities left over generations, such as female founders, people of color, neurodivergent people or founders with atypical backgrounds.

Many people also tend to be “ambitious rebels,” often motivated by a larger cause they care deeply about, have strong family role models, a quality peer network, and are not afraid of failure.

There are far more first- and second-generation immigrant CEOs with STEM degrees than native CEOs, indicating a talent flow from emerging or smaller economies to developed economies. Notably, more second-generation immigrants attend elite universities than others in the sample.

The study also yielded other interesting data points. Unicorn founders tend to create unicorns three years later than founding teams. It takes an average of 7 years for all types of founder teams to reach unicorn status, but it only takes 6 years for second-generation immigrants.

In fact, all-white, male, local Ivy League founders are less common, at only 11%, and only one-third of founders graduated from a top-10 university in the country where they founded their company. University.

Additionally, the top 20 U.S. venture capital funds tend to favor male immigrant founders with STEM degrees from elite Seed universities, but appear to be ignoring female founders, a growing group in the unicorn space.

Defiance Capital founder Christian Dorffer told me: “I believe this is the most comprehensive study of the backgrounds of U.S. and U.K. unicorn founders to date. We covered all new unicorns from 2013 to 2023, covering more than 2,000 founders and over 800 unicorns.”

“Venture capitalists have a saying: ‘It’s all about the people,’ but only 10% of unicorn founders fit Mark Zuckerberg’s profile, and most of the thousands of seed funds are backing the wrong kind of founders . An interesting finding from our research is that even the best funds, like Sequoia, invest in less than 3% of unicorn companies — and only 30 funds have a unicorn market share of 10% or more. More than 1%,” he said.

“When you look at 62% of unicorn founders who are immigrants (often from countries where it’s impossible to build a unicorn) and 17% of new unicorn founders, the hunger we find among unicorn founders Sensibility, confidence, ingenuity and resilience were also meaningful. There were female founders that year.”

He continued: “Immigrant and other underrepresented founders are obviously able to achieve these amazing results, but I wanted to prove it to LPs. Many immigrant founders come from developing countries like India and Africa, and even Eastern Europe. They really don’t have that many options at home. They have to leave and look for opportunities elsewhere.”

“Only 30 funds own more than 1% of all these unicorns, which means they are completely fragmented,” he added.

“If you combine that fragmentation with the fact that immigrants and women find it more difficult to fundraise, there’s a huge opportunity for new funds to come in and specifically seek out these founders.”

I asked him, how might a VC or a family office change their strategy after seeing this research?

“Sequoia Capital ranks first in only 2.8% of unicorns, which means they miss out on a lot. Yes, top funds are relatively safe investments for LPs. But family offices are now converting emerging management People, especially early-stage funds, view them as potential alpha. So if you want to maximize returns as a family office, you need to bring in some new funds, emerging managers, to turn those outliers into unicorns,” He said.

Dover, who now plans to create a podcast with many of the unicorn founders surveyed, said: “The stories that are emerging show crazy determination. As a female founder, you have to work twice as hard and show up twice as hard. meetings to raise money. The founders of Andela and the three African founders who created unicorns… have very inspiring stories.”

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