AI, cybersecurity topped unicorn leaderboards in 2023

Cybersecurity and AI were the top-performing industries for unicorn companies in 2023, defying a difficult fundraising year that saw many startups slash their valuations.

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According to the Morningstar PitchBook Global Unicorn Vertical Indexes, the value of cybersecurity unicorns grew 24.3% and AI unicorns grew 22.9%. The indexes provide daily valuation estimates using a model that incorporates prices for private startups and comparable public companies.

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Our index of global unicorns, which tracks the overall performance of all VC-backed startups valued at over a $1 billion, rose 12.77% in 2023. Despite this performance, only 81 companies achieved unicorn status last year, a decrease from 330 companies in 2022.

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Cybersecurity’s success can be attributed to companies like Wiz hitting a $10 billion valuation in February, Keyfactor notching a $1.3 billion valuation in November and Prove Identity surpassing a $1 billion valuation in October. The continued rise of public cybersecurity companies like Palo Alto Networks and CrowdStrike also contributed to the index taking the top spot.

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Of all the new unicorns last year, 44% were AI and machine-learning specialists, riding a wave of interest in generative AI. Blockbuster fundraising pushed these unicorns to new heights: Inflection AI raised $1.3 billion in June, and Anthropic landed a $4 billion investment from Amazon in September. OpenAI secured a $10 billion investment from Microsoft at the beginning of 2023.

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Agtech was the worst-performing unicorn index in 2023, declining more than 20%. Two companies included in the index, Bowery and Indigo, were major contributors to the downturn as both have seen valuations plummet.

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Indoor farming specialist Bowery conducted multiple rounds of layoffs as Fidelity, one of its leading investors, wrote down the value of the company’s shares by 85%. Boston-based Indigo, a crop protection specialist, also reportedly saw its valuation drop substantially, although it raised $250 million in August.

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Reference: https://pitchbook.com/news/articles/ai-cybersecurity-unicorn-indexes-2023