Crunchbase has a unicorn startups board that keeps track of private companies valued at more than $1 billion. According to the board, 291 new unicorns have been added to its list year-to-date (YTD) through July 15.
The herd of Unicorns is growing exponentially. Over the past year, something like 300 net new unicorns have joined the board, raising the collective value of the more than 900 companies by 50% to $3 trillion.
To give you an idea of how fast unicorns are being added to the board in 2021, at this time in 2020, 175 new unicorn startups joined the Crunchbase board. In 2018, it reached 190 through July 15, but that’s still 53% higher than three years ago.
What’s behind the growth? The big reason has to do with the rate at which companies are going public. YTD through July 25, 250 companies have priced their shares for an initial public offering (IPO). That’s 25 short of the 2014 total for the entire year, with five months to go in 2021.
- Argo AI
- Via Transportation
- Howden Group Holdings
As such, investors are eager to see unicorn startups go public. Here are seven to keep an eye on.
Unicorn Startups Investors Hope Go Public: Nubank
One of the biggest areas of interest when it comes to unicorn startups is in the fintech arena. According to TechCrunch, in the first quarter of 2021, the number of fintechs in the U.S. went over 10,000 for the first time.
While Nubank isn’t based in the U.S. — it is a Brazilian-based digital bank — it does have a lot of prominent American investors, including a $500 million buy-in from Berkshire Hathaway (NYSE:BRK.A, NYSE:BRK.B) as a part of a June funding round that valued the neobank at $30 billion.
Nubank’s growth is unbelievable.
In 2019, it had 12 million customers. Today it has 40 million without having to spend a dime on advertising. As TechCrunch reported in June, it’s grabbing thousands of customers each day.
Euromoney named Nubank Latin America’s best bank in July. The finance magazine also named Nubank Latin America’s best digital bank. That’s heavy praise.
In April, Reuters reported that Nubank is preparing for an IPO as soon as late 2021.
“We will probably do an IPO at some point in time, but it is not among our current priorities. We have the support of an amazing group of investors that share a long-term vision on our business,” Nubank said in an emailed statement to Reuters in April.
Nubank’s revenue will go over $1 billion in 2021. However, it came close in 2020, almost doubling its revenue to $963 million.
According to co-founder David Velez, 50% of Latin Americans are unbanked, leaving many opportunities for Buffett and his fellow investors to make loads of money on their investments.
Databricks was founded in 2013 by the creators of Apache Spark, Delta Lake and MLflow, three open-source platforms that enable organizations to manage their data analytics and artificial intelligence (AI) needs more effectively.
Databricks is the culmination of those efforts providing more than 5,000 organizations worldwide with an open and unified platform for data and AI.
A real-world example of its capabilities is AccuWeather, the weather forecasting service. Databricks, in partnership with Microsoft (NASDAQ:MSFT), has built a forecasting engine that converts weather data into a format that is useful for AI analysis.
“AccuWeather staff can easily interact with datasets and ask specific questions about weather parameters such as temperature and precipitation in specific locations at specific times,” TheRecord reported on July 21. “They can then use other Azure services to apply machine learning models to the company’s datasets and train predictive models to improve the speed and accuracy of AccuWeather forecasts.”
Now multiply this usefulness across more than 5,000 organizations and you get an idea of the opportunity ahead of it.
In Databricks’ most recent funding round, it raised $1 billion at a valuation of $28 billion. It’s expected to pass $1 billion in revenue in 2022. As a result, an IPOL could raise as much as the $3.36 billion Snowflake (NYSE:SNOW) raised in September 2020.
Unicorn Startups Investors Hope Go Public: Fanatics
When I first started following Michael Rubin’s business career in 1995, I don’t think he was old enough to shave. He was 22, ran a company called KPR Sports International, and had just lent Ryka, a maker of athletic shoes, $8 million in return for 40% of its stock.
Today, the part-owner of the NBA’s Philadelphia 76’s and NHL’s New Jersey Devils has a Fanatics business worth $13 billion. So if you buy licensed sports merchandise online, you’ve probably bought from him at some point.
Fanatics raised $320 million in funding from Major League Baseball, Fidelity and Silver Lake private equity in March. It will use the funds to make further acquisitions. If there’s one thing Rubin understands, it’s mergers and acquisitions. He’s done plenty in his time.
Fanatics is expected to generate more than $3 billion in revenue in 2021. Serving more than 80 million customers, investors use the loyal customer base as a springboard into other ventures such as sports betting, etc.
In February, Fanatics opened a Chinese business in partnership with Hillhouse Capital, a private equity firm based in Asia. Fanatics believe this business will quickly grow to be worth more than $1 billion.
I don’t think there’s any question that were Fanatics to go public, investors would gobble up its shares in a hurry.
Way back in February 2017, long before Ford’s (NYSE:F) 2020 slide into penny-stock status, I discussed the company’s intelligent plan to invest in new technology such as artificial intelligence and machine learning.
It had just announced it was investing $1 billion to gain majority control of Pittsburgh-based Argo AI as part of its quest to be a player in self-driving cars.
“Working in conjunction with some of the brightest roboticists and engineers at Ford and Argo AI, Ford’s Smart Mobility LLC segment is responsible for developing the commercialization strategy for the company’s self-driving cars and trucks,” I wrote on Feb. 16, 20217. “Its goal is to have a commercially viable driverless vehicle by 2021, less than five years from now.”
Well, here we are, more than halfway through 2021. How’s it doing?
Later this year, Lyft (NASDAQ:LYFT) is expected to put Ford/Argo AI robotaxis on the streets of Austin and Miami. As part of this partnership, Lyft’s become a minority investor in Argo AI. Volkswagen (OTCMKTS:VWAGY) is the other partner.
The fleet will be a few dozen to start growing to 1,000. This should be an excellent way to promote its current funding round, suggesting an IPO is just around the corner.
Good for Ford. It was in the wilderness there for a while, but it seems to be making many good moves these days.
Unicorn Startups Investors Hope Go Public: Via Transportation
Originally, I reserved this pick for Wise (OTCMKTS:WPLCF), the U.K. fintech company that provides inexpensive money transfer services between countries. However, it went public in early July. I will be sure to write about it in the future.
In its place, I’m going with Via Transportation, a provider of transit tech software used by hundreds of cities and transit agencies. The market for its software is estimated to be worth $60 billion by 2025.
It is said to be working with Goldman Sachs on a future IPO. It received $60 million in funding in March, which values the company at just under $3 billion.
In May, Via was named a finalist for Fast Company’s 2021 World Changing Ideas Award. Transit agencies use Via’s software to create end-to-end transit systems that help eliminate gaps in their transportation services.
In January, the city of North Bay, Ontario, launched dynamic dispatching using Via’s software as a one-year pilot project. Users download the software, indicate their pickup and drop-off point, and then Via’s algorithm matches the passenger with others headed in the same direction.
“Dynamic, on-demand transit will be used during low transit demand times and in areas where fixed routes are most inefficient and expensive with the aim of reducing wait times, providing more direct trips and improving efficiency,” states the Jan. 18 press release.
Ultimately, I could see this leading to the elimination of fixed-route service. It’s indeed a world-changing idea.
In February, Toast was rumored to be going public in an IPO that would value the provider of cloud-based point-of-sale management software for over 40,000 restaurants. The Toast Platform provides solutions from single restaurants, small chains all the way up to national concepts with thousands of locations.
Founded in 2012, the company also provides loans to its customers through its Toast Capital business. Unfortunately, Covid-19 forced the company to lay off 50% of its staff. However, sales rebounded throughout 2020.
In May, the Boston Globe reported that the idea of an IPO was possibly back on the menu. The company used the slowdown to figure out what restaurants could really use to help their businesses. It went to work delivering products such as Toast TakeOut that its customers could use to drive the business even during a pandemic.
“Toast did a really good job of building a customer-first culture,” Rohit Shenoy, a former manager at Toast and founder of Hone Technologies, a startup that assists restaurants with bookkeeping, told the Globe. And, he adds, the company “hired a lot of people from the restaurant industry, so we had the empathy and understanding of how restaurants operate — and could speak their language.”
Look for Toast to continue to benefit as the world eventually returns to normal.
Unicorn Startups Investors Hope Go Public: Howden Group Holdings
Having worked in the insurance industry at the beginning of my career, Howden Group Holdings caught my attention.
Founded in 1994, the London-based insurance broker has grown to over 8,500 employees operating in 45 countries, including Europe and the U.S. With revenues of 777 million GBP ($1.07 billion), annual premiums of more than 10 billion GBP, and adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) of 223 million GBP, it’s a very healthy company.
What excites me about its business is the fact employees own 35%. While that would change after an IPO, I think it’s safe to say that its DNA provides for a longer-term outlook by the company and its three shareholder groups.
Employees have the largest stake. The second shareholder is the Howden Group Foundation, founded in 2014 to enable its employees to carry out charitable work around the world. Its three minority shareholders are private equity firm General Atlantic; CDPQ, a large Canadian pension fund; and Hg Capital, a large European tech investor.
On July 1, HX, the company’s data analytics and advisory business, launched NOVA, a business intelligence platform that enables users to understand the insurance market better and find opportunities.
Speculation on my part, HX could be spun off in the future and also taken public. I will continue to watch Howden with interest.
On the date of publication, Will Ashworth did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Will Ashworth has written about investments full-time since 2008. Publications where he’s appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia. At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities.