The Unicorn Puzzle

Monday February 13, 2023


From 2010 to 2021, 639 US VC-funded firms achieved unicorn status. We investigate why there are so many unicorns and why founders grant investors privileges to obtain unicorn status. Unicorns rely more than other VC-funded startups on organizational capital and network effects. Unicorn status enables startups to access new sources of capital, and growth in available funding causes the number of unicorns to increase. As a result, unicorns can stay private longer, which enables them to grow their organizational intangible assets with less expropriation risk and better capture the economies of scale on which their business model relies.


Daria Davydova, Ecole Polytechnique Fédérale de Lausanne
Rüdiger Fahlenbrach, Ecole Polytechnique Fédérale de Lausanne; Swiss Finance Institute; European Corporate Governance Institute (ECGI)
Leandro Sanz, Ohio State University
René M. Stulz, Ohio State University; National Bureau of Economic Research (NBER); European Corporate Governance Institute (ECGI)