Are unicorns still rare? The U.S. is home to 764 (or 49%) of the world’s 1,553 “unicorns” — privately held companies worth over $1 billion — 53 of which were newly minted in 2024.¹ Well-known U.S. companies that fit the criteria include OpenAI, Reddit, Instacart, Tinder, Uber, and Fanatics, to name a few. All told, the total value of American unicorns is estimated to be around $2.5 trillion, almost half of the $5.3 trillion unicorn value worldwide.^2,3

OpenAI (valued at $157 billion) is chief among the U.S. startups combining the magic of market foresight with investor confidence.⁶ Two months after raising $6.6 billion in the largest venture capital deal of all time, the artificial intelligence (AI) organization has released a new subscription tier called ChatGPT Pro for $200 a month.^7,8

Other high-value U.S. unicorns rewriting the playbook for entrepreneurial success include Space X, Stripe, and xAI. The latter raised $5 billion in a November funding round, bringing its post-investment value to $50 billion.⁹ xAI is currently the second-most-valuable generative AI company in the world behind OpenAI.

New horns on the horizon

Rising stars such as Augment Code (an AI coding assistant), OpenStore (a platform that acquires and scales Shopify businesses), and Fountain (a talent platform) are closing in on billion-dollar valuations, showcasing the steady increase of emerging unicorns in the U.S.¹⁰

For the tenth year running, Forbes has identified 25 U.S. venture-backed companies most likely to reach a $1 billion valuation. Of the list’s 225 alumni, 131, or 58%, became unicorns. Unsurprisingly, the 2024 list is dominated by companies betting on artificial intelligence: Codeium, an AI app that works like autocomplete to predict and complete words or phrases, but for code, has raised $93 million in equity; Coactive AI, which uses AI to analyze and categorize visual data for marketing professionals, has raised $44 million; and Scribe, an app that captures on-screen actions and uses AI to convert them into detailed step-by-step guides, has raised $55 million.¹¹ 

Still, data suggests figuring out how to fly isn’t what it used to be: A report from Bain & Co. found that the pace at which unicorns grow into a household name has slowed significantly.¹² Aside from Meta, Uber is the only other U.S. company to achieve over $10 billion dollars in revenue across the past 2 decades, and it took 14 years to get there. Bain & Co. analysis shows that even among those that have crossed the $1 billion revenue threshold, less than 25% are clearly on track to reach the $10 billion mark.

Investing in innovation

As investing in private companies is typically reserved for institutional investors, Americans need to wait until the company goes public through an initial public offering (IPO). Like any investment, investing in an IPO involves risk and the possibility that the investor could lose money.

For investors that can tolerate risk, taking a chance on a unicorn making its IPO debut represents an opportunity to invest relatively early in the company — if there’s enough demand, there holds the potential for significant gains. For example, the split-adjusted price of Apple at the time of its IPO in 1980 was $0.10 — now, the stock is trading over $247 per share.¹³

Some unicorns race ahead at mythical momentum. Recently, Reddit's shares rocketed more than 200% since the company's initial public offering in March, hitting a record high in early December after analysts highlighted how the company could grow in 2025.¹⁴

Still, research suggests that the average long-term return from IPOs may be lower than the overall market average, meaning investors might not consistently outperform the broader market by solely investing in IPOs.¹⁵ Out of the 168 companies that debuted on U.S. exchanges in 2024, roughly 56% are currently above their offer price, and in aggregate, the total return is around 8%. In comparison, the S&P 500^® is up 26.9% YTD as of Dec. 10, 2024.¹⁶

A dash of magic in the economic mix

While unicorns can drive economic growth by accelerating innovation and creating jobs, they represent only a small fraction of the overall economy: The $2.5 trillion of unicorns in the U.S. represent less than 6% of the market value of the companies that make up the S&P 500^® ($45.8 trillion).¹⁷