Financial Efficiency of Unicorns: Regional and Sector Related Aspects

Abstract

The curiosity of how startups become unicorns is increasing. Only one-fifth of unicorns operating in the world trade their shares publicly. Financial data from the balance sheets and profit (loss) statements of 97 unicorns, which had IPOs between 2009–2018, was collected with the aim to analyse what specific characteristics of financial ratios over a particular IPO related period can be identified for unicorns operating in different regions and sectors. ANOVA was used to analyse the financial efficiency from different perspectives: (I) the financial profile of a unicorn, (II) the financial efficiency of a unicorn based on the business sector (Software; Products and Services; Technology; Internet and Healthcare sectors), and (III) the financial efficiency of a unicorn based on the region of origin (US+, Europe and Asia). Research showed that unicorns are mostly financed by investors, but remain unprofitable. Positive profitability was found in Europe, and the highest liquidity-in Healthcare sector.