New study of unicorn founders finds most are ‘underdogs,’ and female founders are rising

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A caller study that zeros-in connected nan founders of alleged “Unicorns” (companies worthy complete a cardinal dollars) has recovered astir person “underdog” founders, are often drawn from nan apical 10 universities, a rising female laminitis make-up, but nary evident monopoly astatine Seed shape of backing for VCs.

The study (“Unicorn Founder DNA Report) by Defiance Capital of 845 unicorns and 2,018 unicorn founders group retired to look astatine nan “DNA” of unicorn founders, concentrating connected nan US and UK (no EU/European) from 2013 to 2023, to specify nan communal traits of these kinds of founders.

The study found:

• 70% of unicorns person “underdog founders” (immigrants, women, group of colour).

• Unicorns utilized to person only antheral founders, but this is changing pinch 17% having a female laminitis successful 2023.

• 53% person degrees from nan apical 10 world universities.

• 49% of unicorn CEOs had STEM degrees (64% of female founding CEOs had STEM degrees) and 70% of laminitis teams person STEM degrees.

• Outside of SV Angel (6.4%) and YC (10%), nary different VC money sewage into much than 2.8% (Sequoia) of unicorns. This suggests nan marketplace to put successful a imaginable unicorn is wholly fragmented astatine Seed, meaning outlier VC costs person arsenic overmuch chance arsenic a well-known money to put successful a unicorn astatine nan earliest stages.

The study further recovered that unicorns were dominated by achromatic founders, but that each 3rd unicorn had an Asian founder. Indeed, 38% of unicorns had astatine slightest 1 laminitis who was not white: 82% had astatine slightest 1 achromatic founder, 62% had 1st aliases 2nd procreation migrant founders. Only 3% of unicorns had a achromatic founder.

And only 21% of migrant and female founders raised from apical 10 VCs. Teams pinch female founders were 2 years younger than all-male teams erstwhile founding their unicorns (32 vs 34).

Serial founders (50%) were much apt to win building unicorns, but only 1 successful 5 unicorns had solo founders.

During nan past decade, each apical Seed costs were generalist funds, and nan marketplace for Seed costs is highly fragmented. Only 28% had raised superior from a apical VC seed money (with much than 1% marketplace share).

Only 34% of unicorn founders had worked astatine an elite employer anterior to founding a unicorn, suggesting a McKinsey aliases akin inheritance is not a prerequisite to success.

The study besides recovered 3 ascendant factors successful nan “DNA” of a unicorn founder.

1. No “plan B”

2. “A spot connected nan shoulder”

3. Unlimited aforesaid belief

The study recovered that galore unicorn founders were forced to create a maturation mindset, pinch values, activity ethic, and ambitions each established during childhood.

Most had a individual communicative of emotion unfairly treated aliases emotion constricted successful their autochthonal environment.

The study observed these traits successful communities near down for generations, e.g. women founders, group of colour, neurodivergent, aliases founders pinch atypical backgrounds.

Many thin besides to beryllium “ambitious rebels”, often motivated by a greater origin they attraction profoundly about, person beardown family domiciled models, a value adjacent web and nary fearfulness of failure.

A acold greater number of 1st and 2nd procreation migrant CEOs had STEM degrees than section CEOs, suggesting a encephalon drain from emerging aliases smaller economies to developed ones. Significantly, much 2nd procreation immigrants attended an elite assemblage than nan remainder of nan sample.

Other absorbing information points came retired of nan study. Solo founders tended to commencement their unicorns 3 years later than laminitis teams, and it took 7 years connected mean to scope unicorn position for each types of laminitis teams, but 2nd procreation immigrants took only 6 years.

And successful fact, nan all-white, male, local, Ivy convention archetype of laminitis was really an infrequent occurrence, astatine 11%, and only 1 3rd of founders autochthonal to a state wherever they founded nan institution graduated from a apical 10 university.

In addition, nan apical 20 US VC costs tended to favour male, migrant founders pinch STEM degrees from elite universities astatine Seed, but look to beryllium missing a instrumentality by mostly ignoring female founders, a increasing demographic successful nan unicorn space.

Commenting, Defiance Capital laminitis Christian Dorffer, told me: “I judge this is nan astir broad study ever done connected nan backgrounds of unicorn founders successful nan US and UK. We screen each caller unicorns from 2013-2023, covering complete 2,000 founders and complete 800 unicorns.”

“VCs famously opportunity that ‘it’s each astir nan people’, but pinch only 10% of unicorn founders fitting nan Mark Zuckerberg profile, astir of nan thousands of Seed costs are backing nan incorrect type of founders. One absorbing uncovering successful our study is that moreover nan champion funds, for illustration Sequoia, only get into little than 3% of unicorns – and only 30 costs person a unicorn marketplace stock of 1% aliases more,” he said.

“The hunger, self-belief, ingenuity and resilience we recovered successful nan unicorn founders besides make a batch of consciousness erstwhile you spot that 62% had migrant founders (typically from countries wherever it’s intolerable to build unicorns) and 17% of caller unicorns past twelvemonth had female founders.”

He continued: “Immigrants and different underrepresented founders are intelligibly capable to nutrient these astonishing results but I wanted to beryllium it to LPs. A batch of nan migrant founders are coming from nan processing world, for illustration India and Africa, moreover Eastern Europe. They don’t really person that galore options astatine home. They person to time off and prosecute opportunities elsewhere.”

“There’s only 30 costs that person much than 1% stock of each these unicorns, which intends that it’s wholly fragmented,” he added.

“If you harvester this fragmentation pinch nan truth that immigrants and women recovered it harder to fundraise, there’s a immense opportunity for caller costs to travel successful and specifically group retired to look for these founders.”

I asked him really a VC aliases a family agency mightiness alteration their strategy arsenic a consequence of seeing this research?

“Sequoia being nan apical money successful only 2.8% of unicorns intends that they miss a lot. Yes, for LPs, apical costs are a comparatively safe investment. But family offices are now looking astatine emerging managers and particularly early shape costs arsenic nan imaginable Alpha. So if you’re looking to maximise returns arsenic a family office, you request to beryllium successful a fewer caller funds, emerging managers successful bid to get that outlier institution that turns into a unicorn,” he said.

Dorffer, who intends now to nutrient a podcast pinch galore of nan unicorn founders surveyed, said: “The stories that are coming retired show crazy determination. As a female founder, you person to activity doubly arsenic difficult and return doubly arsenic galore meetings to raise nan money. The founders of Andela and 3 African founders that built unicorns… person stories that are conscionable truthful inspirational.”