Startups to Look out for in 2024

A look at tomorrow's Unicorns

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Executive Summary

• In 2023, VC investment experienced a significant decline of 44% on a year-over-year basis. North America faced the most significant impact, witnessing a 48% decline, followed by APAC (31%) and Europe (17%).

• Despite the decline, the global entrepreneurial ecosystem continues to flourish, boasting 1,262 unicorns, although 2023 saw a decrease in the number of new unicorns from 258 to 87.

• OpenAI emerged as the leading unicorn of 2023, with a valuation of $29 billion. Artificial Intelligence (AI) took center stage among the top five valuations, accounting for $37.1 billion (78%), while Semiconductors stood at $5.9 billion.

• The US is anticipated to lead unicorn creation, with over 2,000 potential candidates, while Canada, the UK, and India also exhibit promising prospects.

• Technology & communications, financial services, power, and pharma & healthcare are the dominant sectors in the potential unicorn landscape, collectively encompassing over 80%. Pharma & healthcare, in particular, are poised for significant expansion.

• AI and Fintech are poised to dominate future unicorn creation, while Healthtech and IoT are anticipated to exhibit substantial growth.

Recent VC Trends

Macroeconomic headwinds, exacerbated by rising interest rates and geopolitical tensions like the war in Ukraine, have caused a decline in VC activities over the past two years. 2023 saw a significant downturn, with both deal volume and value hitting their lowest levels.

Global VC Map 2023

• Throughout the year 2023, North America consistently held the position of the foremost region in the global landscape of venture capital (VC) investments, displaying an impressive performance with venture transactions valued at $118.6 billion. 

• The Asia-Pacific (APAC) region exhibited remarkable growth, emerging as the second most active region with venture deals totaling $77.3 billion. Within the APAC region, notable countries such as China, India, Japan, and South Korea played crucial roles in propelling this substantial growth.

VC 2023 Sector Breakdown

The tech industry attracts the highest amount of venture capital funding, with the pharmaceuticals and healthcare sectors, as well as the financial services industry, receiving the second and third largest shares of VC investments, respectively.

Cybersecurity plays a major role in the growth of Tech, media and telecom. Biotech and customized medications are contributing to the expansion of the healthcare industry. These advancements not only enhance access to higher-quality services but also reduce production costs. Mobile applications, financial inclusion, and the incorporation of AI are some of the factors propelling the financial sector's expansion.

Unicorn Trends

Unicorn numbers worldwide reached 1,257 by the end of 2023. The year did, however, record the fewest new unicorns in the previous five years, with a noticeable slowdown since Q3 2022.

• As of December 31, 2023, there were 1,257 identified unicorns worldwide, with a valuation of approximately $2.2 trillion.

• The number of unicorns created in 2023 was remarkably lower than in 2022, with just 87 new unicorns created, a 66% decline.

• In contrast, there were 258 new unicorns worldwide in 2022. Of these, North America and Asia-Pacific accounted for roughly 77%.

2023: A Year of Prudence

In 2023, there were major challenges facing the global startup ecosystem due to geopolitical tensions and macroeconomic uncertainties, which made things difficult for investors and entrepreneurs alike. The year saw a noticeable slowdown in funding as investors became more cautious and gave priority to companies with strong business plans and obvious routes to profitability.

The United States remained the world leader in unicorn creation despite the general slowdown, with China trailing closely behind. It is interesting to note that, in 2023, the US was the only nation to witness the birth of a decacorn, with the tech community taking notice of OpenAI's explosive ascent.

With just two startups reaching unicorn status in 2023, India saw a sharp decline from its stellar performance in 2022, when it had the second-highest number of new unicorns.

The year also brought attention to artificial intelligence's expanding impact, which was largely fueled by ChatGPT's ground-breaking success. Three of the top five unicorns born in 2023 are AI-focused businesses, highlighting the technology's growing prominence and potential. This AI-powered chatbot had a ripple effect on the startup scene.

When we reflect on 2023, it is evident that a lot has changed in the funding landscape. Specifically, investors are now more picky, and startups now need to show that they can bounce back and adapt when faced with challenges. The emergence of artificial intelligence and the US and China's continued leadership in the unicorn race indicate that exciting times are ahead, even as the world's startup community struggles to adapt to a post-pandemic world.

87 Unicorns in 2023

Unicorns by Sector and Themes

• The industries with the highest unicorn valuations in 2023 were technology and financial services.

• AI dominated the new unicorns that year, signaling a significant trend in startup innovation.

Who Backed the Most Unicorns in 2023

Startup Hubs with Most Predicted Unicorns

The US is poised to maintain its dominance, while India is projected to surpass China in unicorn births. However, China may experience a slowdown from its current pace. Meanwhile, significant growth is anticipated in the UK and Germany.

Tomorrow’s Unicorns Sector Breakdown

Technology & Communications

Perplexity AI

• Company Description: Perplexity offers a generative AI tool that functions as an answer engine. It utilizes large language models (LLMs) and provides responses to questions, offering real-time information, and cites relevant sources for transparency and credibility.

• Business Model: To provide a comprehensive knowledge discovery experience through their conversational application and search engine platform

• Headquarters: United States of America

• Solution Focus: AI Search

• Founded: 2022

• Valuation: $520 M

• Total Funding: $131.1M

• Latest Funding: $73.6M (Jan 2024)

• Key Themes: Artificial Intelligence, Conversational Platforms

• Customer Type: B2B/B2C

Gecko Robotics

• Company Description: Gecko Robotics is a startup that specializes in developing robots for industrial inspections. The company's robots are designed to climb and inspect industrial infrastructure such as tanks, boilers, and other complex structures, providing detailed data on their condition without requiring human workers to perform dangerous manual inspections.

• Business Model: Gecko Robotics operates on a subscription-based business model, offering its robotic inspection services to industrial clients on a contractual basis. The company typically charges clients recurring fees for access to its robotic inspection technology and the data analysis services it provides.

• Headquarters: United States of America

• Solution Focus: Robotic Inspection

• Founded: 2013

• Valuation: $633 M

• Total Funding: $229.3M

• Latest Funding: $100M (Dec 2023)

• Key Themes: Robotics

• Customer Type: B2B

Celestial AI

• Company Description: Celestial AI develops an optical interconnect technology platform for compute and memory, enabling optically scalable, disaggregated data center compute and memory for AI advancements. Their technology supports sustainable business models and is integrated into the Orion™ AI accelerator, facilitating independent scalability of compute and memory with optically interconnected high-capacity HBM memory (O-HBM).

• Business Model: Celestial AI's business model revolves around monetizing their advanced optical interconnect technology through various channels, including technology licensing, sales, ecosystem development, and support services.

• Headquarters: United States of America

• Solution Focus: Optical Interconnects

• Founded: 2017

• Valuation: ~$300 M

• Total Funding: $165M

• Latest Funding: $100M (Jun 2023)

• Key Themes: AI Chips

• Customer Type: B2B

Pliops

• Company Description: Pliops develops cloud storage processor technology to enhance storage processors for database applications, consolidating multiple layers into a single high-speed device. This addresses scalability issues posed by the cloud data surge and growing demands of AI and ML, allowing faster data access with reduced computational load and power usage in cloud and enterprise data centers.

• Business Model: Pliops generates revenue through the sale or licensing of its hardware and software solutions, supplemented by service contracts for maintenance and support.

• Headquarters: Israel

• Solution Focus: Advanced Semiconductors

• Founded: 2017

• Valuation: NA

• Total Funding: $205M

• Latest Funding: $100M (Aug 2022)

• Key Themes: Cloud

• Customer Type: B2B

Financial Services

Yu Life

• Company Description: Yu Life is a life insurance company that integrates wellness into its offerings, rewarding policyholders for healthy behaviors. The company utilizes a digital platform where users participate in health challenges to earn rewards for healthy living, supporting mental, physical, and financial well-being.

• Business Model: Yu Life generates revenue through premiums paid by policyholders for their life insurance coverage. It rewards policyholders with incentives for engaging in healthy activities, tracked through its app.

• Headquarters: United Kingdom

• Solution Focus: InsurTech

• Founded: 2016

• Valuation: $800M

• Total Funding: $206.64M

• Latest Funding: $120M (Jul 2022)

• Key Themes: InsurTech

• Customer Type: B2B/B2C

Nymbus

• Company Description: Nymbus provides modern core banking solutions. The company's main activities include the development and provision of a cloud-native platform that supports both traditional and digital retail and business banking. Nymbus offers a range of products and services such as online banking, onboard, lend, labs, banking-as-a-service (BaaS), and operations. It also provides a turnkey solution for launching a digital bank.

• Business Model: Subscription-based SaaS model, offering a cloud-based core processing platform for financial institutions with additional revenue streams from implementation services, transaction fees, customization, data analytics, partnerships, and licensing.

• Headquarters: United States of America

• Solution Focus: Banking Platforms

• Founded: 2015

• Valuation: NA

• Total Funding: $194.2M

• Latest Funding: $70M (May 2023)

• Key Themes: Digital banking, Cloud

• Customer Type: B2B

Tally Technologies

• Company Description: Tally Technologies (Tally) offers a mobile app that aids users in reducing their credit card debt by analyzing their individual financial profiles and extending a new line of credit at a lower interest rate. Additionally, the app facilitates credit card payments, assisting users in avoiding late fees.

• Business Model: The business model of Tally revolves around earning revenue through interest charges levied on users who carry a balance. The company refrains from charging annual fees, balance transfer fees, late fees, prepayment fees, or insufficient funds fees. Instead, it generates revenue by charging a lower annual percentage rate (APR) compared to its users' existing credit cards.

• Headquarters: United States of America

• Solution Focus: Digital Lending

• Founded: 2015

• Valuation: $855M

• Total Funding: $172M

• Latest Funding: $80M (Oct 2022)

• Key Themes: Fintech

• Customer Type: B2C

ADDI

• Company Description: Addi is a digital platform that offers a buy now, pay later service. It allows customers to purchase products and pay in installments. The application also allows users to track purchases, available limits, and payment history.

• Business Model: The platform generates revenue through transaction fees charged to merchants for each sale made using its platform, as well as through interest or fees charged to consumers on certain payment plans.

• Headquarters: Colombia

• Solution Focus: BNPL

• Founded: 2018

• Valuation: NA

• Total Funding: $141.3M

• Latest Funding: $75M (Sep 2021)

• Key Themes: Fintech

• Customer Type: B2C