New study of unicorn founders shows most are 'underdogs', and female founders are on the rise


A new study focusing on founders of so-called “unicorns” (companies valued at more than a billion dollars) finds that the majority of “underdog” founders, who often come from top 10 universities, are an emerging female founder. makeup, but there is no clear monopoly for VCs in the early stage of funding.

A study of 845 unicorns and 2,018 unicorn founders by Defense Capital (the “Unicorn Founder DNA Report”) set out to look at the “DNA” of unicorn founders, focusing on the US and UK (no EU/European) from 2013 to 2023. Define the common characteristics of these types of founders.

The study found:

• 70% of unicorns have “underdog founders” (immigrants, women, people of color).

• Unicorns used to have only male founders, but this is changing with 17% of them having female founders by 2023.

• 53% have degrees from top 10 global universities.

• 49% of unicorn CEOs had a STEM degree (64% of female founding CEOs had a STEM degree) and 70% of founding teams had a STEM degree.

• Apart from SV Angel (6.4%) and YC (10%), no other VC fund accounted for more than 2.8% of the unicorn (Sequoia). This shows that the market for investing in potential unicorns is completely fragmented in seed, meaning that external VC funds have the same chance as a well-known fund to invest in unicorns in the early stages.

The study further found that unicorns were dominated by white founders, but every third unicorn had an Asian founder. In fact, 38% of unicorns had at least one founder who was not white: 82% had at least one white founder, 62% had first- or second-generation immigrant founders. Only 3% of unicorn founders were black.

And only 21% of immigrant and female founders emerged from the top ten VCs. Teams with female founders were two years younger than all-male teams at the time of founding their unicorn (32 vs. 34).

Serial founders (50%) were more likely to succeed in creating a unicorn, but only 1 in five unicorns had a single founder.

During the last decade, all the top seed funds were generalist funds, and the seed fund market is highly fragmented. Only 28% had raised capital from top VC seed funds (with more than 1% market share).

Only 34% of unicorn founders had worked at a specific employer before founding the unicorn, suggesting that a McKinsey or similar background is not a prerequisite for success.

The study also found three key factors in the “DNA” of a unicorn founder.

1. No “Plan B”

2. “A chip on the shoulder”

3. unlimited self confidence

The study found that many unicorn founders were forced to develop a growth mindset with values, work ethic and ambitions established during childhood.

Most had a personal story of feeling mistreated or confined in their native environment.

The study looked at these traits in communities that span generations, for example, female founders, people of color, neurodivergent, or founders with atypical backgrounds.

Many are also “ambitious rebels”, who are often motivated by a larger cause that they care deeply about, have strong family role models, a quality peer network, and no fear of failure.

Far greater numbers of first- and second-generation immigrant CEOs had STEM degrees than native CEOs, suggesting a brain drain from emerging or small economies to developed economies. Notably, more second-generation immigrants attended an elite university than the rest of the sample.

The study revealed other interesting data points. Solo founders tended to start their unicorns three years later than founding teams, and it took an average of 7 years for all types of founding teams to achieve unicorn status, but only 6 years for second-generation immigrants.

And in fact, the all-white, male, local, Ivy League ideal of the founder was actually a rare phenomenon, at 11%, and only a third of founders were natives of the country where they founded the company and a top ten university. Had graduated from.

Furthermore, the top 20 US VC funds favored male, immigrant founders with STEM degrees from elite universities in seed, but missed a trick by largely ignoring female founders, a growing demographic in the unicorn sector.

Commenting, Christian Dorfer, founder of Defense Capital, told me: “I believe this is the most comprehensive study ever conducted on the backgrounds of unicorn founders in the US and UK. We cover all new unicorns from 2013-2023, including over 2,000 founders and over 800 unicorns.

“VCs famously say ‘it’s all about the people’, but only 10% of unicorn founders fit the Mark Zuckerberg profile, with the majority of thousands of seed funds backing the wrong type of founders. “An interesting finding in our study is that even the best funds like Sequoia come in at just under 3% of unicorns – and only 30 funds have a unicorn market share of 1% or more,” he said.

“The hunger, self-confidence, ingenuity and resilience we found in unicorn founders also matters a lot when you consider that 62% of founders were immigrants (usually from countries where it is impossible to create a unicorn) and 17% were new Unicorn is the last year that had a female founder.

He added: “Immigrants and other underrepresented founders are clearly capable of delivering these amazing results but I wanted to prove it to LPs. A lot of immigrant founders are coming from developing countries, like India and Africa, even Eastern Europe. They don't really have that many options at home. They will have to leave and look for opportunities elsewhere.”

“There are only 30 funds that have more than a 1% stake in all these unicorns, which means it is completely fragmented,” he said.

“If you combine this fragmentation with the fact that immigrants and women find it harder to raise money, there is a huge opportunity for new funds to come in and specifically seek out these founders.”

I asked him how might a VC or family office change their strategy as a result of seeing this research?

“Sequoia being the top fund among only 2.8% of unicorns means they have missed out on a lot. Yes, for LPs, top funds are relatively safe investments. But family offices are now looking to emerging managers, and particularly early-stage funds, as potential alpha. So if you are looking to maximize returns as a family office, you need some new funds, emerging managers to get that outside company that turns into a unicorn,” he said.

Dorfer, who now intends to produce a podcast with several of the unicorn founders surveyed, said: “The stories that are coming out show crazy determination. As a female founder, you have to work twice as hard and take twice as many meetings to raise money. The founders of Andela and the three African founders who built unicorns… have stories that are very inspiring.