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The Rise of Unicorns: Multi-Billion-Dollar IPOs

Written by Leonardo Hadi · 7 min read >
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The drivers behind the rapid growth of unicorns and the overview of 2021 multi-billion-dollar IPOs: Coinbase, Robinhood, Instacart, and more.

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The Rise of Unicorns

Silicon Valley is turning itself into the new Wall Street with the rise of multi-billion-dollar IPOs of the technology unicorns during the COVID-19 pandemic. For instance, Airbnb (NASDAQ: ABNB) successfully launched its IPO in 2020 and reached market valuation for more than $100 billion on the first trading day. On the same IPO day, seven-year-old food delivery company DoorDash (NYSE: DASH) went public with $72 billion in market capitalization, while C3.AI (NYSE: AI), an artificial intelligence company, set $13.4 billion in market value.

Read more: How beat DoorDash and Airbnb on IPO first-day return.

Meanwhile, Affirm (NASDAQ: AFRM), a financial technology and loan installment platform, hit an IPO price of $20 billion in January 2021. Roblox (NYSE: RBLX), an online game platform, reached $38 billion in market valuation on IPO in March 2021. The term “Unicorn” is popularized by Venture Capitalist, Aileen Lee, to describe a privately held start-up company with a valuation of more than $1 billion. Today, there are over 450 unicorns that are in the process of IPO – among them are SpaceX, Stripe, Byte Dance, Instacart, Coinbase, and Robinhood.

Read more: Roblox IPO – Dow Sets Record High.

Dot-Com Bubble

After the 2000 dot-com bubble burst, investors and venture capitalists became very cautious in funding internet-based start-ups due to the lack of long-term sustainability and profitability. Amazon, Microsoft, and Google were the companies that survived and thrived after the dot-com bubble burst, but it took a long time for them to be profitable. For example, Amazon (NASDAQ: AMZN), an online bookstore started by Jeff Bezos, did not generate any profit for decades as it reinvested all its profit to grow the business.

Meanwhile, Amazon’s market capitalization was higher than Sears, a brick-and-mortar department store, at that time. Amazon had to sell all the books globally to justify its market capitalization. Eventually, Amazon grew into an online shopping platform, cloud company, and online media streaming and hit $1.5 trillion in market capitalization in 2020. Ironically, Sears filed bankruptcy in the same year as its business model could no longer sustain the digital disruption, consumer behavior shift from in-store to online, and survive due to the economic lockdown during the COVID-19 pandemic.

Based on this experience, future earnings of unicorns can justify the high valuation today as long as they have an agile business model and resiliency in facing disruption in technology innovation, consumer behavior shift, and significant macro-event like the COVID-19 pandemic.

Read more: Pandemic aftershock: 10 global economic trends in 2021

Drivers Behind Unicorn’s Rapid Growth

The mainstream adoption of the internet and the dot-com bubble in the 2000s have given birth to the early unicorns. As technology advances, semiconductor innovation has allowed faster, lighter, cheaper, and more intelligent mobile devices like smartphones, computers, and wearables. Unfortunately, semiconductor advancements in micro-devices and cloud computing were not available before the dot-com bubble, limiting user expansion, restricting the growth of early unicorns, and bursting the bubble.

Apple’s iPhone and App Store launch stimulated higher technology adoption to a large population for both developers and users. Previously, only software companies could afford software development due to increased development costs. Now, Apple’s App platform has enabled the “basement and garage” software developers to develop their games or applications with their laptops, launch directly into the App Store, and cut the “middle-man” and expensive supply chain cost.

The revolution from Apple to democratize software development and lower the delivery costs to the mass market has started the new era of a “Platform” business model. Before the deep dive into the platform business model, let’s first understand the reasons behind the rapid growth of unicorns. It starts with the Get Big Fast strategy’s successful application, high demand for acquisition from the big technology companies and venture capitalists, and premium valuations for going public with the Initial Public Offering (IPO).

Get Big Fast Strategy

The Get Big Fast (GBF) became a popular strategy among unicorns to gain market share, accelerate rapid growth, and weed out the competition by providing free services and conducting large funding rounds. The GBF strategy starts with a free subscription model to acquire as many users as possible and eliminate competitors. The unicorn may apply the freemium model and generate revenue from advertising down the road.

The second step begins with completing multi-round venture capitalist funding to fuel the rapid expansion, hire employees, and develop features that will attract and retain users to remain active on the platform and gain market share. The last step will be to grow internally, acquire other start-ups, be acquired by a larger company, or go for an IPO. The most successful GBF strategy application was Facebook (NASDAQ: FB).

Facebook started as a school project in 2004 to collect university students’ pictures and profiles to measure their attractiveness. Later, it snowballed to other universities, exploded to the mass market, and became the birth of social media. Facebook offered free subscriptions, completed multi-found venture capitalist funding to keep up with the expansion, weed out competition like MySpace, and went for IPO in 2012. Today, Facebook has a market capitalization of $826 billion (as of March 19, 2021) and has acquired many unicorns, such as Instagram and WhatsApp.


Buyout through mergers and acquisitions (M&A) becomes one of the critical drivers of the rapid growth of unicorns fueled by numerous venture capitalists and angel investors looking for the next big thing. Sequoia Capital is the most significant venture capital behind the rise of Apple, Google, Oracle, Nvidia, PayPal, YouTube, Instagram, Yahoo, and more. The venture capital has invested over 1000 companies since 1972, with today’s combined valuation of $3.3 trillion [1].

On top of it, Facebook, Google, and Microsoft are big technology companies actively looking for unicorns for acquisition that can enhance their customer value proposition, offering and develop synergies with their existing business model. It creates competition for the venture capitalist and drives up the valuation of unicorns. It explains why many unicorn IPOs are in the multi-billion-dollar range despite negative profitability.

The main attractiveness of unicorns is the technology entrepreneurs’ freedom and flexibility to grow their start-ups without market pressure of profitability. It benefits them to seek solutions outside the box, better understand the market, and take more risks. The unicorns become the acquisition target when their business model is proven successful. It is the main reason for Facebook acquiring companies like Instagram and WhatsApp, while Google buys YouTube and Microsoft to buy LinkedIn.


Silicon Valley has transformed itself as the recent Wall Street driven by the rapid growth of start-up founders turn billionaire venture capitalists, after going public. Initial Public Offering (IPO) is the ultimate goal of every start-up. Many founders see IPO as the general approval of their business model, the opportunity to cash in their sweat equity, and a source of new funding for further growth.

They provide seed capital, incubator, and accelerator opportunities for new start-ups and turn them into unicorns. The start-up founders will benefit from the network to expand the market share, significant funding source, coaching to develop an agile business model, and guidance for a successful IPO. The venture capitalists will make huge profits after the unicorns reach a high valuation on the IPO day. Furthermore, with a large amount of cash looking for the next significant investment and an enormous payoff on the IPO, the demand for new start-ups and unicorns continues to go up and drives the valuation even higher.

Multi-Billion-Dollar IPOs

The rapid growth of the internet is still the driving force for technology start-ups and unicorns. However, the business model has changed from a customer website into a “Platform” business model that allows users to be both the suppliers and customers. A website is only a landing page for the company to advertise its product and services in the past. Today, a website becomes a “Platform” that allows users to interact by writing comments, providing reviews, and ordering products and services directly from other users through the platform.

Platform Business Model

The users’ ability to interact with other users became the basis of the “Platform” business model. The website is no longer just a landing page. It becomes the virtual store replacing the physical retail stores with the same capability as in-store retail, including product browsing, payment, and delivery, at a fraction of the cost. The transformation allows the online shopping companies to lower the operating cost, reduce the product price, and compete with the big retail giants. Simultaneously, the “Platform” business model allows the company to provide better quality products and services through the unbiased crowdsourced star rating process.

Amazon is the best example for applying the “Platform” business model for online shopping. The Amazon platform allows sellers to list their products and enable buyers to purchase directly through its website, while Amazon only applies service fees plus delivery service. The same platform business model applies to LinkedIn, Facebook, Instagram, Twitter, Reddit for social media, Airbnb for home rental, Bumble for dating, Roblox for games, Coursera for courses, Spotify for music, YouTube for videos, Uber for the taxi service, DoorDash for food delivery, GitHub for coding, Fiverr for freelance jobs, Indeed for job seekers and recruiters, and more.

2021 IPO Hot List

CompanyIndustryMost recent valuationRecent Annual RevenueListing
RobloxVideo games platform$38 billion$923 millionNYSE: RBLX
AffirmLoan platform$20 billion$510 millionNASDAQ: AFRM
BumbleOnline dating platform$8 billion$488 millionNASDAQ: BMBL
InstacartGrocery delivery platform$30 billion$3 billionPrivate
RobinhoodFinancial trading platform$20 billion$682 millionPrivate
NextdoorLocalized social network platform$4 billionPrivate
GitlabOpen-source code management platform$6 billion$150 millionPrivate
CourseraEducation platform$5 billion$140 millionPrivate
CoinbaseCryptocurrency platform$28 billion$1.14 billionPrivate
UiPathRobotics software platform$10.2 billion$400 millionPrivate
PetcoPet retail$6 billion$4.1 billionPrivate
Source: Bloomberg

Roblox (NYSE: RBLX), a video game platform, went public on March 10, 2021, and the stock surged 43%, with more than $38 billion in market capitalization on the market debut. The company CEO and co-founder, David Baszucki, describes Roblox as a community where people create together. The video game platform is free and available through smartphones, tablets, and consoles, with the primary revenue generation from Robux currency to purchase virtual objects.

Read more: Roblox IPO – Dow Sets Record High.


Affirm (NASDAQ: AFRM) is a financial technology company engaging in financial lending and loan installment platforms for online shopping. The company has a partnership with Walmart and Shopify to provide loan installment services for online purchases. The company reported annual revenue of $509 million with nearly $20 billion of market capitalization since the IPO on January 13, 2021.


Bumble (NASDAQ: BMBL), a female-focused dating and networking app that allows women to make the first move. Bumble reached 80 million matches and had over 22 million members in just over one year. As of 2019, Bumble and Tinder became the most popular dating apps in the US, with combined monthly users of nearly 13 million people. Bumble reported annual revenue of $488 million with $7.86 billion in market capitalization.

Read more: Bumble $13 billion IPO: 63% surge on market debut led by 31 years old female CEO


Instacart is a platform service for grocery delivery and pick-up in the United States and Canada via the website and mobile App. The company founder, Apoorva Mehta, was a former Amazon employee. Before founding Instacart, he started 20 different platform services, including social gaming companies, social networks for lawyers, and more. The company reported $10 million in revenue in 2013 and grew to $3 billion in 2019. The company plans for an IPO in late 2021 with an estimated valuation of $30 billion [1].


Robinhood is the pioneer of a commission-free trading platform that unlocks the large micro-investor market. The online trading platform generates revenue from payment for order flow. It sends small trades with high volumes into a larger brokerage house and receives an incentive payment. In Jan. 2021, Robinhood was at the center for Reddit WallStreetBet’s short squeeze against a hedge fund on GameStop stock. The company generates annual revenue of $682 million, with an estimated IPO value of $20 billion [2].


GitLab is a free and open-source software code repository platform that provides source code management solutions and team collaboration on software development. The company focuses on helping software developers and engineers to speed up product updates and lowering operating costs. The company reported $150 million annual revenue and an IPO value of $6 billion.


Coursera revolutionized higher education by providing high-quality courses from reputable universities worldwide. It also becomes the platform to deliver an online degree from a major university in the United States, Australia, and Europe. The company reported annual revenue of $140 million and an estimated IPO value of $5 billion.


Coinbase is the largest cryptocurrency exchange in the United States by volume. It is known as the exchange and storage for Bitcoin plus other crypto and other government-issued currencies. The company integrates its payment processing service with PayPal, Stripe, and Braintree. The company was founded in 2012 and generated annual revenue of $1.14 billion. It expects to launch its IPO this year with an estimated valuation of $28 billion.

Read more: Bitcoin’s wild run hit $1 trillion market capitalization


UiPath is a software company that develops a platform for robotic process automation. The platform manages repetitive front and back-office tasks, including customer relationship management and enterprise resource planning. The company reported $400 million annual revenue and an IPO value of $10.2 billion.

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Written by Leonardo Hadi
Quantitative hedge fund investor and Professional Engineer, holding an MBA from the University of Illinois at Urbana-Champaign Profile

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