In the world of venture capital, an uncomfortable reality has emerged: many unicorns, valued at over $1 billion during the boom years of 2020 and 2021, are struggling to maintain their status. As of January 2025, over 60% of these companies haven’t secured additional funding since 2021, and their growth has slowed significantly. While some continue to generate over $100 million in annual recurring revenue, they face challenges in sustaining the rapid growth they once enjoyed. For founders, the key lies in maintaining growth and managing cash flow effectively, as private equity may still seek to invest in companies showing promise, even if valuations have diminished.
So, there’s a growing concern in the venture capital world that many unicorns—companies once valued at over $1 billion—might not hold on to that title anymore. After resisting this realization for some time, many investors are slowly coming to terms with it by 2024.
A significant number of unicorns that achieved their lofty valuations between 2020 and 2021 are facing harsh realities. Research shows that over 60% of them have not raised any new funding since 2021. Many have struggled to achieve the growth necessary to attract more investment, and their valuations are likely becoming inflated illusions.
According to recent data from Carta, as of January 1, 2025:
– 374 out of the original 616 unicorns had not raised any further funding.
– Only 83 managed to secure a flat or higher valuation in subsequent rounds (about 13.5%).
– 67 experienced a down round (10.9%), showcasing that many are losing value.
– 78 have successfully exited through IPO or acquisitions (12.7%).
– 14 have shut down completely (about 2.3%).
These numbers indicate a tough reality for the venture ecosystem. Investors frequently focus on success stories, but they often neglect to discuss the ones that stall or decline—unless they go completely under.
While some unicorns may have never made sense as high-value companies, others might still be generating $100 million or more in annual recurring revenue (ARR), but their growth has slowed considerably. For these companies, the challenge lies in maintaining stability without running out of cash, even if their growth rates diminish.
So, what if you were one of those unicorns that raised funding at over $1 billion in 2021 or even 2025? The important thing is to keep the momentum going, even if it’s at a slower pace. Private equity firms may not be interested in all the nearly 400 unicorns that haven’t raised further rounds, but many may still find value in those that are financially stable and maintaining even modest growth.
The key takeaway is clear: Reaching a milestone of $100 million+ in ARR, with some growth and no burning cash, can still represent real value for your company—even if it isn’t at the inflated levels seen in recent years. It’s all about sustainable growth in this challenging Market landscape.
Tags: venture capital, unicorn companies, startup growth, funding challenges, private equity.
What does it mean for unicorns to be “stuck in limbo”?
When we say unicorns are “stuck in limbo,” it means these companies are valued at over a billion dollars but are not making much progress. They may be facing challenges that prevent them from growing or moving forward.
Why are so many unicorns struggling?
Many unicorns are dealing with tough Market conditions, competition, or high expectations from investors. These factors make it harder for them to grow and succeed.
What percentage of unicorns are in limbo?
According to Carta, around 60% of the unicorns from 2021 are currently in limbo. This number reflects the difficulties many high-value startups are facing today.
How can unicorns get out of limbo?
Unicorns can work on strategies to improve their business models, reduce costs, and focus on customer needs. They may also seek new funding or partnerships to boost their growth.
What does this mean for investors?
Investors should be cautious with unicorns that are in limbo. It’s important to look at the company’s performance and potential before investing, as the future may be uncertain for many of these startups.