Of the list’s 225 alumni, 131, or 58%, became unicorns, including DoorDash, Figma, Anduril, Benchling and Rippling. This year, it’s dominated by artificial intelligence.
Damn, we’re good. This year was the tenth year in a row that Forbes teamed up with TrueBridge Capital Partners to search for the 25 U.S.-backed companies most likely to reach a $1 billion valuation. Of the list’s 225 alumni, 131, or 58%, became unicorns, including DoorDash, Figma, Anduril, Benchling and Rippling, although 21 of those are now worth less than $1 billion. Forty-two were acquired; only three (1%) went public for less than $1 billion. There have been surprisingly few disasters: Just five startups imploded or shut down, most spectacularly microbiome startup uBiome, an alum of the 2018 list, which liquidated after being raided by the FBI over its billing practices.
Only the tiniest fraction of the nation’s tens of thousands of venture-backed startups will ever reach a billion-dollar valuation. When Forbes first launched this list in partnership with TrueBridge in 2015, the goal was to find those that looked poised to become unicorns well before they became household names. From the start, the list was grounded in quantitative analysis based on data provided by companies on metrics that include revenue, revenue growth, valuation, valuation growth and headcount.
One of the standout companies that first year was Tanium, the cybersecurity startup that was one of three firms that year to cross the $1 billion mark before we published. (We’re more careful to exclude startups like that now.) Today, the Kirkland, Washington-based startup, which reached a valuation of $9 billion in 2021, has raised nearly $1 billion in funding and ranks #20 on the Forbes Cloud 100 list. And perhaps our single best win from not just that year but the list overall: DoorDash, the food delivery firm that now trades on Nasdaq with a market cap of $51 billion.
Alumni of the list include DoorDash, Anduril, Tanium, Figma, Rippling and Duolingo.
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Since then, we’ve identified startups that include Anduril, the defense tech firm and alumnus of the 2018 list that is now valued at $14 billion; language-learning app Duolingo, which was on the 2019 list and is now publicly traded with a market cap of $8 billion; design startup Figma, an alum of the 2019 list that’s now valued at $12.5 billion; HR software firm Rippling, which was on the list in 2020 and is now valued at $13.5 billion; and semiconductor startup Astera Labs, an alumnus of the 2022 list that’s now publicly traded with a market cap of $6.2 billion.
Astera, the first semiconductor startup to make the list, posted latest 12-month revenue of $230 million – and told investors in early August that it expected $95 million to $100 million in the upcoming third quarter. The company’s founders, all first time entrepreneurs who’d previously worked at Texas Instruments, started the company because of a belief that the existing ways of connecting all the GPUs and AI chips together wasn’t keeping up with advances in artificial intelligence and machine learning. In a recent interview, cofounder and president Sanjay Gajendra said the AI boom had played out even faster than they’d expected. “We did not envision the trillion-parameter-plus models,” he said. “To be candid with you, this is way bigger than we had imagined.”
Last year’s list featured Monarch Tractor, makers of an electric autonomous tractor, which recently raised $133 million at a valuation of $518 million to expand overseas, starting in Europe. Despite farmers postponing purchases of capital equipment due to interest rates, Monarch expects revenue to reach $112 million this year, up from $37 million last year. “For farmers high interest rates are making purchases challenging,” said cofounder and CEO Praveen Penmetsa. “We are feeling some of that, but because we are a transformational company and providing operational savings to farmers, we can continue our growth.”
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This year, with artificial intelligence dominating the markets, the list includes startups using AI to do just about everything. Codeium makes an AI app that works like autocomplete but for code. Scribe uses AI to make training easier than screen-sharing over Zoom. Fireworks AI, founded by former Meta engineering director Lin Qiao, aims to help businesses ship new AI products in as few as five days at minimal cost. And Replicate provides a library of 25,000 open-source AI models, including Stable Diffusion and Meta’s Llama 2, so developers can test out which one works best for them.
But this year’s list also looks beyond the hype to companies solving less glamorous problems, like Promise, which works with municipalities and utilities to collect unpaid bills with text messages and zero-interest plans. “We had to make the case to the market that you can build products that are not predatory, that work for people and work for the market,” said cofounder and CEO Phaedra Ellis-Lamkins, who previously worked as a labor organizer, non-profit executive and business advisor to pop star Prince.
This year’s list includes five companies with female cofounders – Equip, Fireworks AI, Midi Health, Promise and Scribe – all of which also have female CEOs. That compares with last year’s list, when six companies had female cofounders, though only three with female CEOs. Those numbers – a reflection of Silicon Valley’s funding – have remained stubbornly lower than we’d like.
This year’s crop of startups has far lower average previous year’s revenue than those on the 2023 list, with $14 million versus $24 million. With AI investment booming, three companies – Coactive AI, Langchain and Turnkey – had zero revenue for 2023. They also, perhaps surprisingly, raised less equity, an average of $80 million to last year’s $104 million.
For the full list of Next Billion-Dollar Startups, see here.
This article was first published on forbes.com and all figures are in USD.
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