Unicorns turning into wereicorns

Matt Harney shared research on EBITDA margin, Revenue growth and Rule of 40 for US unicorns.

1. It’s eye opening how much EBITDA margins have been improved in 4-5 quarters for all types of unicorns (something like 20-70 percentage points depending on quartile). It’s another example that software companies can be operated way more efficiently than many larger startups have done in the last 5-10 years.

2. The fact that the median unicorn is below 0 and bottom quartile unicorns are below -50 in a Rule of 40 calculation are signs of weakness. Given how many startups became unicorns with less than $50 million in revenue, this is another example that many of the 1200+ unicorns around the world really are wereicorns.

Author: Henrik Torstensson

Partner at Alliance VC. Investing in Nordic early-stage tech startups.

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