How Many Funding Rounds Does It Take To Become A Unicorn?

Building a unicorn sounds like a mythical journey reserved for the chosen few. You have an idea, build a product and suddenly, you’re running a business worth a billion dollars.

But how many funding rounds does it actually take to become a unicorn? And is becoming a unicorn more luck, strategy or long-term game play?

Well, thanks to some research by Ilya Strebulaev and the Stanford University Graduate School of Business Venture Capital, we now have a much clearer idea of what the unicorn journey actually looks like in practice.

What Is A Unicorn Anyway?

In the startup world, a unicorn is a privately-owned company valued at $1 billion or more. The term is used because unicorn companies, like unicorns themselves, are a rare any mythical phenomenon.

Through their research, the Stanford University Graduate School of Business Venture Capital looked at nearly 2,000 unicorn companies between 1997 and 2024 that reached a $1 billion valuation either through a funding round or IPO.

Here’s what they found…

How Long Does It Take To Become A Unicorn?

To an outsider, it might seem like unicorn companies grow quickly out of nowhere. And whilst that is true in some cases, it’s not true of others.

Most unicorns actually reach the $1 billion milestone between 4-8 years after starting up. The most common journey from founding to unicorn is around 4 years.

For founders launching today, the journey to unicorn status is estimated to take around 6.6 years, meaning a business launching today could be worth $1 billion by 2030.

But one of the most interesting elements is how much quicker this timeline has become. Companies founded before 2012 took around 10 years to become unicorns. Those founded after 2011 have cut that nearly in half, reaching unicorn status in around five years on average.

Whilst this is certainly impressive, it’s also relatively expected. A billion dollars now, though a lot of money, is significantly less than it was 10 years ago. Cutting it in half however? That’s impressive.

The Speed Of Unicorn Creation Has Accelerated

AI has helped drive down this timeline from inception to unicorn simply by making innovation easier whilst also bringing in a lot of investor attention.

One AI company, Safe Superintelligence, reached unicorn status in under a year. Other AI companies like Anthropic and xAI achieved the same, showing unprecedented levels of growth.

For others, the path was a little longer. Stack Overflow took 13 years. Quizlet took 15. Kiteworks took more than 20 years.

And whilst this certainly seems longer than the year-mark, building a billion dollar company in a decade is still incredibly impressive.

So, How Many Funding Rounds Does It Take?

So we know how much time it takes, but how many funding rounds?

Well, according to the research, which looked at over 2,000 unicorns, the average number of funding rounds before reaching unicorn status was 5.

But within the data, the ranges told many stories.

For example, nearly 200 companies reached unicorn status with less than 2 rounds, which is incredibly impressive.

Almost 600 companies became unicorns between rounds 3 and 4.

But coming in with the most common figure, half of all unicorns raised more than 5 rounds before hitting the billion-dollar mark, and 331 companies needed 8 or more.

In the dataset, the maximum amount of rounds raised was 18.

A Quick Rise Doesn’t Always Lead To Success

Importantly, quick growth doesn’t always mean long-term success. There have been plenty of unicorn startups that have generated hype and risen quickly, only to fall to the wayside later.

Theranos and WeWork are 2 examples of this. Both raised huge capital, generated global hype but ended up burning out in the process.

Whilst Theranos fell as a result of whistleblowing, WeWork struggled with cashflow, eventually filing for bankruptcy.

So whilst fast growth is definitely impressive, it’s not always sustainable.

So, Is Building A Unicorn Fast Or Slow?

Building a unicorn can be fast. In fact, it can be a lot faster than it used to be!

With increased capital and high investor interest, building a unicorn now is the fastest it has ever been.

But whilst founders chase high valuations, the important part isn’t just building a unicorn company quickly. It’s building a unicorn company that can continue to grow and evolve, even long after this milestone has been reached.