The Unicorn Puzzle

Daria Davydova, Ruediger Fahlenbrach, Leandro Sanz and René M. Stulz
Additional contact information
Daria Davydova: Ecole Polytechnique Fédérale de Lausanne
Leandro Sanz: Ohio State University (OSU) - Department of Finance
René M. Stulz: Ohio State University (OSU) - Department of Finance; National Bureau of Economic Research (NBER); European Corporate Governance Institute (ECGI)

No 22-80, Swiss Finance Institute Research Paper Series from Swiss Finance Institute

Abstract: From 2010 to 2021, 639 US VC-funded firms achieved unicorn status. We investigate why there are so many unicorns and why controlling shareholders give investors privileges to obtain unicorn status. We show that unicorns rely more than other VC-funded firms on organizational capital as well as network effects and the internet. Unicorn status enables startups to access new sources of capital. With this capital, they can invest more in organizational intangible assets with less expropriation risk than if they were public. As a result, they are more likely to capture the economies of scale that make their business model valuable.

Keywords: Unicorns; Scale and Scope; Venture Capital; Private vs. Public; Organizational Capital (search for similar items in EconPapers)
JEL-codes: G24 G32 G34 (search for similar items in EconPapers)
Pages: 72 pages
Date: 2022-10
New Economics Papers: this item is included in nep-pay and nep-sbm
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Citations: View citations in EconPapers (1)

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Working Paper: The Unicorn Puzzle (2022)
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