The AI gold rush is so hot that startups are outgrowing the unicorn label in real time.
While we were reporting this year’s list of future billion dollar companies, some companies raised new capital and topped the threshold almost overnight.
Let me explain. Since 2023, we have worked with TRAC, an early-stage venture firm based in San Francisco, to identify 30 startups whose AI algorithms predict one day will become unicorns.
Because we have to create our own reports on startups, there is always a lag between when TRAC provides us with a list and when we publish it. That hasn’t been an issue in the past few years, as startups typically only raised new funding once a year.
But these are not typical times, with the most popular AI startups raising new rounds every few months.
“The competition to invest in ‘hot’ companies is as intense as it has been in decades,” said Fred Campbell, managing partner at TRAC. “TRAC sees investor demand exceeding round size by a factor of 10, meaning that for every $1 the company wants to raise, investors are providing $10.”
As we worked on this list this year, startups continued to drop out as they raised new funding, surpassing TRAC’s $250 million threshold for becoming a “future unicorn.” So, here are the startups that “graduated” from our ranking:
- Builder.io, which develops a content management system platform for composable commerce, closed a new round late last year at a valuation of $1.85 billion, according to PitchBook.
- Profound, an AI-driven marketing platform, raised $96 million in Series C and reached a $1 billion valuation last month.
- Braintrust, an AI observability and evaluation startup, raised $80 million in Series B funding last month at a valuation of $800 million.
- Novig, a peer-to-peer sports prediction platform, has reached a valuation of $500 million following a $75 million Series B funding round announced last month.
Another reason more companies are breaking through quickly is that TRAC’s AI prediction accuracy continues to improve.
“Today, it is easier than ever for AI to identify future unicorns,” Campbell said.
But for others, it’s easy to identify those unicorns. When TRAC first shared its list of “future unicorns” with us in 2023, using AI to identify startups was rather novel. Now it’s much more common, meaning more VCs are chasing the same companies.
“Securing allocation in funding rounds for fast-growing potential unicorns is becoming more difficult than ever,” Campbell said.
There’s also the question of whether the term “unicorn” has lost its meaning in an era when the hottest Frontier Labs startups are worth more than $1 billion in the first place, long before they even release a product.
Unicorns are supposed to be rare, but there are now 1,694 unicorns, according to data from Crunchbase.
Campbell still believes unicorns are a unique enough breed.
“About 20,000 to 25,000 new tech companies around the world receive funding, but only about 200 become unicorns,” Campbell said. “These are the very rare companies that can capture the largest share of value creation in the market.”
