Unicorns, privately held start-up companies valued at US$1 billion or more, are so called owing to their statistical rarity (though in real life of course they only exist in legends).

What does the presence of unicorns, the corporate kind, signify to a country? Is it a reflection or product of the size, vigour, entrepreneurship, ability and willingness to embrace novelty and change of the economy from which they arise? Or it is simply a matter of having an efficient private capital market which funds and grows young businesses? Either way, their international distribution makes interesting reading. 

According to a list recently put together by CB Insights, the US market intelligence firm that focuses on high growth private companies and investor activities, the USA leads the world in sightings of unicorns, with 402 companies valued in aggregate at US$1,325 billion. The statistics are revealing, especially when each country’s GDP ranking (2020) is juxtaposed:

No. of unicorns by country

 1. United States; 402 unicorns; aggregate value $1,325 billion; GDP rank in the world 1st

 2. China (ex. Hong Kong): 158 unicorns; $533 billion; 2nd in GDP

 3. India: 41unicorns; $133 billion; 6th in GDP

 4. United Kingdom: 31unicorns; $134 billion; 5th in GDP

 5. Germany: 18 unicorns, $46 billion; 4th in GDP

 5. Israel: 18 unicorns, $25 billion; 29th in GDP

 7. France: 17 unicorns; £30 billion; 7th in GDP

 8. Canada: 14 unicorns; $29 billion; 9th in GDP

 9. Brazil: 13 unicorns; $58 billion; 12th in GDP

10. South Korea: 10 unicorns; £24 billion; 10th in GDP

11. Singapore: 8 unicorns; $24 billion; 36th in GDP

12. Hong Kong: 6 unicorns; $33 billion; 35th in GDP

13. Australia: 6 unicorns; $23 billion; 13th in GDP

14. Japan: 6 unicorns; $12 billion; 3rd in GDP

15. Switzerland: 5 unicorns; $8 billion; 18th in GDP

16. Sweden: 4 unicorns; $58 billion; 22nd in GDP

16. Netherlands: 4 unicorns; $13 billion; 17th in GDP

18. Indonesia: 3 unicorns; $14 billion; 16th in GDP

19. United Arab Emirates: 3 unicorns; $5 billion; 27th in GDP

What stands out from the above is the relative “over-achievement” by Israel, Singapore and Hong Kong in relation to their GDP ranking. Israel has long been known for its tech-based start-up scene. The government of Singapore has made no secret of its ambition to attract talent and capital from surrounding areas to encourage entrepreneurs. The Hong Kong picture can probably be seen as part of the larger Chinese drive for growth. 

In contrast, the “under-achievement” of Japan is as disappointing as it is striking. What does this say about the country’s ability to nurture, promote and finance new businesses? As noted previously, Japan has a large number of SMEs, many of which play very important roles in innovation. (It is worth noting that Italy, the third largest EU economy and another country with many SMEs, has no unicorn in the CB Insights list.) Japan also has large conglomerates with global footprints. The country’s financial firepower is globally acknowledged. What Japan does appear to lack is an active and efficient private capital market. Japanese VC, family office and HNWI investments seem to account for much less in the growth of young companies compared to other mature economies. If today’s unicorns are tomorrow’s core players, Japan should breed lots of them, and fast.