This post has been updated.
Last month, Quartz went hunting for the biggest “unicorn makers” in the venture capital world. By analyzing data from research firm Pitchbook, the goal was to find out which firms participated in rounds that directly pushed a startup’s valuation to $1 billion or more.
Accel Partners and Insight Venture Partners came out on top, each with seven deals that helped propel a startup to “unicorn” status. But since the scope was late-stage deals, some readers noted, rightly so, that these firms were simply riding the wave, investing in fast-growing-yet-established startups, such as Slack. For investors with deep enough pockets, it’s easy to go “logo shopping” and invest in hot startups, solely to be associated with them. (The data, however, did include follow-on deals, or subsequent investments in startups the firms already had a stake in.)
But getting in early is often where the biggest returns are. Making those types of investments also requires guts and foresight since they’re bets on startups that might have a barely working prototype—or perhaps just an idea.
So this time, Quartz looked at early-stage investments—seed and series A rounds—in startups that ultimately became billion-dollar companies, using Pitchbook’s US data from 2000 to June 10, 2015. Sequoia Capital led with 17 investments—including LinkedIn, Dropbox, Airbnb, Stripe—followed by SV Angel with nine and First Round Capital with eight. (The data from Pitchbook did not include companies that eventually went public with valuations of $1 billion or more.)
Sequoia has a reputation for being the best at spotting unicorns. When looking solely at the number of billion-dollar startups in its portfolio, that’s true. But the firm has also invested in 307 early-stage companies since 2000, which results in a 5.5% unicorn-spotting rate. (We previously reported a 1.5% rate, but Sequoia has since provided Quartz with data that Pitchbook didn’t have.) Overall, almost all the firms that got in early with at least four unicorns tout a rate of 1% to 3%, with a few exceptions. Y Combinator, for example, invested in the most number of early-stage startups (808), deflating its unicorn-spotting rate to 0.7%. The other major exception is Union Square Ventures, which got in early with five startups (Etsy, Twitter, Zynga, MongoDB, Twilio) eventually worth at least $1 billion. It had only invested in 62 early-stage companies—a whopping rate of 8%.
Update: This post has been updated to clarify that the data from Pitchbook did not include companies that went public with a valuation of $1 billion or more. The charts have also been updated with data provided by the venture capital firms, and the unicorn-spotting rates have been recalculated for the US accordingly.