KUALA LUMPUR (Dec 27): Funding for the unicorn class of companies — private start-ups valued at US$1 billion (RM4.63 billion) or more — has fallen dramatically in 2023 to around 25% of what it was during the 2021 market peak.

In a report on Tuesday, Crunchbase, which tracks trends, investments and news of global companies from start-ups to the Fortune 1000, said that investments by leading investors in unicorn companies dropped precipitously in 2023.

The firm found that investments were mostly in the single digits this year for the most active investors in this asset class.

It said the nine most active venture and growth investors globally, who have racked up the most investments in unicorn companies since 2018, invested in a total of 44 unicorn companies in 2023 — or 13% of all unicorn companies that raised funding in the private market this year.

Crunchbase said that in 2022, they invested in 213 companies, or around 28% of unicorns funded that year. In 2021, that number was 471 companies, or 30% of this asset class.

The firm said that for the three most active investors — growth-stage investors Tiger Global, Coatue and the SoftBank Vision Fund — investment counts in 2021 were up almost three times or greater from 2020, as these firms made bigger bets as the initial public offering market for technology stocks took off in 2021.

It said that for the multi-stage venture capital firms that were the most active — Andreessen Horowitz, Accel, Lightspeed Venture Partners and Index Ventures — along with growth investor Insight Partners, investment counts were closer to doubling in 2021 as compared to 2020.

Crunchbase said these firms tended to invest earlier in companies, and kept investing through the growth in the venture market.

Sequoia Capital was the single firm on this active list of investors in unicorns that increased its investment pace, but did not double year-on-year from 2020 to 2021, Crunchbase said.

Crunchbase also said that in 2024, it expects to see a winnowing of the unicorn ranks as some companies shutter, others are acquired, and, in the best-case scenarios, ascend to the public market.

And some companies might still be able to raise funding, albeit at lower values, it said.