China has surpassed the United States as the country with the most unicorns, with 206 privately held tech startups each valued at $1 billion or more, the Hurun Research Institute said on Monday.
The report identified 494 unicorns worldwide as of June 30, 2019.
Why it matters: China and the US are locked in a race to lead in key technology sectors such as artificial intelligence (AI) and cloud computing. Ongoing trade tensions between the two countries have led to the crippling of several Chinese tech startups by a ban on the import and sale of American technology.
“China and the USA dominate with over 80% of the world’s known unicorns, despite representing only half of the world’s GDP and a quarter of the world’s population. The rest of the world needs to wake up to creating an environment that allows unicorns to flourish in.”
—Hurun Report Chairman and Chief Researcher Rupert Hoogewerf
Details: According to the ranking, the world’s top three unicorns by valuation are from China: Alibaba-affiliate Ant Financial valued at $150 billion, TikTok’s parent company Bytedance worth $75 billion, and ride-hailing giant Didi Chuxing at $55 billion.
- The report named American venture capital firm Sequoia as the most successful unicorn investor with 92 unicorns in its portfolio. Other prominent unicorn investors include SoftBank, Tencent, Tiger, IDG, Goldman Sachs, and Alibaba.
- The US trailed China by a small margin, clocking 203 unicorns.
- In China, e-commerce has produced the most unicorns with 33 startups in the sector. Fintech and media and entertainment are also fertile breeding grounds for unicorns.
- The cumulative valuation of China’s fintech unicorns totaled $262 billion, more than four times than that of the US.
- Chinese startups SenseTime, valued at $6 billion, and Megvii, valued at $4 billion, were among the four highest valued AI unicorns worldwide.
- This is the first report on global unicorns released by the Hurun Research Institute.
Context: China is eager to transform itself from the world’s manufacturing center into an innovation hub on par with the most technologically advanced countries, and it is looking to do so by boosting its technology sector.
- In July, China debuted a Nasdaq-style STAR Market technology board on the Shanghai Stock Exchange, which aims to make China a more attractive destination for tech startups looking to float shares.
- The Chinese government is pouring money into fostering tech startups. The Ministry of Science and Technology runs several tech-focused incubation programs and funds.