A brand new research that zeros-in on the founders of so-called “Unicorns” (firms price over a billion {dollars}) has discovered most have “underdog” founders, are sometimes drawn from the highest 10 universities, a rising feminine founder make-up, however no apparent monopoly at Seed stage of funding for VCs.

The research (“Unicorn Founder DNA Report) by Defiance Capital of 845 unicorns and a couple of,018 unicorn founders set out to have a look at the “DNA” of unicorn founders, concentrating on the US and UK (no EU/European) from 2013 to 2023, to outline the frequent traits of those sorts of founders.

The research discovered:

• 70% of unicorns have “underdog founders” (immigrants, girls, individuals of color).

• Unicorns used to have solely male founders, however that is altering with 17% having a feminine founder in 2023.

• 53% have levels from the highest 10 international universities.

• 49% of unicorn CEOs had STEM levels (64% of feminine founding CEOs had STEM levels) and 70% of founder groups have STEM levels.

• Exterior of SV Angel (6.4%) and YC (10%), no different VC fund received into greater than 2.8% (Sequoia) of unicorns. This implies the market to spend money on a possible unicorn is totally fragmented at Seed, that means outlier VC funds have as a lot likelihood as a widely known fund to spend money on a unicorn on the earliest phases.

The research additional discovered that unicorns have been dominated by white founders, however that each third unicorn had an Asian founder. Certainly, 38% of unicorns had not less than one founder who was not white: 82% had not less than one white founder, 62% had 1st or 2nd technology immigrant founders. Solely 3% of unicorns had a black founder.

And solely 21% of immigrant and feminine founders raised from prime ten VCs. Groups with feminine founders have been two years youthful than all-male groups when founding their unicorns (32 vs 34).

Serial founders (50%) have been extra more likely to succeed constructing unicorns, however only one in 5 unicorns had solo founders.

Over the past decade, all prime Seed funds have been generalist funds, and the marketplace for Seed funds is extremely fragmented. Solely 28% had raised capital from a prime VC seed fund (with greater than 1% market share).

Solely 34% of unicorn founders had labored at an elite employer previous to founding a unicorn, suggesting a McKinsey or related background will not be a prerequisite to success.

The research additionally discovered three dominant elements within the “DNA” of a unicorn founder.

1. No “plan B”

2. “A chip on the shoulder”

3. Limitless self perception

The research discovered that many unicorn founders have been compelled to develop a progress mindset, with values, work ethic, and ambitions all established throughout childhood.

Most had a private story of feeling unfairly handled or feeling restricted of their native setting.

The research noticed these traits in communities left behind for generations, e.g. girls founders, individuals of color, neurodivergent, or founders with atypical backgrounds.

Many have a tendency additionally to be “formidable rebels”, usually motivated by a larger trigger they care deeply about, have sturdy household position fashions, a high quality peer community and no worry of failure.

A far larger variety of 1st and 2nd technology immigrant CEOs had STEM levels than native CEOs, suggesting a mind drain from rising or smaller economies to developed ones. Considerably, extra 2nd technology immigrants attended an elite college than the remainder of the pattern.

Different fascinating knowledge factors got here out of the research. Solo founders tended to begin their unicorns three years later than founder groups, and it took 7 years on common to achieve unicorn standing for all sorts of founder groups, however 2nd technology immigrants took solely 6 years.

And in reality, the all-white, male, native, Ivy league archetype of founder was truly an rare prevalence, at 11%, and just one third of founders native to a rustic the place they based the corporate graduated from a prime ten college.

As well as, the highest 20 US VC funds tended to favor male, immigrant founders with STEM levels from elite universities at Seed, however seem like lacking a trick by largely ignoring feminine founders, a rising demographic within the unicorn house.

Commenting, Defiance Capital founder Christian Dorffer, instructed me: “I imagine that is essentially the most complete research ever achieved on the backgrounds of unicorn founders within the US and UK. We cowl all new unicorns from 2013-2023, masking over 2,000 founders and over 800 unicorns.”

“VCs famously say that ‘it’s all concerning the individuals’, however with solely 10% of unicorn founders becoming the Mark Zuckerberg profile, many of the 1000’s of Seed funds are backing the flawed sort of founders. One fascinating discovering in our research is that even the very best funds, like Sequoia, solely get into lower than 3% of unicorns – and solely 30 funds have a unicorn market share of 1% or extra,” he stated.

“The starvation, self-belief, ingenuity and resilience we discovered within the unicorn founders additionally make a whole lot of sense if you see that 62% had immigrant founders (usually from international locations the place it’s inconceivable to construct unicorns) and 17% of recent unicorns final yr had feminine founders.”

He continued: “Immigrants and different underrepresented founders are clearly in a position to produce these wonderful outcomes however I needed to show it to LPs. Loads of the immigrant founders are coming from the creating world, like India and Africa, even Jap Europe. They don’t actually have that many choices at house. They’ve to go away and pursue alternatives elsewhere.”

“There’s solely 30 funds which have greater than 1% share of all these unicorns, which implies that it’s completely fragmented,” he added.

“Should you mix this fragmentation with the truth that immigrants and girls discovered it more durable to fundraise, there’s an enormous alternative for brand new funds to come back in and particularly got down to search for these founders.”

I requested him how a VC or a household workplace may change their technique because of seeing this analysis?

“Sequoia being the highest fund in solely 2.8% of unicorns implies that they miss lots. Sure, for LPs, prime funds are a comparatively protected funding. However household workplaces are actually rising managers and particularly early stage funds because the potential Alpha. So in case you’re trying to maximise returns as a household workplace, that you must be in a couple of new funds, rising managers to be able to get that outlier firm that turns right into a unicorn,” he stated.

Dorffer, who intends now to provide a podcast with most of the unicorn founders surveyed, stated: “The tales which can be popping out present loopy willpower. As a feminine founder, it’s a must to work twice as arduous and take twice as many conferences to lift the cash. The founders of Andela and three African founders that constructed unicorns… have tales which can be simply so inspirational.”