A brand new examine that zeros-in on the founders of so-called “Unicorns” (firms value 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 examine (“Unicorn Founder DNA Report) by Defiance Capital of 845 unicorns and a couple of,018 unicorn founders set out to take 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 examine discovered:

• 70% of unicorns have “underdog founders” (immigrants, girls, folks 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 bought into greater than 2.8% (Sequoia) of unicorns. This means the market to put money into a possible unicorn is totally fragmented at Seed, which means outlier VC funds have as a lot likelihood as a widely known fund to put money into a unicorn on the earliest levels.

The examine additional discovered that unicorns have been dominated by white founders, however that each third unicorn had an Asian founder. Certainly, 38% of unicorns had a minimum of one founder who was not white: 82% had a minimum of one white founder, 62% had 1st or 2nd era 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 just one in 5 unicorns had solo founders.

Over the last decade, all prime Seed funds have been generalist funds, and the marketplace for Seed funds is very 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 examine additionally discovered three dominant components within the “DNA” of a unicorn founder.

1. No “plan B”

2. “A chip on the shoulder”

3. Limitless self perception

The examine discovered that many unicorn founders have been pressured to develop a development 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 atmosphere.

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

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

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

Different attention-grabbing knowledge factors got here out of the examine. Solo founders tended to begin their unicorns three years later than founder groups, and it took 7 years on common to succeed in unicorn standing for all sorts of founder groups, however 2nd era immigrants took solely 6 years.

And actually, 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 area.

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

“VCs famously say that ‘it’s all in regards to the folks’, however with solely 10% of unicorn founders becoming the Mark Zuckerberg profile, many of the hundreds of Seed funds are backing the incorrect sort of founders. One attention-grabbing discovering in our examine is that even one of the 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 variety of sense while you see that 62% had immigrant founders (usually from nations the place it’s unattainable to construct unicorns) and 17% of latest unicorns final 12 months had feminine founders.”

He continued: “Immigrants and different underrepresented founders are clearly capable of produce these wonderful outcomes however I wished to show it to LPs. Lots of the immigrant founders are coming from the growing world, like India and Africa, even Japanese Europe. They don’t actually have that many choices at dwelling. 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 signifies that it’s completely fragmented,” he added.

“For those who mix this fragmentation with the truth that immigrants and ladies discovered it more durable to fundraise, there’s an enormous alternative for brand spanking 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 signifies that they miss lots. Sure, for LPs, prime funds are a comparatively protected funding. However household places of work are actually taking a look at rising managers and particularly early stage funds because the potential Alpha. So when you’re trying to maximise returns as a household workplace, you could be in a number of new funds, rising managers so as to get that outlier firm that turns right into a unicorn,” he stated.

Dorffer, who intends now to supply a podcast with lots of the unicorn founders surveyed, stated: “The tales which might be popping out present loopy dedication. As a feminine founder, it’s important to work twice as onerous and take twice as many conferences to boost the cash. The founders of Andela and three African founders that constructed unicorns… have tales which might be simply so inspirational.”