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Charging into our list

For anyone watching the new Apple TV+ drama WeCrashed about Adam Neumann’s meteoric rise and implosion as the boss of WeWork, the unicorn will be a familiar image. That’s because in the opening credits the mythical horned beast features in every shot, as a reminder that the shared office firm was once regarded as one of the biggest unicorn companies of them all.

Lest we forget, the term unicorn was coined in 2013 when US investor Aileen Lee used it to introduce 39 unlisted firms that were worth $1 billion or more.

We began work on our own ranking of Chinese unicorns in late 2020 and introduced it early last year.

What’s new about the latest ranking?

Our snapshot of China’s Top 50 Unicorns – which is based on reports in the media and information from data aggregators including 36Kr, CB Insights and Hurun – is topped once again by Bytedance with a $400 billion valuation (see full table below).

It’s been just over a year since our debut Top 50 Unicorns ranking (see WiC530). The firms at the head of the ranking have been treading water, however, especially in the internet and tech sector, which has seeded many of the biggest unicorns in the past.

WiC has written extensively about the impact of nearly 18 months of tougher scrutiny from government regulators, triggered by the collapse of fintech giant Ant Group’s IPO in November 2020. Six months later ride-hailing platform Didi Global had a near-death experience of its own, when it was punished for pushing ahead with a New York listing in apparent contravention of Beijing’s instructions.

By then Ant’s valuation was already dropping steeply from its highs towards a much lower level of $200 billion. There has been little sign of it regaining the lost ground or getting back to a debut in the public markets. Didi’s market cap also took a hit this week after it said it won’t pursue a relisting elsewhere until its US delisting is completed.

Back at the summit of the Top 50, only SheIn has shown a significant increase in value after completing a fundraising in April that was reported to have more than doubled its valuation to $100 billion.

That means the fast-growing fashion retailer, which makes almost all of its sales to consumers outside China, has closed some of the gap on Ant and Bytedance immediately above it in the ranking, as well as now being worth more than rival retailers Zara and H&M combined.

How has China’s unicorn herd taken shape over the last two years?

Our inaugural ranking of China’s unicorns reflected the rise of the biggest of the internet and tech platforms, which had bulked up across a range of services in consumer-facing applications in areas like e-commerce, social media and digital payments.

Much of the investment in the unicorns was coming from heavyweights Alibaba and Tencent, the two biggest names in the sector, who were taking stakes in the best of the newcomers, alongside leading venture capital firms like Hillhouse and Sequoia China.

There was a sudden rise in the valuations of many of these ‘platform’ companies as the pandemic took hold, with a surge in demand for online services from locked-down households, especially in sectors like edtech. But the mood turned nastily against firms in areas like fintech, social media and gaming, e-commerce and delivery as the government started to take action against the trends that it disliked, such as the sudden rise in readily available loans for consumers or the spread of online games often seen as addictive to young people.

The most dramatic changes in government policy saw the evisceration of the edtech platforms, however, which had soared in value as Covid-19 forced millions of children to study from home. By the summer of 2021 they were being blamed for stoking parental and student anxiety about the educational ‘arms race’ and Beijing blew the sector up by banning the edtechs from making profits.

All of them dropped out of the Top 50 ranking as a result when we did our third quarter update last year.


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