Unicorns likely to turn to private equity for financing: Preqin

[SINGAPORE] As the venture capital (VC) winter continues, startups may have to turn to private equity for funding.

A report by data platform Preqin said: “Unicorns – once mythical, now abundant – may themselves inch towards the private equity sphere.” Unicorns refer to companies with a valuation of US$1 billion.

Continuation funds are one way an investor can stay invested in a startup. This sometimes happens when there are fewer opportunities in the initial-public-offering markets for an exit.

Still, Preqin expects private capital to continue growing, reaching US$32 trillion in assets under management (AUM) by 2030.

In the last 20 years, there have been almost 2,000 unicorns minted globally, according to Preqin.

The bumper year for unicorns was in 2021, with over 500 unicorns minted – more than any other year since 2005 until the first half of 2025. As venture capital dry powder decreased, the number of unicorns being minted fell in tandem.

Thirty-nine unicorns hail from South-east Asia, with 26 being from Singapore and 13 from Indonesia, according to data tracked by Preqin. This is a far cry from China and India, which have 252 and 152 unicorns, respectively. The US dominates with 1,020 unicorns minted so far.

Famous Singapore names include Grab, Sea, used-car company Carro, e-commerce player Carousell, and software company Trax.

In the Asia-Pacific, it takes an average of 4.8 funding rounds from initial fundraising to unicorn valuation. The region also features the second-fastest average time to unicorn status at 45.7 months, behind only the Middle East’s 40.7 months.

Asia-Pacific unicorns raised an average of US$243 million from investors before crossing the US$1 billion valuation threshold. This is higher than any other region, including North America and the Middle East at US$158 million and US$117 million, respectively.

Sovereign wealth funds have emerged as important investors in unicorns, having backed 317 unicorns for the period from 2005 to H1 2025, said Preqin. Singapore leads the pack, with 220 deals with unicorns backed by sovereign wealth funds in the Republic. Qatar comes in second with 41 deals, followed by the UAE at 39 deals.

The information technology sector had the most unicorns, followed by the consumer discretionary and financial and insurance sectors.

There was not always a fairytale ending for unicorns – 57 have gone bankrupt or been written off since 2006. Trade sales, initial public offerings and secondary share purchases comprise the bulk of unicorn exits.

As startups, unicorns and non-unicorns alike have struggled to find an exit over the last two years, there is pressure on VC firms and investors regarding the valuations established between 2018 and 2022 – a period fuelled by low interest rates and cheap money.

Between 2014 and 2021, Preqin data showed that the aggregate value of all unicorns rose from US$96.1 billion to over US$1 trillion. The exit queue, however, has lengthened significantly since then.

Unicorns have not been immune to down or flat rounds during this tough fundraising period. Notable unicorns that took down rounds include buy now pay later startup Klarna, which saw its valuation plunge by 85 per cent to US$6.7 billion in 2022.

The era of “effortless unicorn creation” has passed, said Sola Akinola, managing director of Preqin. With exits being delayed, down rounds becoming common, and liquidity becoming scarcer, investors cannot rely on headlines alone, he added.

“What matters now is clarity – distinguishing durable companies from those inflated by the zero-interest-rate-period era,” said Akinola.