The Downfall of Billionaire-Backed Unicorns

In January 2022, credit card startup Brex raised $300 million, nearly doubling its valuation to $12.3 billion, and making its Brazilian co-founders, Pedro Franceschi and Henrique Dubugras, the world’s youngest self-made billionaires.

A year later, the company’s value has fallen to $6.4 billion, and the co-founders are no longer billionaires.

The fall in value is not exclusive to Brex but is also a common trend among billionaire-backed unicorns.

Below we’ll look at 44 founders that have lost half their wealth and are nearly $100 billion poorer than a year ago. Twelve are no longer billionaires.

The Rise and Fall of Billionaire-Backed Unicorns

In March 2022, 44 founders of unicorns were worth a total of $190 billion, according to Forbes’ estimates. A year later, with the crypto market and private markets taking a downward turn, Forbes revalued the world’s billionaire-backed unicorns.

The results were staggering, with half the wealth of the billionaires behind unicorns being wiped out, leaving the elite group $96 billion poorer than a year ago.

Biggest Losers

The fortunes of these unicorn founders tumbled the most since March.

Sources: Unicorn valuations based on pricing data provided by ApeVue, Caplight Technologies and Notice, as well as Forbes reporting.

The “Valuation Drug”

Matt Murphy, a partner at venture capital firm Menlo Ventures, believes the world of venture capital got intoxicated by the high valuations during the startup funding frenzy, but the “funny money” is gone and it’s time to refocus on building great companies in a more operationally efficient way.

Cutting Valuations

A few unicorns have already cut their own valuations, including Checkout.com, Stripe, Instacart, and Databricks.

Swedish buy-now, pay-later startup Klarna was the only unicorn with founders on Forbes’ billionaires’ list to raise a new round at a lower valuation, a so-called “down round.”

No Longer Billionaires

Billionaires in March, these dozen entrepreneurs have since fallen below the cut.

Sources: Unicorn valuations based on pricing data provided by ApeVue, Caplight Technologies and Notice, as well as Forbes reporting.

The Market Has to Pick Up

Menlo Ventures’ Murphy believes that the market has to pick up later this year and that layoffs are one-way companies are “rightsizing to make their cash last even longer.”

A few unicorns, such as Brex, Klarna, and Stripe, have already cut staff.

Forbes’ New Methodology

Forbes has changed its methodology for valuing VC-backed companies, taking into account the recent turmoil in public markets and internal and external markdowns these unicorns are facing.

If a company has raised money in the last three months, Forbes used its most recent valuation from that funding round.

In the absence of recent funding rounds or internal markdowns, Forbes worked with three private market pricing data providers.

Full List

Forbes revalued the fortunes of these 44 unicorn founders.

Sources: Unicorn valuations based on pricing data provided by ApeVue, Caplight Technologies and Notice, as well as Forbes reporting.

Final Thoughts

The downfall of billionaire-backed unicorns is a common trend in the current market, with many losing half their wealth in the past year.

A few unicorns have already cut their valuations, and layoffs are one-way companies are “rightsizing to make their cash last even longer.”

Forbes has changed its methodology for valuing VC-backed companies, taking into account the recent turmoil in public markets and internal and external markdowns these unicorns are facing.