By Mark Garver, March 5, 2024
So the definition of a Unicorn has always been a startup company that reached $1B in post money valuation, wow that is a lot! Consider for instance the money Microsoft has poured into OpenAI, creating probably the biggest unicorn, since Elon Musk started SpaceX. However, aside from these well funded ventures, what we are seeing in today’s market is falling Unicorn growth.
One might ask the simple question, is it the economy, or is it hyper-valuations over the past few years, that have stalled the Unicorn birthrate. Well, as much as I would like to blame the economy, I can’t. What I can say is that part of the problem has been Venture Capital, attempting to buy into potential unicorns, and in that vein creating a hyper-valuation for companies that couldn’t sustain or even live up to that valuation. This is why PE funds are so much more important in this realm, invest, help mange, create an ecosystem for the portfolio. I am not talking about buy-out funds, but importantly mid-market growth PE Funds. Private Equity is a multi-trillion dollar market, controlling over 36% of M&A activity, but PE has a huge place in growth equity, a place where smaller funds are important.
Mid-Market Growth PE Funds can enable a founding team to achieve greater goals, faster and without the distractions that can be caused by debt rounds, or a buyout. Allowing these founders to have access to capital, superior guidance through leveraged expertise to create a synergy with the PE Fund and their sister companies within the PE Fund portfolio!
At AI Healthcare Capital, we don’t chase the mythical beast, called a unicorn, we build them, with the team at our portfolio companies. As Aristotle said, “The whole is greater than the sum of its parts”. That is our vision at AI Healthcare Capital, it’s the portfolio, not individual companies. We help grow and merge them into a beneficial impact group, plain and simply, offering a significant opportunity for our portfolio companies and to our investors.
