Eight years ago, the idea that a venture capital (VC) backed startup could reach an aggressive valuation of over $1 billion without going public was inconceivable. But today the Wall Street Journal, Fortune Magazine, CNNMoney and CB Insights, each keeps a list of such companies and their valuations, and the list keeps growing. With the decline in the U.S. market for initial public offerings (“IPOs”), which is caused in part by the availability of new private capital sources, there is a rise in the number of privately held firms that are valued at $1 billion or more (“unicorns”).

The U.S. has the largest concentration of unicorns in the world. Whereas, in the recent past, startups tended to go public or be sold approximately four years after founding, today the average time to IPO or sale is eleven years. In a recent paper, Unicorn Stock Options—Golden Goose or Trojan Horse?, I argue that by staying private and not pursuing an IPO or sales transaction, the unicorns are delaying liquidity events for their shareholders, including employees. In the new economy, knowledgeable employees contribute to the firm’s intangible assets.

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