2016 China Unicorns Development Report

On March 1, 2017, the Torch Center of Chinese Ministry of Science and Technology, associated with Great Wall Enterprise Strategy Institute (hereinafter referred to as the Great Wall Strategy) published ‘2016 China Unicom Enterprise Development Report’ (hereinafter refers to as the Unicorn Report) and the Unicorn Enterprises List in Beijing. Zero21Po provided data support for the Unicorn report. The director of Torch Center, Zhang Zhihong, and the director of Administrative Committee of Zhongguancun, Guo Hong attended the press conference and made speeches. Representatives of Unicorn start-ups, representatives of national high-tech zones, experts and media journalists attended the conference as well.

Statue of mythical Chinese Unicorn Qilin

The list shows that the number of national Unicorns* has increased significantly in 2016, from 70 enterprises in 2015 to 131 in 2016, showing the general innovative strength of China. The regional innovation ecosystem has been optimized, as Unicorn enterprises emerged in 16 cities. Beijing, Shanghai, Shenzhen, Hangzhou have now become the main concentration areas for Unicorn enterprises. These start-ups have grown in areas such as e-commerce, internet finance, intelligent hardware, transportation, etc. Intelligent economy, platform economy and sharing economy are still producing more Unicorns.s

Chinese innovative strength continues to improve

The list shows that the number of Chines Unicorn enterprises has reached 131, showing the strength of Chinese scientific and technological innovation.

The total valuation of 131 Chinese Unicorn enterprises is 487.6 billion US dollars, and the average valuation is 3.72 billion, thereof seven super Unicorn valued more than 10 billion US dollars, account for 46% of the total. They are the Ant Financial Services Group ($ 75 billion), MIUI ($ 46 billion), Aliyun ($ 39 billion), DiDi Travel ($ 33.8 billion), Lujiazui International Financial Asset Exchange ($ 18.5 billion), Meituan &Dianping ($ 18 billion), DaJiang Innovation ($ 10 billion).

According to the list, there are 50 enterprises were founded in 2014 and later, accounts for more than one third of the total. Thereof 17 enterprises were founded in and after 2015. To be listed as Unicorn enterprises within one or two years after their foundation, reflects Unicorn enterprises’ growth characteristics like strong innovative capability, short growth cycle, and explosive growth potentiality.

The year of 2016 was once considered as a ‘capital winter’ for venture investments. However, the Unicorn list shows that the ‘capital winter’ had no impact on the creation of outstanding start-ups and companies .

Chinese high-tech regions become Unicorn cradles

The Unicorn Report shows that, Unicorn enterprises mainly emerge in the regions where the ecosystem is suitable for innovation and entrepreneurship. The national demonstration zone Zhongguancun is one of the most relevant example. 65 Unicorn start-ups in Beijing, and half of all Unicorn enterprises in China were born in Zhongguancun. Relying on a favorable innovative and entrepreneurial ecosystem, Zhongguancun is now becoming a global center for scientific and technological innovation.

China has 16 cities in which unicorn enterprises have emerged. Beijing, Shanghai, Shenzhen and Hangzhou, rely on a good innovative and entrepreneurial ecosystem and have become the main 4 concentration areas for these special start-ups. There are 65, 26, 12 and 11 unicorns located in these cities respectively. These four major cities have their own characteristics: Beijing’s Unicorn enterprises are leaders in new models and technologies of the industry; there are 60% of Shanghai’s Unicorn enterprises are newly founded Internet enterprises; 42% of Shenzhen’s Unicorn enterprises are technology-driven; Hangzhou has 12 Unicorn enterprises half of which belongs to the Ali-circle, engaged in e-commerce and internet finance.

According to statistics, 104 of these miracle companies all over the country, are located in high-tech zones. National high-tech zones have become ‘Unicorn cradles’.

Unicorns in AI, Big Data, Cloud Computing, Business Services and other sectors

The Unicorn Report shows that Chinese Unicorn enterprises are distributed in 18 sectors, more than 30 sub-sectors. E-commerce, internet finance, intelligent hardware, transportation being the most productive sectors the proportion of which is accounted for 56% of the total Unicorn production. Technology-driven Unicorns continue to emerge, the major characteristic is that the new-comers are mainly distributed in artificial intelligence, big data, cloud computing, business services, social networking, internet security, new media and other technology & innovative industrial sectors.

Based on the analysis of potential groups, it is expected that more Unicorn will be generated in the intelligent economy, platform economy and shared economy sectors, driven by data and technology innovations.

Platform-based enterprises become an important source of Unicorns

"Alibaba Group incubated 7 Unicorn enterprises: the Ant Financial Service, Taopiaopiao, DingTalk, Aliyun, Koubei, Ali music and Cainiao, with the largest valuation of 136.35 billion US dollars"

The report also shows that 31 start-ups were generated by platform-based business incubation or investment, and their valuation accounted for 44.7% of the total valuation of all Unicorns. Among them, Alibaba Group incubated 7 Unicorn enterprises: the Ant Financial Service, Taopiaopiao, DingTalk, Aliyun, Koubei, Ali music and Cainiao, with the largest valuation of 136.35 billion US dollars, accounting for 27.9% of all Unicorns. Tencent incubated 4 Unicorn, the same as Letv. In addition, Baidu, JD, MIUI and other platform-based enterprises are actively planing for their own strategic layouts, building their own business ecosystem through incubating and strategically investing Unicorns.

It is expected that platform-based business incubation will continue to be an important source of Unicorns.

Six mechanics of Unicorn enterprises’ explosive growth

In the same day, Great Wall Strategy also published their report about the explosive growth of start-ups. Great Wall Strategy suggests that the new economic growth is following the non-linear growth pattern of entrepreneurship - Gazelle - Unicorn - Loong enterprise. The six mechanics of explosive growth are partnership, cross-border, platform, ecosystem circle, tipping point and self growth.

High-tech zones should focus on explosive growth, adopt targeted support policies for start-ups, Gazelle enterprises and Unicorn enterprises in order to improve innovative ecosystem construction, and consciously become cradles for more Unicorns.

Start-ups in explosive growth are not only promoting the originality of emerging industries, but also encouraging the subversive changes in traditional industries, leading the leaping development of the region. Gazelle and Unicorn enterprises will be the engine of rapid economic growth, economic transformation and upgrading.

*Note: China Unicorn standards

Chinese Unicorn enterprises are: (1) registered in China, with legal personality; (2) established less than ten years (established in 2006 and later); (3) received private investment, and not yet listed ; (4) valued more than 1 billion US dollars (based on the final round of corporate financial valuation). The list is based on independent declarations, recommendations from investment institutions, public data collections, private data supports and other means of summarizing the candidates’ data, and finally 131 standard Unicorn enterprises have been selected.

Original article here

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