Geography of Unicorns

This is the second companion article to my LinkedIn posts on #Unicorns dealing with unicorn #geography. You can find the first post here. My goal in these articles is to provide more background and details behind the results in the unicorn posts. The previous companion article is here (explaining how I define and find unicorns). The next article is here. You can find the full-length pdf document here.

1. Definitions and Data Sources

For each #venturecapital backed unicorn, we collected the location of its headquarters at three different points in time: at the time of #startup #founding, at the time when the company became a unicorn, and at its latest active date. The veracity of each location input was cross-checked using multiple sources. Location data was successfully collected and verified for all 531 companies in the USMAIN sample.

To identify companies’ locations at the time of the founding, the following were the main sources: PitchBook, companies websites (sections on “History” or “About Company”), or companies’ Form D on the SEC website (an example is given here).

For the location at the time the private company obtained unicorn status, Pitchbook is the main data source. For each funding deal, Pitchbook provides the location of the deal (which is the company’s headquarters in the vast majority of cases). We also rechecked PitchBook data using articles from multiple sources (such as TechCrunch, Insider, WSJ, CNBC, etc.). Finally, in some cases we used Wayback Machine (a digital library of archival internet sites) to confirm the headquarters location from companies’ websites in the month and year of the company becoming a unicorn.

For companies that became unicorns upon undergoing IPOs, S-1 forms were the main source. If the company attained a unicorn status upon a sale, a public announcement of the acquisition, in which the location of the acquired company is often indicated, was also utilized.

Finally, we created a map using the location of HQ at the companies’ latest active dates. The latest active date is defined either as the date of liquidation of the company (via bankruptcy or a sale) or the most recent location date as of September 2021. For example, the latest active date for Theranos is September 2018, and for Palantir Technologies, it is 2021. PitchBook was the main source, with all the outputs cross-checked using companies’ websites and the other sources listed above.

2. Geography Results

Each variable is visualized in two ways, using the standard cartographic coordinate format and using so-called cartograms [1]. To produce a cartogram, the area of each state is rescaled in proportion to the number of unicorns in that state. Thus, a greater area on the plot means a larger number of unicorns headquartered in this state.

Figure 1 and Figure 2 show the unicorn locations at the time of founding. Out of 531 unicorns in the USMAIN sample, 510 unicorns were founded in the United States and 21 unicorns were founded abroad.

Figure 1: Unicorn Locations at the Time of Founding

Figure 2: Cartogram of Unicorn Locations at the Time of Founding

Figure 3 and Figure 4 show company locations at the time they attained unicorn status. Note that out of 21 unicorns founded outside the United States, 13 companies had moved their HQs to California,  four – to New York State, two to Massachusetts, and one each to Texas and Florida.

Figure 3: Unicorn Locations at the Time They Attained Unicorn Status

Figure 4: Cartogram of Unicorn Locations at the Time They Attained Unicorn Status

Out of 510 companies founded in the United States, 15 moved their HQs by the time they became unicorns. For example, four companies moved away from California: Intarcia Therapeutics to Massachusetts, Peloton Therapeutics to Texas, Vox Media to the District of Columbia, and Tableau Software to Washington State. Three companies moved their HQs away from Maryland: Epic Games and Cardioxyl Pharmaceuticals to North Carolina, and Synthetic Genomics to California. Two companies left Washington State: Internap to Virginia and Sweetgreen to California.

Figure 5 and Figure 6 show the location of unicorn HQs at their latest active date. Nine companies moved their HQs in the period between the date they became unicorns and their latest active date. Five companies moved their HQs in 2020–2021. Four of them relocated their HQs from California: Snowflake Computing to Montana, Palantir Technologies to Colorado, Tanium to Washington State, and Green Dot to Texas. Also, Ribbon Communications moved its headquarters from Massachusetts to Texas. An example of a company that moved its HQ before 2020 is CapitalSource which moved its primary location from Maryland to California.

Figure 5: Unicorn Locations at Their Latest Active Date

Figure 6: Cartogram of Unicorn Locations at Their Latest Active Date

Notes

[1] The procedure to produce cartograms is given at go-cart.io. I thank the developers for giving the open permission to use their method. For further details, see M. T. Gastner, V. Seguy, and P. More. “Fast Flow-Based Algorithm for Creating Density-Equalizing Map Projections,” Proceedings of the National Academy of Sciences of the United States of America 2018, 115, no. 10, E2156–E2164.