FANTASTIC BEASTS roam Silicon Valley, but one creature has been stalking the land: the "zombie" unicorn, a firm once worth $1bn-plus but now a mere shadow of its former self.
By May 2026, 332 of the 1,900 unicorns in a database maintained by Ilya Strebulaev of Stanford University had raised money at a valuation at or below their peak.
As many as 383 had disclosed no new funding in the previous three years; 41 of these had lost unicorn status.
Some unicorns may have raised no money because they did not need it, but others may be struggling to justify mythical valuations.
When unicorn-spotting was at its height, plenty of those startups had scant revenues and sketchy business plans.
Interest rates have since risen and fundraising has fallen, to $66bn last year.
Some businesses seem simply to have been wildly overrated, such as Cameo and SonderMind.
Startups typically aim to spend five to ten years growing before listing on the stock market or finding a buyer.
Zombies and their backers may find it hard to do either, as VC agreements often allow investors to veto public offerings.
Nearly half of the firms in Mr Strebulaev’s database valued at less than their peak raised money in 2021.
Falling valuations spell horror for VCs, with Pitchbook expecting net cuts in valuations of between $500bn and $1trn.
