Around August, my editor and I started pondering a question that proved less contentious than anticipated: Will we ever witness startups valued at a trillion dollars?
TL;DR
- The question of trillion-dollar startups is being discussed, with OpenAI's valuation cited as an example.
- The rise of trillion-dollar private companies raises questions about venture capital models and regulations.
- New terms like "triceratops," "gigacorn," "terracap," and "Kaiju-corn" are being proposed for these massive entities.
- Staying private may become more appealing for trillion-dollar companies, with secondary markets offering liquidity.
After posing this question to numerous individuals, the response, nearly without exception, has been a variation of “Yes, look at OpenAI’s $500 billion valuation.”
It's quite astonishing to think that as late as August 2018, the world's most highly valued startup was Uber, boasting a modest $76 billion valuation, and no public companies had yet achieved trillion-dollar market capitalizations. Apple was the first to achieve the trillion-dollar milestone in August 2018 (on Tuesday, the iPhone manufacturer's market cap hit $4 trillion), with Meta, Nvidia, Microsoft, Alphabet, and Tesla subsequently joining them.
Given that a trillion-dollar privately-held startup may be inevitable, several questions warrant consideration. These include the implications for the venture capital model reliant on exits and for entrepreneurs, the impact on regulations and disclosure requirements for public companies (particularly with initiatives to grant retirement plans access to private investments), and, naturally, how we should categorize these entities.
Describing such a substantial company as a startup is, naturally, somewhat inaccurate, as Bessemer's Talia Goldberg notes: “Calling a trillion dollar company a ‘startup’ is an exercise in branding,” she stated in an email. “It is a way for founders to keep the innovation narrative.” Goldberg further observes that the combined worth of the businesses featured on Bessemer’s Cloud 100 roster has increased tenfold in the past ten years. Before long, she anticipates, “the average private valuation will be $112 billion.”
This does raise the question: twelve years after Aileen Lee created the phrase to characterize companies valued at a billion dollars, what significance does “unicorn” hold now? Startups worth $1 billion are commonplace today. A new term is required for the most exceptional category, which, according to the Term Sheet readers I've consulted, will soon be quantified in thirteen figures.
Samir Kumar, Touring Capital general partner, suggests the name “triceratops.”
“If you think of triceratops you think of an unstoppable creature and brute force,” Kumar said via email. “Kind of like how trillion-dollar valuation startups will be created. Triceratops also went extinct.”
Costonoa Ventures partner John Cowgill suggests “gigacorn,”, whereas Felicis founder and managing partner Aydin Senkut favors “terracaps.”.
“‘Terra’ for trillion,” Senkut said. “It’s the next logical jump after unicorns and decacorns. At that scale, ‘startup’ doesn’t cut it. A terracap isn’t really a startup. It’s a sovereign economy with a cap table.”
My personal submission, for anyone wondering, is dragon. But perhaps my favorite suggestion:
“At a trillion dollars, we’re going to have to call them Kaiju-corns!” Antonio Rodriguez, Matrix managing partner, said via email. “Because like the fabled monsters from the center of the Earth, they are big and strong and stomping all over the rest of the startup ecosystem.”
Naturally, a significant hurdle arises once these Kaiju-corns emerge, probably strengthening the motivation to remain privately held indefinitely.
“If you’re investing in a startup worth a trillion dollars, what exit are you underwriting to? How is there any other exit besides going public?” Wonders Touring’s Kumar. “And how many trillion-dollar startups will be able to put up the numbers to justify that valuation in the public markets? None of this is remotely close to being reasonable. Besides going public, probably the more realistic path is staying private (like SpaceX), and doing secondaries and tender offers to create liquidity for founders and early investors. That’s another very real path.”
Amplify Partners GP Sunil Dhaliwal makes a significant observation: any phenomenon reaching such a large scale is, by its very nature, unusual.
“We should give the unicorn metaphor a rest,” said Dhaliwal via email. “It served its purpose, but saying decacorn, centicorn, or kilocorn (is that what’s next?) Has become meaningless. I’m not going to try to make fetch happen by coming up with a new catchy moniker. I think the bigger point is that while a few companies might reach this level, this is definitely not a category of companies anytime soon.”
Investor excitement for privately held firms, especially those in AI, doesn't appear to be diminishing.
“The biggest delta we’ve ever seen now exists between private and public growth,” said Senkut via email. “The best private companies are growing at 400%, while the best publics struggle to hit 20%. Capital is going to go where the growth is. And right now, that’s private markets.”
Term Sheet Podcast… This week’s guest: Oura CEO Tom Hale! Oura has been making headlines for months, most recently with its massive $900 million funding round, valuing the wearables giant at $11 billion. In September, while at Brainstorm Tech, I sat down with Oura CEO Tom Hale to talk about the company’s growth, data privacy, the biggest challenge he’s faced as CEO, the unexpected places he’s unlocked consumer value, and more. Listen and watch here.
See you tomorrow,
Allie Garfinkle
X:@agarfinks
Email:[email protected]
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Venture Deals
- Uniphore, a Palo Alto, Calif.-based business AI platform, raised $260 million in Series F funding from NVIDIA, AMD, Snowflake, Databricks, and others.
- Moniepoint, a Lagos, Nigeria-based financial platform, raised $200 million in Series C funding. DevelopmentPartners led the round and was joined by LeapFrogInvestments, Lightrock, AlderTreeInvestments, and others.
- LangChain, a San Francisco-based agent engineering platform, raised $125 million in funding. IVP led the round and was joined by CapitalG, SapphireVentures, and existing investors.
- Seneca, a San Francisco-based firefighting technology company, raised $60 million in funding. CaffeinatedCapital and ConvectiveCapital led the round and were joined by FirstRound Capital, TransitionVC, AdvanceVenturePartners, and others.
- UnifyAppsa developer of enterprise AI operating systems based in New York City secured $50 million in Series B funding. WestBridgeCapital led the round and was joined by ICONIQ and others.
- Servala San Francisco-based IT service management platform powered by AI secured $47 million in Series A funding. RepointVentures led the round and was joined by FirstRound Capital, GeneralCatalyst, BoxGroup, and others.
- Hyroa developer of conversational AI for health care, based in New York City, secured $45 million in funding. HealthierCapital led the round and was joined by Norwest, DefineVentures, and existing investors.
- Keycardsan Francisco-based platform for AI agent creation and deployment, secured $38 million in seed and Series A funding. AndreessenHorowitz and boldstartventures led the $8 million seed round and AcrewCapital led the $30 million Series A round.
- FaethTherapeuticsa San Francisco-based biotech firm focused on creating treatments for tumor metabolism secured $25 million in investment. S2GVentures led the round and was joined by KhoslaVentures, FutureVentures, DigitalisVentures, and others.
- ChipAgents, a Goleta, Calif.-based agentic AI chip design platform, raised $21 million in Series A funding. BessemerVenturePartners led the round and was joined by others.
- Estuarya data movement and streaming platform headquartered in New York City secured $17 million in Series A financing. M13 led the round and was joined by Firstmark and OperatorPartners.
- Streetbeata Palo Alto, Calif. Firm, an AI-powered intelligence platform for financial professionals and retail investors, secured $15 million in Series A financing. CDPVentureCapital led the round and was joined by TTVCapital, P101, MonteCarloCapital, 3Lines, and others.
- Bronto, a Dublin, Ireland-based log data platform company, raised $14 million in seed funding. CercanoManagement led the round and was joined by Heavybit and ConvictionCapital.
- Acelaba Brooklyn, N.Y.-based AI-powered platform that assists architects in selecting building materials has secured $13.5 million in Series A financing. NavitasCapital led the round and was joined by JLLSpark, DivcoWest, and others.
- SizableEnergy, a Milan, Italy-based ocean energy storage company, raised $8 million. PlaygroundGlobal led the round.
- AnchorBrowsera developer of a cloud browser for AI agents, with operations in Tel Aviv, Israel, and New York City, secured $6 million in seed funding. BlumbergCapital led the round and was joined by Gradient.
- MythWorx, a Dallas, Texas-based AI model company, raised $5 million in seed funding. EagleVentureFundIV and EagleFreedom FundII led the round and were joined by angel investors.
- Lusteran AI-powered platform based in Indianapolis, Ind., aimed at assisting customer-facing teams in avoiding errors, has secured $3 million in seed funding. HighAlpha and IvyVentures led the round and were joined by others.
- Pierea financial automation platform based in New York City, powered by AI, secured $2.1 million in pre-seed funding. Grand Ventures led the round and was joined by SelahVentures, TrustageVentures, SamvidVentures, and FabricVC.
Private Equity
- Machinify, a portfolio company of NewMountainCapital, took PerformantHealthcare, a New York City-based health care analytics company, private for approximately $670 million.
- MainsailPartners invested $54 million in CourtReservea developer based in St. Augustine, Fla., specializing in software for booking, membership management, and other aspects of racket and paddle sports.
- An affiliate of H.I.G.Capital acquired a majority stake in A.L.A.A logistics and distribution services provider based in Naples, Italy, serving aerospace and defense manufacturers. The financial details were not revealed.
- Caylent, backed by GryphonInvestors, acquired Trek10, a South Bend, Ind.-based Amazon Web Services partner. Financial terms were not disclosed.
- IndustrialControlSolutions, a portfolio company of LDRPartners, acquired Duro-Sense Corporationa designer and manufacturer of temperature sensors and assemblies, based in Carson, Calif. The financial details were not revealed.
- OneEquityPartners acquired a majority stake in DigitalValuea tech solutions provider based in Rome, Italy, offering data, AI, and cloud computing services. The financial details of the agreement were not made public.