• Unicorns cluster hard in a few metros, especially the Bay Area and NYC, and city lines often fail to describe where companies actually live and hire.

• Seed funding hasn’t “corrected” in recent years the way later-stage did: Seed valuations stayed high while series valuations saw a clearer drop after rate hikes.

• Still, the companies that command the highest early valuations are more likely to become unicorns later, even as “what counts as a region” gets fuzzier every year.

If you’re trying to understand where America’s biggest startup outcomes come from, there’s an obvious, messy shortcut: “unicorns,” private companies valued at $1 billion or more.

A decade after the term was coined in a TechCrunch essay by investor Aileen Lee, data firm CB Insights tracks where they concentrate.  

San Francisco by itself can outnumber most other nations, and “Silicon Valley” becomes a game of boundary-drawing — is a company in San Jose meaningfully different from one in Mountain View if it hires from the same talent pool, raises from the same investors and sells to the same customer set? Same idea in Los Angeles, where the reference often refers to a sprawling constellation of beach cities, suburbs and industry pockets that don’t fit neatly on a map.

“Unicorn” is increasingly a proxy for companies that found a market big enough, urgent enough and scalable enough to support billion-dollar expectations without the discipline of public markets.

That’s why any list of “top unicorn regions” inevitably turns into an exercise in simplification. Your own combined tallies — Bay Area cities rolled up, satellite hubs grouped into a metro identity — are less a distortion than a reality check. 

Ecosystems are defined by labor markets, networks and institutions, not city borders. And as we’ve written before, shared identity across neighboring metros can be an asset, not a branding problem. Regions just need to thread a story.

So why keep talking about unicorns at all?

Because in a world where startups can stay private longer, “unicorn” is increasingly a proxy for something real: companies that found a market big enough, urgent enough and scalable enough to support billion-dollar expectations without needing the discipline (or scrutiny) of public markets. Even Investopedia’s plain definition gets at the point: It’s a valuation threshold, not a virtue signal.

Seed deals as indicator for future valuation

Peter Walker, data lead at an equity management platform Carta, last week offered a useful lens on how those expectations get set early.

In his “State of Seed” presentation, Walker made the case that while later-stage startups went through a meaningful valuation correction after interest rates rose, seed-stage valuations didn’t really come down. The median seed pre-money valuation on Carta hit record highs through 2025, with only a modest wobble, while later-stage medians show a clearer dip.

One reason is structural: Seed deals are often shaped by accelerators and other “fixed term” market-makers. Venture capital is governed by the power law, where a very small number of outsized winners drive results. Accelerator programs follow that logic. Very few perform orders of magnitude better than the rest.

Looking at seed-stage companies funded between 2016–2020, Carta found unicorn outcomes were far more common among startups that started in the top quartile of seed valuations. In that cohort, more than 1 in 20 of top-quartile seed valuations later became unicorns, compared with fewer than 1 in 100 of bottom-quartile seed valuations.

Win by expanding your region’s ‘credibility pool’

Two things can be true at once:

  1. Plenty of lower-valued seed startups still become unicorns (the bottom quartile rate isn’t zero)
  2. The market isn’t random. Whatever drives the highest seed valuations, whether it’s founder track record, early traction, talent density, credibility with investors, access to “warm” networks or being in the right customer corridor, often continues to matter later.

If you were an uninformed investor, you’d be entirely justified to follow the pack. 

For local entrepreneurial ecosystem builders, if unicorns are a valid scoreboard, it’s tempting to chase that: lure venture capital, recruit “name” founders, announce accelerators, hope the numbers follow.

A more grounded takeaway for local builders from the Carta framing is this: Your job is to expand the region’s credibility pool and customer proximity so more teams can command high-conviction seed rounds. 

That doesn’t mean inflating valuations as a goal. It means building repeatable conditions that make strong teams legible to capital and markets: early customers willing to pilot, operators who become angels, institutions that convene talent and storytelling that helps outsiders understand why this place produces winners.

Unicorns, on their own, don’t make an economy healthy. But a healthy innovation economy tends to produce some companies that compound quickly, hire aggressively, and create liquidity for founders and early employees. It’s fuel that can recycle into the next generation.

So the question isn’t “How do we get more unicorns?” It’s: What would it take for more founders here to be the kind of teams the market consistently prices into that top quartile?