Where US unicorns still cluster — and why copying the map fails

If you’re trying to understand where America’s biggest startups 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 continues to track where they concentrate.

San Francisco alone outnumbers most other nations. As for “Silicon Valley,” that stat becomes a game of boundary-drawing: Is a company in San Jose meaningfully different from one in Mountain View if they hire from the same talent pool, raise from the same investors and sell to the same customers? Same question in Los Angeles, a sprawling constellation of beach cities, suburbs and industry pockets.

Nationwide, regional civic leaders who took entrepreneurship and science-technology seriously adapted to hunting for unicorns — and were often generous in what counted as their own.

Ecosystems are defined by labor markets, networks and institutions, not city borders. 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 stay private longer, it’s a proxy for a company that found a market big enough, urgent enough and scalable enough to carry billion-dollar expectations without the discipline (or scrutiny) of public markets. Small business is effective at stewarding local culture, but new and fast-growing firms create jobs, change markets and shape regional economies. Unicorns are a narrative-rich scoreboard.

The outcome is vanishingly rare: Of the roughly 6.5 million US businesses started in 2025, more than 80% will never hire an employee, only about 2.5% will ever cross $250,000 in revenue and fewer than 0.5% will raise a dollar of institutional capital. Even Investopedia’s plain definition gets at the point: It’s a valuation threshold, not a virtue signal.

When winners are that rare, the temptation is to guess them early, which, argues Victor Hwang, is a self-defeating habit.

“The mistake has been prejudging companies before they get started,” said Hwang, founder of Right to Start, author of influential 2012 entrepreneur-organizing book “The Rainforest” and my Builders Live podcast cohost. 

“It’s like telling the kids they’re on the gifted track, and not on the gifted track, before they’ve even started school.”

Seed deals as indicator for future valuation

The market bets early anyway. Peter Walker, then-data lead at equity management platform Carta, last year offered a useful lens in a “State of Seed” presentation.

While later-stage valuations took a real hit after interest rates rose, seed valuations barely flinched, with median seed pre-money hitting record highs through 2025. Part of that is structural — seed rounds are shaped by accelerators and other fixed-term market-makers, and venture runs on the power law, where a very few outsized winners drive everything.

Those early prices carry signal. Among startups seeded between 2016 and 2020, Carta found unicorns emerged far more often from the top quartile of seed valuations: 5.6%, versus 0.8% from the bottom quartile.

Whatever earns a company that high-conviction round (founder track record, early traction, talent density, warm investor networks)  tends to keep mattering later.

Win by expanding your region’s credibility pool

Two things are 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. If you were an uninformed investor, you’d be entirely justified following the pack. Pattern-matching is financially rational.

For local ecosystem builders, that makes unicorns a tempting scoreboard to chase: Lure venture capital, recruit “name” founders, announce accelerators, hope the numbers follow. It’s also a trap.

“A healthy entrepreneurial ecosystem will have unicorns,” Hwang said. “But we started measuring that to see the health of the ecosystem, and then people took it as: We should just focus on building unicorns.”

It’s Goodhart’s law: When a measure becomes a target, it stops being a good measure. Fund patents to look innovative, he noted, and you just get more patents, without the expected social good.

It helps to remember the 2010s unicorn boom was partly an artifact of its moment: Cheap money and a hard road to going public made it easy to stay private and grow fast. Gopuff, Philadelphia’s first unicorn, is still private years later, its IPO dangling. After decades of quality ecosystem-building work in Philly, other unicorns followed (HR platform Phenom, developer-tools dbt Labs, privacy-minded DuckDuckGo). But years later, who connects the dots between local organizing and headline-grabbing outcomes?

So the more grounded job is to widen the region’s credibility pool and customer proximity, so more teams can command high-conviction rounds in the first place. Not inflating valuations as a goal — building the repeatable conditions underneath them: Early customers willing to pilot, operators who become angels, institutions that convene talent and storytelling that helps outsiders understand why this place produces winners.

Practitioners feel the pull. Rae’Mah Henderson, who builds in Birmingham, Alabama, credited a couple of high-growth companies with giving the city “almost an education across the board: OK, how do we support a startup?”

But she caught herself mid-conversation: “My ecosystem wants unicorns so bad,” she said, when “the work I need to be doing is supporting the zebras” — the steady-growth companies that never make the mythical-animal headlines, as Technical.ly has long reported.

Taylor Eubanks of consultancy firm Blend HQ warned of the opposite reflex: “ecosystem bullies” who won’t let a founder forget a first failure, quietly teaching everyone else not to try. Hwang argued Silicon Valley’s real export was never the unicorn anyway; it was a culture comfortable testing, failing and iterating.

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 — fuel that recycles into the next generation.

So the question isn’t “How do we get more unicorns?” It’s the one Hwang said every state should be able to answer: Do we have the conditions where a founder can go from zero to a thousand, and take another swing if the first one dies?