The Rise of the Unicorns - How Media Affects Start-Up Valuations

45 Pages Posted: 15 Jul 2016

Date Written: July 2016

Abstract

Within the last years, start-ups have achieved extraordinary high valuation levels which have never been seen in such dimensions before. These high-valued start-ups with valuations above or equal to US$1bn are also called unicorns. Similarly, media coverage of start-ups has increased significantly. In this paper the impact of media coverage on global unicorn valuations between 1990 and October 2015 is empirically analyzed. In addition, the impact of technology advancements on the media and start-ups is discussed. The here presented results indicate that technology advancements increase media coverage for start-ups. Investors which are typically not primarily active in the VC market are most affected by increasing media coverage. Start-up and especially unicorn valuations are driven to a large extent by increasing media coverage before a funding round. These results add new insights on the driving factors of start-up valuations and are consistent across a variety of different regression models and robustness checks.

Keywords: Valuation, Venture Capital, Unicorns, Start-ups, Media, Technology

JEL Classification: D8, G14, G24, G32, M13

Suggested Citation

Zörgiebel, Severin, The Rise of the Unicorns - How Media Affects Start-Up Valuations (July 2016). Available at SSRN: https://ssrn.com/abstract=2808458 or http://dx.doi.org/10.2139/ssrn.2808458

Severin Zörgiebel (Contact Author)

Goethe University Frankfurt ( email )

Theodor-W.-Adorno-Platz 3
Frankfurt am Main, 60323
Germany

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