VC Macroeconomics: Market Size for Unicorns

In 2000, I joined DeviantArt, an online community of digital artists worldwide. This exposure showed me how the internet can break down borders and create global communities, solidifying my belief in the power of digital startups to reach beyond local markets.

However, achieving global scale requires more than just a digital presence. For startups targeting local markets or aiming to expand into new regions, understanding diverse macroeconomic landscapes is essential. Today, I’m sharing some insights I’ve gained in this area.

ℹ️ I'm in travel mode for a month, so some weekly editions may be shorter or skipped.

Population Unicorn

Speaking about market size, I compared the number of unicorns to population and GDP. 

An enough local market size for high buying power (GDP/capita) is 33 million population, for mid-power is 48 million, and for low is 98 million people.

For example:

• Low: Vietnam (99M population, $4.4K GDP per capita) or Egypt (113M, $3.5K)

• Mid: South Korea (52M, $33K) or Spain (48M, $33K)

• High: Australia (27M, $65K) or Netherlands (18M, $63K)

To make this study fairer, I excluded micro-countries, which are usually used as jurisdictions. For a detailed study, read Unicorn Market Size.

Local vs Global

If a country's population is smaller than these thresholds, reaching a $1B valuation becomes more challenging. It may need stronger market domination, which is often possible through administrative resources in less democratic places, a strategy that’s not sustainable as it relies less on market conditions. 

Alternatively, startups must think outside the borders as early as possible. In some cases, the valuation can rise significantly while still being under the unicorn threshold, potentially leading to acquisition by global companies if the country’s politics are not protective.

Startups related to offline processes or local businesses are easier to protect from acquisition or global player market penetration. For example, what can protect a local market from OpenAI? Only firewall games. Does the nation win from such protection? Absolutely not, as it’s impossible to dive deeper into tech fields like AI in isolation. 

On the other hand, services like Uber can be blocked at the local regulation level. Without the need for deep tech, local developers can build ride-handling apps, leaving global players unable to leverage any competitive tech advantages, thus losing the market to local players.

The game changer could be autonomous driving vehicles, but there may be more concern about human drivers losing their jobs than business impacts.

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I'm researching the operational terms of angel groups and syndicates, focusing on medians for annual membership fees, deal fees from investors, and deal fees from startups. If you have data, please reach out via DM.

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