When the Unicorn Label Bites Back: How the $1 B+ Club Is Being Re-rated This Cycle

Hitting a $1 billion valuation once signalled a major success in private markets. Today: not so much. The “unicorn” badge still grabs attention—but the business behind it must now justify the number. At Aduna Capital we see this as a pivot point for founders and investors alike.

1. The scale and challenge

There are over 1,200 unicorn-valued private companies globally. CB Insights+1 Many of these companies were valued during a more relaxed investment climate. Now macro pressures, tighter liquidity and fewer exit opportunities are forcing responses. For example, a recent report shows large numbers of unicorns haven’t raised new funding in several years — indicating slower liquidity and potential valuation drag. Crunchbase News

2. Why valuations are being re-rated

• Higher investor scrutiny: Growth alone no longer silences questions about margins, run-rate, unit economics.

• Compression of future value multiples: With higher interest rates and delayed exits, valuations anchored to “future profits” get challenged.

• Exit environment is tougher: Fewer mega IPOs or acquisitions mean private valuations must stand on firmer ground. Crunchbase News+1

• Overhang risk: Some unicorns have gone years without meaningful funding updates, raising questions about momentum. Crunchbase News+1

  
  

3. What this means for founders

• A $1 B valuation is no longer just a milestone—it’s a promise. You must ask: Can the business deliver?

• Raising at a high multiple without matching fundamentals may lead to diluted future rounds or down-round risk.

• Metrics matter more than ever: how quickly you acquire customers, the cost, retention, lifetime value—all are under sharper focus.

• Exit-planning becomes essential. If the timing or size of the exit slips, valuation expectations may fall accordingly.

  
  

4. What this means for investors

• Don’t use “unicorn” status as a proxy for quality. Drill into business fundamentals.

• Scenario-plan for slower growth or longer exit horizons.

• Engage early and deeply with founders on governance, operational metrics—not just on valuation headlines.

  
  

5.  Seven practical questions to ask before raising at a unicorn level

(At Aduna Capital we walk through these with our founder-clients)

• What is the monetisation model, and how quickly will it scale to meaningful margin?

• What is your net customer-lifetime value (LTV) vs cost to acquire (CAC)? Are those improving?

• How does your unit economics evolve if growth slows by 30 %?

• What exit horizon are you targeting? How sensitive is valuation to a delay of 12–24 months?

• How much dilution are you locking in now — and does it leave flexibility for follow-on rounds?

• What market signals or regulatory changes could tilt the multiple downward?

• Are you building your team, systems and governance now to withstand the scrutiny of a more demanding investor pool?

  
  

6. Case study: Where re-rating hit hardest

Consider the fintech example: Plaid, valued at more than $13 billion in 2021, but later cut to approximately $6.1 billion in 2024. Financial Times The core business had grown revenue, yet the multiple contracted dramatically as the environment changed. That marks two lessons: First — valuation is volatile even when business improves. Second — growth alone is insufficient.

Globally, many Indian startups across fintech, SaaS and consumer-internet have raised capital in recent years only to face valuation downgrades. The Business Times The phenomenon is not isolated — it’s structural.

The $1 billion club hasn’t collapsed—but its meaning has shifted. Valuation alone isn’t the finish line; it’s the baseline for proof. At Aduna Capital we work with founders and investors to align ambition with fundamentals, because in this cycle the business must deliver, not just the headline.