Working Paper: NBER ID: w30604
Authors: Daria Davydova; Rüdiger Fahlenbrach; Leandro Sanz; Ren M. Stulz
Abstract: Unicorns are startups that choose to stay private even though they are large enough to go public. We propose an efficiency explanation for their existence. Startups relying highly on organization capital are more vulnerable to expropriation of their organization capital if they go public before their position is sufficiently secure. Our main empirical findings are that shocks to the fragility of organization capital decrease the IPO likelihood, unicorn status enables startups to stay private longer by giving them access to new sources of capital, and unicorns and their industries have higher organization capital intensity than other startups.
Keywords: No keywords provided
JEL Codes: G24; G32; G34
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| increased funding availability (I22) | rise in unicorn births (J19) |
| rise of new types of firms (L26) | unicorn status (Y30) |
| new types of firms relying on organizational capital and network effects (D26) | unicorn status (Y30) |
| unicorns remaining private (Y50) | building intangible assets (O34) |
| increased funding (I22) | unicorns access alternative funding sources (G19) |
| unicorns delaying IPOs (G24) | building sufficient organizational capital (D29) |
| dual-class share structures (G32) | founders retaining control post-IPO (G34) |