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Inside the unicorn economy

Dropbox Headquarters San FranciscoDropbox Headquarters San Francisco
Dropbox headquarters, San Francisco, CaliforniaPhoto: Bruce Damonte

In January, when Fortune put a unicorn on its cover to represent the new age of private enterprises with billion-dollar valuations, we thought it might signal a peak. Instead, unicorns have been proliferating like rabbits. The pace and size of funding announcements have only intensified in 2015—even as jitters in the broader stock market stoke fears of a startup bubble. When our list debuted in January, we counted at least 80 of these so-called startup unicorns. Since then we’ve added 59 to the list. In 2010 startups raised 29 rounds of funding worth $100 million or more; in the first half of this year alone there were almost four times as many.

The resulting startup gold rush has had profound and wide-ranging effects. Some credit the boom with driving up San Francisco rents, which are set to surpass New York City’s this year for the first time since the dotcom bubble. Others say it’s making talent in the Bay Area just as pricey: Yelp CEO Jeremy Stoppelman recently said the unicorn boom had contributed to higher payroll costs. The only option? “Hold the dam on that whole thing and ride it out,” he says.

Meanwhile, businesses that cater to startups are thriving, including actual catering companies and ZeroCater, which supply employees at billion-dollar startups like GitHub and Eventbrite with gourmet fare. Because of their mandate for breakneck growth at all costs, startups have specialized needs, creating opportunities for unicorn-friendly service providers.


Take Ohio Design, a San Francisco company that makes artisanal office furniture for clients like Square and Uber. Sales have shot up 25-fold during this boom, says founder David Pierce. “I feel like we’re building the picks and shovels for the gold miners,” he says.

Ohio Design isn’t alone. Custom Spaces, a commercial real estate firm that has worked with unicorns like Airbnb and Dropbox, has thrived by working specifically with new companies, which tend to outgrow offices quickly. Same for TaskUs, a startup that has raised $15 million itself to help the likes of Uber outsource customer service and back-office support to the Philippines. HomePolish, an interior-design company that counts Blue Apron and Gilt Groupe as clients, regularly fields startups’ requests for phone booths, bar carts, and Ping-Pong tables.

But no corner of the economy has felt the unicorn effect as profoundly as venture capital. Last year VCs plowed $56.4 billion into startups, the most since 2001, according to CB Insights. Increased competition for the hottest deals means firms must distinguish themselves with startup-friendly services. The savviest ones now also provide PR, recruiting, marketing, and design assistance to portfolio companies, along with lavish rooftop parties and CEO summits in the Hamptons. Last year, in a bid to appear as pro-entrepreneur as possible, Felicis Ventures pledged to side with founders in any decision, forfeiting voting rights. There’s even a new firm called Unicorn Capital Partners, poised for what it calls “the start of the Age of Unicorns.” If this is a tech bubble, investors don’t seem terribly concerned.

To see our full unicorn list, click here.

A version of this article appears in the September 15, 2015 issue of Fortune magazine with the headline “The unicorn economy.”