Westward Ho

Michael Moe  |

Image via ™Pacheco/Flickr CC

The businesses that generate the most spectacular returns are small companies that become big companies. At GSV, our objective is to identify and invest in the Stars of Tomorrow — the fastest growing, most innovative companies in the world.

As such, every year we identify 250 private companies that are poised to become the next generation of game-changing businesses. We call this group the Global Silicon Valley Pioneer 250.

How do we construct the list?

Our top-down perspective focuses on the intersection of Megatrends (technological, economic, and social forces that disrupt the status quo) across growth sectors of the economy to identify game-changing businesses with innovative technologies and services.

Additionally, we put a weighting on the caliber of a company’s investor group, Board representation, and the sector it is operating in. The process is definitely both art and science, but we attempt to be as systematic and consistent with our analysis as we can.

We’re looking for large, open-ended growth opportunities as well as individual companies that possess the critical elements necessary to capture meaningful market share in these opportunities.

GSV’s bottom-up analysis is centered on the Four Ps — People, Product, Potential, and Predictability — an objective framework to assess a company’s potential to realize sustained long-term growth resulting from market Megatrends.

Silicon Valley has become synonymous with big ideas, start-ups, and inventing the future. But today, the magic of Silicon Valley has gone viral, and it’s gone global. From Austin to Boston and Chicago to Sao Paulo — from Shanghai to Mumbai to Dubai, a Global Silicon Valley is emerging.

Source: GSV Asset Management
*China (4), India (7), SE Asia (3)

Today, most Pioneer 250 members (130 companies) reside in the Bay Area. New York City is the second largest cluster with 39 companies. But we expect to find much broader geographic dispersion in the coming years.

Pioneer 250 companies have been backed by a range of leading VCs, led by Andreessen Horowitz (A16Z), which counts 46 companies on the list. Second-place Kleiner Perkins (KPCB) and third-place NEA have backed 34 and 31 companies respectively.

Source: GSV Asset Management

Equity funding raised across the Pioneer 250 ranges from $5.5 million (Science Exchange) to $320 million (Affirm). Most companies fall into two brackets — 48% have raised between $50 million and $150 million, and 43% have raised less than $50 million. By investment stage, 64% of companies are Series C or later.

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Source: GSV Asset Management

Source: GSV Asset Management

Over 50% of Pioneer 250 companies were founded between 2011 and 2015 (135). Just seven companies were launched in 2015 and only one in 2016. The median age is six-years-old.

The Median Age of Pioneer 250 Companies is Six-Years-Old

Source: GSV Asset Management

Nearly 75% of Pioneer 250 companies have 100 or more employees. Just 17 have 50 or less. The median headcount is 178.

The Median Employee Count of Pioneer 250 Companies is 178

Source: GSV Asset Management, Mattermark, LinkedIn

There were 11 “graduates” from the inaugural Pioneer 250 list in 2016. Nine companies exited via M&A, including Dollar Shave Club Club, which was acquired by Unilever for $1 billion, and Quip, which was acquired by Salesforce for $750 million.

Companies that Have “Graduated” from 2016 List via IPO, M&A, or Valuation Surpassing $1 Billion

Source: GSV Asset Management

The lone IPO was Talend, which listed in July 2016. Go-Jek left the list as it surpassed the $1 billion valuation mark later in the year on a $550 million August financing that marked the company at $1.3 billion. Subsequent to the start of 2017, Trello was acquired by Atlassian for $425 million. It will be recorded as a 2017 graduate.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not necessarily represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer.

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