Investing.com -- The value of the largest 100 privately-held companies worth at least $1 billion increased this year thanks to an improving economic backdrop and an ongoing surge of enthusiasm around artificial intellgence, according to data from PwC.
Citing figures from private market data provider PitchBook and its own internal analysis, PwC found the value of these companies -- dubbed "unicorns" -- rose in value by 10%, or $187 billion, reversing declines posted in 2023.
Almost 90% of the uptick was due to only 15 of these businesses, with Elon Musk-led Space X recording the largest jump, PwC said. The rocket group's valuation grew by 31% or $40 billion.
Following a time of "significant macroeconomic headwinds in 2022 and 2023" that partly contributed to barren period for public market debuts, sentiment around unicorns was bolstered this year by rising economic stability in US and Europe as well as fading inflationary pressures, PwC said.
Of these unicorn companies, 30% have undertaken a form of a fundraising round in 2024, up from 12% last year. However, 70% did not go through a funding round, suggesting that a "majority of the cohort" either has sufficient liquidity to execute their growth plans or is waiting for economic conditions to improve further, PwC noted.
"As the macroeconomic landscape continues to improve, we expect a further increase in funding round and deal activity over the next 12 months as companies seek further investment to execute strategies and investors look for exit/liquidity events," PwC said, flagging "whether valuations hold up remains the key question."
Much of the market for initial public markets has been in a dry patch over the past two years, while the proceeds raised in recent flotations have remained far below the 10-year historical average. Social media group Reddit, logistics business Lineage and healthcare company Concentra are among the biggest IPOs this year.
Despite waning fears of a widespread recession and frothy stock valuations, investors have largely sought out firms with a clear path to profitability, tempering expectations around unicorns. But analysts are projecting that the trend could reverse itself in 2025.
"Ongoing recovery of the IPO market provides an exciting opportunity for investors and founders to access a deep liquidity pool of public capital, boost brand profile, realize a return on investment and reward talent," said PwC UK Capital Markets Director Kat Kravtsov in a statement. "Being IPO ready and fit for growth will be critical elements for success at IPO and in the aftermarket."