Europe is minting unicorn companies at its fastest pace since 2022, with AI startups attracting an increasing share of venture capital.
According to PitchBook, 11 VC-backed European companies have raised funding at valuations above €1 billion ($1.63 billion) this year, putting the region on track for a record year of unicorn creation.
The surge reflects a broader trend of venture capital concentrating around a smaller pool of startups, particularly in AI.
“Q1 2026 was the strongest quarter in almost four years, more than double the number minted in the same period last year, and up 57 per cent from Q4,” a May PitchBook report said.
But this year’s unicorn cohort is increasingly concentrated in a handful of sectors, most notably AI.
“Having largely missed out on the LLM race, Europe is setting itself up to lead in physical AI, with French world model developer AMI Labs securing a US$4.5 billion (AU$6.2 billion) post-money valuation in its first funding event in March,” the report said.
“Another LLM alternative, UK-based Ineffable Intelligence, gained a US$5.1 billion post-money price tag last month.”
PitchBook also highlighted defence technology as a sector continuing to attract strong investor interest and produce unicorns.
“Heightened geopolitical tensions and Europe’s desire for greater sovereignty have sustained momentum for defense spending. London-based drone startup Roark netted a $1.8 billion post-money valuation in January.”
Globally, unicorn numbers are also on track to reach their second-highest level on record, with 1,680 unicorns carrying a combined valuation of US$8.6 trillion at the end of March. According to PitchBook’s Q1 2026 Global Unicorn Tracker, that is more than seven times the number recorded a decade ago.
The US remains home to the largest number of active unicorns, with 853 companies accounting for 53.5 per cent of the global total. China follows with 330 unicorns, ahead of India (56), the UK (53) and Germany (28).
“But even within the global unicorn herd, value is concentrated in just a few startups,” PitchBook said.
According to PitchBook, the world’s most valuable unicorns include ByteDance, Ant Group, Stripe and SpaceX.
“Because the elite group of unicorns has become so large, some have argued that new terms are needed to describe them.”
‘Decacorn’ has been coined to describe startups valued at about US$10 billion, while ‘dragon’ refers to a class of private, venture-backed companies valued at US$12 billion or more.
The 10 most valuable companies now account for more than 40 per cent of total combined post-money valuations.
“In fact, over half of global unicorns haven’t raised a round in more than two years, suggesting that a significant portion of the market could need repricing.”\
PitchBook said the valuations of the largest unicorns remain particularly exposed to swings in public equity markets.
“Facing a selloff of tech stocks in 2022, many of the most valuable tech startups are expected to struggle to maintain or increase recent valuations.”
Venture capitalist Aileen Lee, founder of Cowboy Ventures, coined the term “unicorn” in 2013 to describe billion-dollar US software companies.
“At the time, these startups were both rare and special: Lee counted just 39 companies that met her criteria in 2013, a list that included Facebook, LinkedIn, Workday and Twitter,” PitchBook said.
PitchBook defines a unicorn more narrowly as a venture-backed company that has raised funding at a post-money valuation of US$1 billion or more.
“We stop considering the company a unicorn if it is no longer venture-backed because it goes public or is acquired, or if its valuation falls below the US$1 billion threshold – for example, because it went out of business or had a down round,” a report on 2 May said.
Once considered rare, there were 1,590 active unicorns globally as of 2 February 2026, according to PitchBook data.
“The fact that so many funding rounds now involve billion-dollar companies is due in part to the growth in VC fund sizes. Several late-stage investors, most notably SoftBank, have tech investment strategies built almost exclusively around backing companies that are valued at more than US$1 billion,” the report said.
However, PitchBook said growing competition is pushing some investors further down the funding curve in an effort to build relationships with future unicorns earlier.
The firm said unicorns remain critical to venture capital returns because a small number of companies typically generate the majority of gains – a dynamic known as the power law.
“Unicorns are a highly visible example of the power law in action.”
