PWC: Unicorns in Digital Economy: 5 Emerging Trends

Unicorns in edtech, gaming, and streaming were already attracting significant interest before 2020; they collectively raised $23.8 billion between 2016 and 2019. But it was during the pandemic (defined in our study as January 2020 through the end of our study period, which was June 30, 2021) that they took off, bringing in $29.9 billion. Members of Gen Z, the digital natives born between 1997 and 2012, found themselves uprooted during their formative years both socially and academically. Around the world, this cohort had to quickly make key parts of their lives fully virtual through learning remotely and playing games online to stay connected with friends.

This transformation has become a social phenomenon that is bringing the metaverse, a tech-enabled digital world, to life. Innovation often looks to the next generation, and much of Gen Z is now mature enough to start driving behaviors and usage of technology—with the rest of society following suit. And increasingly the tech world is going to cater to their needs and preferences. For example, demand for the products and services of edtech, gaming, and streaming unicorns has skyrocketed, as have their valuations. Thirty-three entertainment and media companies have achieved unicorn status since 2020.

• Edtech scaled rapidly when many school buildings shuttered and students were forced to quarantine for prolonged periods, and when employees sought virtual options for professional and personal skill development. During the pandemic, edtech unicorns raised (on an annualized basis) eight times the annual amount raised from 2016 through 2019. Tutoring platforms Byju (based in India) and Yuanfudao and Zuoyebang (based in China) received massive investment (each attracted $3 billion to $4 billion in funding between 2016 and 2021). The Business Standard reported that Byju had 100 million registered students and 6.5 million paid subscribers as of September 2021.

• Gaming unicorns raised (on an annualized basis) more than double the amount of capital during the pandemic that they raised during the previous four years. This reflects gaming’s transformation into an environment for social connectivity, and, in the near future, marketplaces. Gaming industry analytics firm Newzoo reported that the global gaming market generated $177.8 billion in 2020, a year-on-year increase of 23%. Growth in gaming unicorns has been driven by US-based pre-pandemic unicorns Epic Games and Magic Leap.

• Similar to gaming unicorns, streaming unicorns more than doubled the annual billions raised during the pandemic compared to 2016–19. Streaming has become omnipresent. For example, Sweden-based music streaming company Spotify, which was a unicorn until it went public in 2018, grew its user base from 77 million in 2015 to 365 million in 2021. TikTok (founded in 2016) and its competitor Kuaishou (founded in 2011) have each grown to a staggering 1 billion monthly active users during the pandemic.

This trend is just getting started—the convergence of the metaverse, crypto, and 5G has the potential to create a web 3.0 economy that we can’t yet fully envision, and that will evolve over the course of the decade.