A Look At The 2024 Next Billion-Dollar Startups List
Forbes Assistant Managing Editor Katharine Schwab and Senior Editor Amy Feldman, take a deep dive into Forbes's 2024 Next Billion-Dollar Startups List and look back at the list's ten year history.
Read the full story on Forbes: https://www.forbes.com/sites/amyfeldman/2024/08/13/forbes-next-billion-dollar-startups-list-has-accurately-predicted-100-unicorns-in-10-years/
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Read the full story on Forbes: https://www.forbes.com/sites/amyfeldman/2024/08/13/forbes-next-billion-dollar-startups-list-has-accurately-predicted-100-unicorns-in-10-years/
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Transcript
00:00Hi, my name is Katherine Schwab. I'm an assistant managing editor here at Forbes. Today is a
00:08very special day because it is the 10th anniversary of the Forbes Next Billion Dollar Startups
00:13list. And I'm really excited to be here with Amy Feldman, who's edited the list for most
00:19of its history. Amy, congrats on the 10th anniversary.
00:23Thanks, Katherine, and I'm delighted to be here to talk about it.
00:26Great, so what is the Next Billion Dollar Startups list? Talk to me a little bit about
00:31the goals for launching this list 10 years ago.
00:33Sure. The Next Billion Dollar Startups list, it's a list of companies that are worth less
00:37than a billion now, 25 companies each year that we think are likely to hit that mark.
00:43So when we look at the list, we try to get companies that are not only valued highly,
00:48but also have decent amount of revenue and revenue growth that can really grow into that
00:52valuation and have staying power.
00:54Right. OK, so how do we actually select which companies make this list?
00:59We get nominations from all over the place. Our data partners, Truebridge, asks hundreds
01:04of VC firms. We at Forbes reach out to companies. We do a massive social outreach as well. We
01:11usually get 150 to 200 nominations, and companies have to fill out significant financial information.
01:18And then our first cut of the list is a quantitative cut.
01:23OK, so we're just looking at revenue numbers, valuation, funding raise, that kind of thing.
01:28As well as headcount, headcount growth, revenue growth. There's a bunch of different metrics
01:35that go into it.
01:36OK, so what was the kind of cutoff revenue-wise to make the list for this year?
01:41We did have, interestingly enough, because AI is so hot this year, we have a few companies
01:46that did not have revenue because we look at revenue for last year, 2023.
01:51Right. Ah, the pre-revenue.
01:53Correct.
01:53Yes. That is unfortunately becoming a thing. OK, so we've been doing this list for 10 years
02:00now. I'm curious what kind of high-level trends you've seen change over time as you've been
02:07focused on this list.
02:09What's interesting, Catherine, is that the list will reflect what's going on in the world.
02:13And so this year, it's very much of an AI-focused list. It was to some extent last year as well,
02:18but really so this year. During the early days of the pandemic, it was much more healthcare
02:23focused. So we had companies like Capsule and Lyra Health in 2020. This year, I think
02:29we have one or two healthcare companies, but it's very much an AI list this year.
02:34OK. What are some of the companies we put on this list that you feel most proud that
02:42we spotted before they blew up?
02:44We had some really interesting companies. If you go back to 2015, we had DoorDash on
02:49the list, which was worth well under a billion dollars. Now, obviously, everyone knows its
02:55name. It's publicly traded. It's worth close to $50 billion. We had Tanium on the list,
03:00which my colleagues at Forbes just did a big profile of for Cloud 100. It's obviously
03:05broken out since that time.
03:08OK. So I think also like Anduril. There's a bunch of household names that...
03:14There's a bunch of household names from over the years. We had Anduril. We've had Figma.
03:20We've had Rippling. It's been quite a number, more than 50% of the list. I believe 131 companies
03:30out of 225 have crossed the billion dollar mark.
03:33OK. That's a pretty good track record, I would say, over the years, especially because
03:38so many companies fail. Like most startups fail.
03:42Correct. Most startups fail.
03:44OK. So do you think there's some sort of secret sauce here in terms of picking these
03:50companies or it's just really looking for... It's just that revenue growth? I mean, I know
03:55as I've worked on this list for the first time this year and something that we're very
04:01careful about is that companies don't get to not share their revenue if they want to
04:05be on this list. So it's definitely, you know, we push for those hard numbers.
04:09Correct. We need numbers. And for the analysis of the list, we have more numbers that we
04:16don't publish in order to make sure that we're getting decent companies. We also do obviously
04:22vetting and reporting after the numerical part. So for example, in 2019, there was a
04:28company that we were considering, Clio, which was very hot at the time. And the reporter who
04:33was working on it noticed that the CEO had lied about her age. And that led to a sort of a full
04:40investigation into the company. They obviously were not on the list, but it was a separate
04:45investigation into the company, the result of which was that she resigned.
04:50Wow. OK. I love that over the years we've had both these kind of breakout companies
04:58that we've identified early, but also, you know, using this as a tool for investigative reporting,
05:02which is really awesome. Are there any companies that made the list that we aren't so proud of
05:08that crashed and burned afterward? There's always a few. And with 225 alumni,
05:15there's going to be a few. So there's five companies that have either shut down or imploded.
05:19And our worst implosion, which we are not proud of, but everyone missed. It didn't happen until
05:26a few years later, is a microbiome company called Ubiome. And it was it was on the list when it was
05:33riding high. It subsequently went through really bad stuff, which included the FBI raiding its
05:42offices. CEO is resigning. The company is gone. Yeah. Yikes. I mean, I do feel like five out of
05:49over 200 is it's a it's a pretty good record. Yeah. So let's talk a little bit more about
05:57about this year's list. What do you think this year's list tells us about this
06:02current moment in venture capital? I think this year's list, it's it's as we said, it's very much
06:07of an A.I. list. And so it really tells us that that's where the money is going. So we have a
06:12number of really interesting A.I. companies like Codium is on the list, Fireworks, A.I. These are
06:19companies that are, I think, very well known within the A.I. community, but maybe not so much outside
06:24of it that we do think are likely to break out going forward. It's also interesting this year
06:30because of the amount of money going in, the revenue, overall revenue on this list is lower
06:36than it was last year. I believe it was averaging about 14 million on this list versus last year's
06:41list, which was 24 million. So that's a sort of interesting trend. Hmm. What do you think that
06:46indicates? I think it indicates that because there's so much money going into A.I. companies
06:52that we do have some of these companies that are pre-revenue, which a couple of years ago was very
06:57unusual to have a company that didn't have revenue the previous year. Gotcha. OK. What about some of
07:04the non-A.I. companies on the list? Are there any that you feel personally excited about? Yes.
07:09So I profiled for the magazine a company called Promise, and it's not an A.I. company. It's a
07:14company that is working with utilities, and it helps people to pay their bills. It sets up
07:24zero-interest payment plans for these utilities so that people can pay their bills without it
07:29being punitive. And the woman who founded it has a very interesting background for a company on
07:34this list. She was a labor organizer, a nonprofit executive, and sort of, oddly enough, a business
07:41advisor to Prince. And she ended up going into tech startups later in her career and founded
07:47this company. And it's a really fascinating business. Yeah. Prince business advisor to tech
07:54CEO is definitely a trajectory we do not see every day. It's certainly one I've never seen before,
07:59and I'm not sure we'll see again. Yeah. I mean, I find Promise to be a really fascinating company.
08:03How do they actually make money if they're not charging any interest on these payment plans?
08:08So they're charging to the utilities. They're not charging the people who are paying the bills. So
08:14the utilities, if they can increase the amount of people that are paying, that's hugely important
08:21to them. So if they can get their payment rates up from, say, 20 percent or 30 percent to 80 percent
08:27or 90 percent, it's well worth it to them to pay for that. That's great. Yeah. It's also kind of an
08:34unusual space for a company to be focused on. GovTech companies are not usually the hottest,
08:41highest-flying startups. But I think her story is really inspirational. And I worked on the story
08:49with Amy for the magazine, so I'm deeply invested in this company's success. And I hope that it
08:56kind of sees through its promise. Yeah. I hope so, too. Yeah. So looking ahead,
09:04what do you hope to see for next year's list? What would be your kind of ideal
09:12group of companies as we're starting to report on the next hottest group of startups?
09:19Well, I think it'll be interesting for next year. And I don't know if this is what I
09:24hope for, but will this AI trend-slash-bubble continue for next year? Will we continue to see
09:31that dominating the list, or will something else take its place in the interim?
09:38This list is very much of a reflection of what's going on in Silicon Valley,
09:44what's going on in the tech world, and whether that continues will be fascinating to see.
09:50Great. Thank you so much, Amy. And thanks, everyone.