The true value of unicorns
San Francisco-based analytics company Quid recently screened its proprietary database of companies that received at least $5 million in venture capitalist money from June 2014 to June 2015. As noted by Fortune.com, the company identified a total of 2,233 heavily-funded startups across a range of industries.
These so-called “unicorns,” or tech startups with a valuation of $1 billion or more, continue to pique investor interest: Funding for private technology firms leapt 25 percent from the last year, and 92 percent compared to two years ago.
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The following sectors were the most heavily funded in the U.S. over the past year.
1. Business & Financial Tech | $11.3 billion
There was no competition for the business & financial tech-focused unicorns: Investors were more than happy to spread their generosity, providing 388 startups with funding and solidifying the sector’s spot as the most funded.
Among the 388, one company did stand out: YourPeople, a payments & processing company based in San Francisco, which has received $598 million in investments, placing it as the No. 1 most funded company within this sector.
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Doing business as Zenefits FTW Insurance Services, the organization operates a cloud-based HR automation platform for small- and medium-sized businesses.
Top funded company: YourPeople
Most recent valuation: $5 billion
2. Urban Mobility & Vehicles | $9.1 billion
According to Fortune, 121 unicorns received funding for work within the urban mobility & vehicles sector and without question, the sub-sector that received the most funding was travel & cars: Out of the $9.1 billion allocated to this sector, $8.8 billion was invested specifically within the popular category.
The company catapulting the sector to the No. 2 spot? Uber Technologies, Inc., which has received $6 billion in funding since its inception and was valued in July 2015 at approximately $51 billion.
According to the Wall Street Journal, Uber’s fast-paced rise above the $50 billion mark illustrates the brand’s “aggressive global expansion into more than 300 cities,” proving that the value and quantity of this unicorn will continue to increase.
Top funded company: Uber Technologies, Inc.
Most recent valuation: $51 billion
3. Biotech & Pharma | $8.9 billion
Of the 301 biotech & pharma companies funded by U.S.-based VCs from June 2014 to June 2015, 180 identify specifically with the pharmaceutical, therapeutic & gene therapy sub-sector. At the top of this list is Intarcia Therapeutics, Inc., which has received $906 million in investments since launching.
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Incorporated in 1995 and headquartered in Boston, Intarcia Therapeutics has a strategic partnership with Quintiles, Inc. and Servier. The company was formerly known as BioMedicines, Inc. and changed its name to Intarcia Therapeutics, Inc. in September 2004.
Top funded company: Intarcia Therapeutics, Inc.
Most recent valuation: $5.5 billion
4. Advertising & Media | $8.7 billion
When analyzing the advertising & media sector, it isn’t very surprising to learn that social media apps & content was the stronger of its two sub-sectors in terms of investments ($6.5 billion compared digital media, marketing & sales, which earned $2.2 billion).
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It also doesn’t come as a shock to learn that Pinterest received such a high amount of funding ($1.9 billion)—but where are all of the others sites? Of the 344 companies referenced, only Pinterest and InsiderSales.com had received enough funding to be mentioned.
Top funded company: Pinterest
Most recent valuation: $11 billion
5. Big Data | $6.4 billion
The 231 companies to be funded under the Big Data umbrella were split between infrastructure & machine learning (161 companies at $4 billion) and data center & cloud applications (70 companies at $2.5 billion).
The most noteworthy? Palantir Technologies, which creates data-mining software for large corporations and government entities – it’s even backed by the CIA – and has received an estimated $1.1 billion in VC funding to-date.
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Recently valued at $20 billion, the secretive startup has secured its place as the fourth most valuable venture-backed company in the world.
Top funded company: Palantir Technologies
Most recent valuation: $20 billion
[Sources: Bloomberg, Fortune, The Wall Street Journal, Quid]
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Six issues at the top of tax and finance leaders’ agenda
New Deloitte research reveals that tax leaders are under increasing pressure to add strategic value as companies accelerate business model transformation, from undergoing digital transformations to rethinking their supply chains or investing in green initiatives.
According to Phil Mills, Deloitte Global Tax & Legal Leader, to “truly deliver value to the business, the tax function needs to rethink its resourcing model and transform its technology infrastructure to create capacity and control costs”.
And the good news, according to Mills, is that tax and business leaders have more options at their disposal to achieve this.
Reflecting the insights of global tax and finance executives at global companies, Deloitte’s Tax Operations in Focus study reveals the six issues at the top of tax and finance leaders’ agenda.
Trend 1: Businesses seek more strategic counsel from tax
Companies are being pushed to develop new digital products and distribution channels and accelerate sustainable transformation and this is taking them into uncharted tax territory. Tax leaders say their teams must have the resources and skills to give deeper advisory support on digital business models (65%), supply chain restructuring (49%) and sustainability (48%) over the next two years. This means redrawing the boundaries of what tax professionals focus on, and accelerating adoption of advanced technologies and lower-cost resourcing models to meet compliance requirements and free up time.
According to Joanne Walker, Group Tax Director, BT Group PLC, "There’s still a heavy compliance load today, but the vision for the future would be that much of that falls away, and tax people become subject matter experts who help program the machine, ensure quality control, and redirect their time to advisory activity.”
Trend 2: Tipping point for resourcing models
Business partnering demands in the tax department are on the rise, but 93% of tax leaders say their department’s budget is remaining flat or falling. To ensure that the tax function can redefine itself as a strategic function at the pace that is required, leaders are choosing to move increasing amounts of compliance and reporting to a combination of shared service centers, finance departments, and outsourcing providers that have invested in best-in-class technology.
Trend 3: Digital tax administration is moving faster than expected
in addition to the rising focus of the corporate tax department partnering with their business counterparts, transformative changes to the way companies share tax information with revenue authorities is also creating an imperative to modernize operations at a faster pace. Nine in 10 (92%) respondents say that shifting revenue authority demands on digital tax administration will have a moderate or high impact on tax operations and resources over the next five years—and several heads of tax said the trend is moving faster than expected.
"It’s really stepped up in the last couple of years," says Anna Elphick, VP Tax, Unilever. "Tax authorities don't just want a faster turnaround for compliance but access into a company’s systems. It's not unreasonable to think that in a much shorter time than we expect, compliance will be about companies reviewing a return that's been drafted by the tax authorities."
Trend 4: Data simplification and lower-cost resourcing are top priorities
Tax leaders said that simplifying data management (53%) and moving to lower-cost resourcing models (51%) must be prioritized if tax is to become more proactive at delivering strategic insights to the business. Many tax teams are ensuring that they have a seat at the table as ERP systems are overhauled, which is paying dividends: 56% of those that have introduced NextGen ERP systems are now highly effective at supporting the business with scenario-modeling insights. Only 35% of those with moderate to low use of NextGen ERP systems said the same.
At Stryker, “we automated the source P&L process for transfer pricing which took a huge burden off of the divisions," says David Furgason, Vice President Tax. "Then we created a transfer price database to deposit and retrieve data so we have limited impact on the divisions. We are moving to a single ERP platform which will help us make take the next step with robotics.”
Trend 5: Skillsets are shifting
Embedding a new data infrastructure and redesigning processes are critical for the future tax vision. Tax leaders are aligned — data skills (45%) and technology process experience (43%) are ‘must have’ skills in a tax department of the future, but more traditional tax specialist knowledge also remains key (40%). The trick to success will be in tax leaders facilitating the way these professionals, with their different backgrounds, can work together collectively to unlock lasting value.
Take Infineon Technologies, which formed a VAT technology and governance group "that has the right knowledge about how to change the system to ensure it generates the right reports", according to Matthias Schubert, Global Head of Tax. "Involving them early was key as we took a greenfield approach, so we could think about what the optimal processes would look like and how more intelligent systems could make an impact
Trend 6: 2020 brought productivity improvements
Improved productivity (50%) and accelerating shifts to remote working (48%) were cited as the biggest operational benefits to emerge from COVID-19-driven disruption. But, as 78% of leaders now plan to embed either hybrid or fully remote models in the tax function long term, 34% say maintaining productivity benefits is a top concern. And, as leaders think about building their talent pipeline and strengthening advisory skill sets, 47% say they must prioritize new approaches to talent recognition and career development over the next two years, while 36% say new processes for involving tax in business strategy decisions must be established.