A Look At The 2024 Next Billion-Dollar Startups List

Forbes

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/  Subscribe to FORBES: https://www.youtube.com/user/Forbes?sub_confirmation=1  Fuel your success with Forbes. Gain unlimited access to premium journalism, including breaking news, groundbreaking in-depth reported stories, daily digests and more. Plus, members get a front-row seat at members-only events with leading thinkers and doers, access to premium video that can help you get ahead, an ad-light experience, early access to select products including NFT drops and more:  https://account.forbes.com/membership/?utm_source=youtube&utm_medium=display&utm_campaign=growth_non-sub_paid_subscribe_ytdescript  Stay Connected Forbes newsletters: https://newsletters.editorial.forbes.com Forbes on Facebook: http://fb.com/forbes Forbes Video on Twitter: http://www.twitter.com/forbes Forbes Video on Instagram: http://instagram.com/forbes More From Forbes:  http://forbes.com  Forbes covers the intersection of entrepreneurship, wealth, technology, business and lifestyle with a focus on people and success.

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.

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