Did you know that the average return from investing in stocks is 10% per year (not accounting for inflation)? But who wants to be average?!
You have been asked to support an investment firm by analyzing trends in high-growth companies. They are interested in understanding which industries are producing the highest valuations and the rate at which new high-value companies are emerging. Providing them with this information gives them a competitive insight as to industry trends and how they should structure their portfolio looking forward.
You have been given access to their unicorns database, which contains the following tables:
dates
| Column | Description |
|---|---|
company_id | A unique ID for the company. |
date_joined | The date that the company became a unicorn. |
year_founded | The year that the company was founded. |
funding
| Column | Description |
|---|---|
company_id | A unique ID for the company. |
valuation | Company value in US dollars. |
funding | The amount of funding raised in US dollars. |
select_investors | A list of key investors in the company. |
industries
| Column | Description |
|---|---|
company_id | A unique ID for the company. |
industry | The industry that the company operates in. |
companies
| Column | Description |
|---|---|
company_id | A unique ID for the company. |
company | The name of the company. |
city | The city where the company is headquartered. |
country | The country where the company is headquartered. |
continent | The continent where the company is headquartered. |
The top three industries producing Unicorns are as below:
SELECT
COUNT(company_id),
industry
FROM industries
GROUP BY industry
ORDER BY count DESC
LIMIT 3;With this in mind, The data has been filtered to show the average valuation (in billions $USD) for the years 2019, 2020 and 2021.
WITH dates_year AS
(
SELECT
EXTRACT(YEAR from date_joined) as year,
company_id
FROM dates
)
SELECT
i.industry,
d.year,
COUNT(i.company_id) AS num_unicorns,
ROUND(AVG(f.valuation) / 1000000000, 2) AS average_valuation_billions
FROM industries AS i
LEFT JOIN dates_year as d
ON d.company_id = i.company_id
LEFT JOIN funding as f
ON f.company_id = i.company_id
WHERE d.year IN ('2019', '2020', '2021')
AND i.industry IN ('Fintech', 'Internet software & services', 'E-commerce & direct-to-consumer')
GROUP BY industry, d.year
LIMIT 10;It is clear that although the number of businesses reaching unicorn status has increased year over year for these three industries, the average valuation has not followed an upward trend. All three industries have had lower average valuations in 2021 compared to 2019.