A year ago, the term "unicorn" seemed to get bandied about as if $1 billion was the starting point for valuations and not a benchmark of achievement. Now it's starting to look like Silicon Valley has learned the value of a dollar.

Only 11 U.S. startups have crossed this year into that high-valuation category as of the end of last month, according to PitchBook's second annual VC Unicorn Report. That's compared with 43 startups last year and 33 in 2014, though it's still higher than levels of prior years.

The report admits unicorn talk is starting to feel a little tired, but points out there is meaningful data within the seemingly over-picked trend. And common explanations for the recent shift from rabbit-like reproduction rates to more of a trickle don't tell the whole story.

"The general explanation that a capital rich environment is causing a concentration among safer prospects at the late stage only partially explains such continued unicorn funding," states the report.

If you want to know what's really pushing things around, look beyond venture capital firms. According to PitchBook, "late-stage companies with sufficient financial means are able to access lines of credit or other financing alternatives beyond simply raising another strictly traditional venture round that would only further complicate capital structures and potential liquidity."

One trend to keep an eye on is mutual funds investing in private capital markets, according to a press release about the report. While three of the top five investors in unicorns are venture capital firms SV Angel, Sequoia Capital and Andreessen Horowitz, it's mutual funds snagging the remaining two spots: Fidelity Investments and T. Rowe Price. The two funds have invested in companies including Snapchat, Oscar Health and Glassdoor.

Other "tourist investors" following in the trend include Wellington Management, Tiger Global Management and Blackrock. And the amount of money these mutual funds are pouring in is worth noting: "Last year alone, global mutual fund investors poured $23.7 billion into 192 VC transactions--the highest amount of capital invested ever and a 66% increase from the year prior," states the release.

PitchBook senior analyst Garrett Black said in a statement that three factors--private companies staying private, volatile public markets and a looming rise in interest rates--are driving the trend. "These factors make investments into VC-backed companies more attractive than ever to tourist investors like mutual funds. We anticipate they'll continue to invest in this asset class," he said.

Published on: Sep 21, 2016