The launch of startup unicorns worldwide has faded this year as investors focus more on sustainable valuations and profitability amid volatile market conditions, according to data and analytics firm GlobalData.
The firm said 85 unicorns were created in the second quarter of this year, compared with 127 during the previous quarter.
A total of 521 startups from 2021 have maintained their unicorn status, up fivefold compared to the 100 unicorns from 2020.
"The startup ecosystem, which was on a unicorn creation spree last year, is currently facing a funding crunch as investors are looking for sustainable business models, valuations and a path to profitability amid volatile market conditions," said Kiran Raj, practice head of disruptive technology at GlobalData.
In 2022, key markets witnessed a drop in the birth of unicorns, GlobalData indicated.
The US saw unicorn creation declining from 77 in the fourth quarter of 2021 to 47 in the second quarter of 2022.
In Asia Pacific, China saw a drop in unicorn births from eight in the fourth quarter of 2021 to four in the second quarter of 2022, while India reported a decline from 14 to four during the same period.
Prasad Kakade, senior disruptive technology analyst at GlobalData, said the unicorn boom in 2021 was caused by a funding frenzy fuelled by the rapid adoption of technology and innovative offerings by startups in areas such as edtech and e-commerce gaining relevance in response to the pandemic and its impacts.
Based on an analysis by GlobalData's Disruptor Intelligence Centre, technology and communications, financial services, pharma and healthcare, and consumer packaged goods will account for over 80% of potential unicorns.
The technology and communications sector is set to generate the highest number of unicorns, followed by financial services.
The top five themes to have the highest number of unicorns are predicted to be artificial intelligence, followed by digital media, cloud, fintech and e-commerce.
GlobalData has a list of more than 100 potential startups in Asean, including two from Thailand -- Omise, a payment service provider, and Pomelo, a fashion retail startup.
"The US, followed by India, China, the UK and Germany will remain the top five unicorn hubs," Mr Kakade said.
"The US will continue to dominate half of the world's unicorns and India is expected to surpass China in terms of the total number of unicorns in the future."
He added that China is expected to slow down from the current levels of unicorn births for various reasons such as its zero-Covid policy and the crackdown on technology firms due to antitrust and security concerns.
