Silicon Valley's unicorn elite create wealth like never before

With money flooding into Silicon Valley and the likes of Uber Technologies and Airbnb becoming household names, America’s start-ups are creating wealth like never before. And the rise of unicorns—the once-rare class of private companies valued at more than $1 billion—means their founders have huge stakes worth astonishing amounts. If only on paper.
 

Among closely held US venture-backed companies, the 10 most valuable stakes owned by founders are worth $60 billion, based on ownership data compiled by EquityZen, which helps investors trade start-up shares. That would rank more than a dozen of the founders as paper billionaires, according to calculations by Bloomberg. 
 

“The pre-IPO billionaires club is unprecedented,” said Phil Haslett, co-founder and head of investments for EquityZen. “But with more money exchanging hands in the private markets, the astounding wealth accumulated feels much more legitimate.”

Tech has long been a robust wealth creator: six of the 10 richest people on the Bloomberg Billionaires Index built their fortune in the industry. But unlike Jeff Bezos, Bill Gates or Mark Zuckerberg, many of the new tycoons have yet to take their companies public, and much of their fortunes are tied solely to private valuations that can be difficult to pin down.
 

The ranking is calculated by taking EquityZen’s estimates of the ownership stakes held by the founders and applying it to the price per share of the last funding round. The companies declined—or didn’t respond to—requests for comment.
 

At the top of the list is a magnate who’s already built a fortune on the stock market: Elon Musk. His personal stake in Space Exploration Technologies is valued at $14.6 billion. That’s more than the value of his holdings in publicly traded Tesla—even after a share surge last week as Musk said he may take the carmaker private. Musk is unlikely to tap his space wealth anytime soon. SpaceX President and Chief Operating Officer Gwynne Shotwell said in a May interview with CNBC that the company has no plans to go public until it is flying regularly to Mars, which is years away at best.
 

The three founders of Airbnb, who follow Musk on the ranking, may be closer to tapping the public markets. Brian Chesky, the home-sharing company’s co-founder and chief executive officer, told employees in June that it is aiming to hold an IPO before late 2020, when some employee stock grants expire. And they’ve already been able to monetise some of their stake. Founders and early employees have sold at least $350 million worth of equity, according to people familiar with the matter. That type of avenue enabled Uber co-founder Travis Kalanick to turn part of his paper fortune into cold, hard cash. He reaped about $1.4 billion after SoftBank Group and other investors bought $9.3 billion worth of equity in January.