In the business world, a “unicorn” is the term used to indicate that a privately held startup company has a valuation of more than $1 billion. It was first coined seven years ago by a venture capitalist to describe the rare occurrence of such successful businesses. In 2013, there were just 39 companies considered to be unicorns, but by April 2020 that number had grown to 465. It is thought the reasons behind the rapid growth of unicorns include: a fast-growing strategy; large company acquisitions; an increase in private capital; and technological advancements.

In November 2019, just prior to the annual meeting of the Radiological Society of North America held in Chicago, Cameron Ramsden wrote an article entitled “Who’ll win the race to be the next medical imaging unicorn?” He highlighted three companies that had achieved unicorn status in the previous 12 months. These included: United Imaging, headquartered in Shanghai, with a valuation of $5 billion and a full suite of products to challenge GE, Siemens and Philips; the Butterfly Network with its breakthrough technology of ultrasound on a chip; and HeartFlow, that uses CT images to help detect coronary artery disease.

Ramsden identified his favourite to be the next unicorn as Hyperfine, a company launched by Jonathan Rothberg who also founded the Butterfly Network. Hyperfine’s claim to fame is to have developed an MRI system (seen left) that can be brought to a patient’s bedside to study brain function. Its FDA-approved device will cost just $50,000, use 35-times less power than a conventional 1.5 Tesla MRI system, and create a paradigm shift in medical imaging.

Ramsden thought that NanoX, an enigmatic Japanese-Israeli joint venture that has developed a novel X-ray source technology, had an outside chance of becoming the next unicorn. According to its promotional video, “Instead of heating just one filament to produce electrons, NanoX has developed a silicon chip that distributes the task across 100 million nanocones that are digitally controlled” (see below right). The company believes the exceptionally small size and low cost of their X-ray sources will enable them to deliver medical imaging to the masses and it has already negotiated several significant deals.

Earlier this year, writing in the Journal of Financial Economics, two academics developed a valuation model for companies backed by venture capital and applied their model to 135 unicorns. They concluded that valuations averaged 49% above fair value and, if valued correctly, almost half the companies would lose their unicorn status. As the dot-com bubble taught us: caveat emptor – let the buyer beware.