What is a Unicorn?
Unicorn is a period used in the venture capital industry to describe a private start-up company valued at over $ 1 billion.
The period was first made famous by venture capitalist Aileen Lee, founder of CowboyVC, a start-up venture principal fund based in Palo Alto, California.
Unicorns can also refer to a human resource recruitment phenomenon.
Human resource managers can have high expectations of a position occupied, which leads them to seek candidates with qualifications above those required for a particular job.
Essentially, these managers are looking for a unicorn, creating a disconnect between their ideal candidate and who they can hire from the pond of available staff.
- Some of the more popular unicorns in the US include home-sharing giant Airbnb, video game company Epic Games, and fintech companies Robinhood and SoFi.
- Aileen Lee first wrote about unicorns in the venture capital world in her article “Welcome to the Unicorn Club, learning from Billion-Dollar Start-ups.”
- Looked at software start-ups founded in the 2000s and estimated that only 0.07% of them will ever reach a $ 1 billion valuations.
- Start-ups that have hit the billion-dollar mark are so rare that finding one is as difficult as finding a mythical unicorn.
- According to Lee, the first unicorns formed in the 1990s. Alphabet (to get) – then Google – was the clear-cut super unicorn of the group, valued at over $ 100 billion.
- Many unicorns were born in the 2000s, even though Facebook (FB) is the only super unicorn of the decade.
Amazon is a part of a unicorn company
- Unicorns are usually described as private start-ups, so Amazon is not considered a unicorn company. Before it went public, however, it was Amazon
- Start-ups valued at over $ 1 billion are named unicorns because they are so rare.
- Frequently, these companies have seen rapid success or market entry, which has thrown them into an almost mythical category because they are so rare.
Invest in a unicorn
- Unless you’re a private investor or a venture capitalist, unicorns who are start-ups don’t accept many medium-sized investments.
- However, interested investors should monitor these unicorns’ growth as they decide to become public companies and IPOs.
Unicorns in business
- A company is looking for the best people for the job and having high expectations compared to those available in the workforce.
- Hiring managers may be looking for candidates with much higher qualifications than the job demands.
- For example, a mid-sized company may want to hire someone who has experience in marketing, social media, writing, sales, and management and speaks three different languages.
- While it may be convenient to hire a person with all these skills instead of multiple employees to perform separate tasks.
- It can be too much for the new hire and lead to disappointment.
How many unicorn companies are there?
- “Rare” is no longer an adjective that is readily applicable to this type of business.
- When Lee published his article in 2013, he mapped 39 start-ups with unicorn status.
- According to consulting firm CB Insights, there are already 442 worldwide in January 2020.
- Today there is even talk of deviations depending on the valuation level.
- Decacorn for start-ups worth over 10 billion US dollars, Hectocorn for 100 billion US dollars, etc.
- By June 2020, there are more than 600 unicorns worldwide. Together they have raised $ 442 billion and are worth around $ 2 trillion in total.
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How does this rating work?
- There are numerous ways to determine a company’s value, and each has a science behind it.
- If a business is not in the list on the stock exchange, its funds usually carry out the valuation.
- These funds usually “bet” on start-ups’ ideas and growth potential, often before they profit.
- The idea is to support growth and expects significantly higher returns in the future.
- As a market practice, these investments are commonly made in circles.
- we’re counting here as Nubank has become the largest independent digital bank in the world after its seventh round.
- In general, the funds and the start-up enter into a valuation agreement communicated to the market.
- Unicorn start-ups are private technology companies worth over a billion dollars before they go public, that is, before they go public (initial public offering).
- The main characteristic of a unicorn start-up is innovation in the market to which it belongs.
- For example, Uber has revolutionized transportation by allowing users to order a vehicle anytime, anywhere with just a few clicks.
- The focus of the development of a unicorn start-up is on the customer.
- Software products and features are created with the user in mind and their accessibility to solve problems or difficulties.
- The Uber company was born out of the grief of its owner Travis Kalanick as he tried to hail a taxi on a rainy day in Paris.
- He couldn’t do it and thought about how it would be easier to place the order on his smartphone.
- And after a few projects, he created the Uber app.
- Spirit of innovation: channeling the customer’s pain and developing a way to solve it in the best possible way.
- As of 2019, there were more than 325 unicorn start-ups worldwide, according to CBInsights.
- And that number has tended to increase sharply in recent years.
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