Anyone who is fluent in the startup language should already be familiar with the term “unicorn”. More than that, practically every potential entrepreneur has the dream of seeing his company become a unicorn startup.
The concept is simple: unicorn is the name given to startups valued at more than $1 billion.
Getting there, however, is not so easy.
Where did the term unicorn startup come from?
The first person to use this expression was American capital investor Aileen Lee, in her article Welcome to the unicorn club: learning from billion-dollar startups (“Welcome to the unicorn club: learning from billion dollar startups ”).
The word “unicorn” plays on the idea that this type of company would be extremely rare. In Lee’s own words, “we know it’s not perfect – unicorns apparently don’t exist (…). But we like that term because it alludes to something rare and magical. ”
When one takes into account that a good part of the startups that became giants started with ideas considered absurd and unbelievable, the analogy seems to make even more sense.
How many unicorns are there?
“Rare” is no longer an adjective easily applicable to this type of company. In 2013, when Lee published his article, he mapped 39 startups with unicorn status; in January 2020, according to consultancy CB Insights, there are already 442 in the world.
Today, there is even talk of variations depending on the size of the assessment – decacorn for startups valued at more than $ 10 billion, hectocorn for $ 100 billion, etc.
How does this assessment work?
There are a few ways to determine a company’s value – and each has a science behind it. When a company is not yet publicly traded, the valuation is usually made by the funds that invest in it.
These funds typically “bet” on the idea and growth potential of startups, often even before they make any kind of profit. The idea is to support growth and expect a considerably greater return in the future.
As a market practice, these investments are usually made in rounds (we count here how Nubank became the largest independent digital bank in the world after its seventh round). In general, the funds and the startup enter into an agreement on what will be the valuation disclosed to the market.
Unicorn startups are private technology companies valued at more than one billion dollars before going public on stock exchanges, that is, before conducting the IPO (Initial Public Offering).
The main characteristic of a unicorn startup is innovation in the market where it belongs. Uber, for example, has revolutionized transportation, allowing users to order a vehicle with a few clicks anywhere and anytime.
As of January 2019, there were more than 325 unicorn startups in the world according to CBInsights, and that number has tended to grow a lot in recent years.
Do you want to know more about these startups, who are the unicorns of Brazil, and how to reach the dreamed billion dollars? So, you’re in the right place!
What is a unicorn startup?
The term unicorn startup was born in the year 2013 when the founder of Cowboy Ventures o, Aillen Lee, described it as companies that were valued at more than 1 billion dollars without having capital on the stock exchange.
This description was given by the rarity of these companies and the difficulty of valuing them for emerging businesses in the market. So, unicorns are the companies that faced the challenges, survived the obstacles, and reached the dreamed tenth digit.
A Super Unicorn (Decacorn) is the startup that achieves appreciation in excess of 10 billion dollars, like Uber and WeWork.
The main characteristics of a unicorn startup are:
Innovating and revolutionizing the market model in which the company is inserted is essential to ensure that there will be a differential.
Spotify is an example of innovation, as it revolutionized the way people listened to music, bringing the streaming medium for this purpose. This is the idea of innovating, getting out of the bubble of what works and taking chances with new possibilities and ideas.
Because they are innovative companies, they remain in a position of advantage in the market, being pioneers in the industry, innovating, and improving the product always.
It is important to keep up to date and constantly growing in order to guarantee the leading position at the top.
Most unicorns have invested in technology. Although not a rule, investing in technological capitalization to become a unicorn is essential. In addition, there is no denying that technology and automation are increasingly present in our routine, right?
The focus of the development of unicorn startups is the customer. The software’s products and functionalities are created with the user and their accessibility in mind, in order to remedy any pain or difficulty.
The Uber company emerged from the pain of its owner, Travis Kalanick when trying to call a taxi on a rainy day in Paris. He just couldn’t do it and thought about how it would be easier to place this order on his smartphone and, after some projects, created the Uber app.
This is the spirit of innovation: channeling the customer’s pain and developing a way to resolve it in the best possible way.