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The startup world is full of young, energetic disruptors. It’s no wonder that this has generated a lingo of its own. ‘Unicorn’ is one such word often used to describe a very select group of startups.
Why would you describe a tech company in terms of a mythical animal?
Because businesses that earn this name are so very rare. A unicorn startup is one that’s been valued at over $1 billion. There have been less than 1,000 of these across the globe, making these uncommon to the extreme.
Let’s understand the unicorn startup meaning and look at some examples of these.
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What Is Unicorn Startup?
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Unicorn Valuation Meaning
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Examples Of Unicorn Startups
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What Does It Take To Succeed?
What Is Unicorn Startup?
What is a unicorn company? To understand the meaning of unicorn, it’s important to first define what a startup is. While many young businesses use the word to describe themselves, a startup differs from a business of a more traditional nature. Here are some features that set a startup apart:
- It uses technology as a core part of its operations
- It must be privately held
- It’s innovative
- It doesn’t always have a product or revenue stream in place at the time of valuation
- It’s relatively new – usually younger than three to five years
These are a few of the basic principles of startups. As we’ve seen already, the unicorn valuation meaning applies only to the rarest-of-the-rare startups that have been valued at over $1 billion. They attribute the term to Aileen Lee, founder of the seed-stage venture capital firm Cowboy Ventures.
There are two other terms that apply to startups that have gone a step further:
- Decacorn: a startup valued at greater than $10 million
- Hectocorn: a startup valued at more than $100 million
While unicorns are rare enough, decacorns are hectocorns are like gold dust in the startup world! It takes a continuous growth mindset to reach these highest levels of achievement. In 2021, there were 396 unicorns in the United States, 277 in China and 79 in India.
Unicorn Valuation Meaning
It’s difficult to assign value to a business early on because its financial records are private. Also, the unicorn startup meaning itself implies that the business is in its early stages, and it’ll most likely not have made any or much money compared to what has been invested in it. Which is something that can confuse people who don’t understand what is a unicorn company.
The inherent value of an organization is a crucial consideration when it needs to raise money from investors to continue its operations. Investors can include:
- Founders of the startup
- Friends and family
- Financial institutions
- Angel investors
- Venture capitalists
Before they invest any money, they’ll study the startup’s business plans, work in progress, assets and potential revenue streams. There are usually several rounds of funding, so they’ll also look at what has already been invested. These various rounds of funding occur when a business needs to grow. They might be called seed funding, series A and series B rounds.
Understanding unicorn valuation meaning is a critical part of growth strategies for entrepreneurs. Sometimes there are problems with what a startup promises, or how investors value its work. In the case of Theranos, the health-tech unicorn that claimed it had developed revolutionary techniques to conduct blood tests with just a single drop of blood, there were significant gaps between what they promised and the reality of progress it had made. The result was investors losing millions of dollars and founder Elizabeth Holmes being tried for fraud.
Examples Of Unicorn Startups
Now that we’ve understood unicorn startup meaning, let’s look at some examples. Many unicorns have emerged in the past decade. Silicon Valley in California, Sweden and Bangalore are just a few places that have acted as fertile ground to develop innovative ideas for startups.
Some of the success stories are shaping the way we live and travel. Others see no limit to their potential, shooting for space or revolutionary healthcare. These innovators show the importance of entrepreneurship. Let’s inspect some of these to better understand what is unicorn startup:
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ByteDance
The startup behind social media site Tiktok is the most valuable unicorn in the world, with a valuation of over $140 billion. It has also been named the most visited website in 2021, more popular than even Google. TikTok’s users upload videos in various formats unique to the platform, which has caught on hugely among content creators and viewers alike. Despite the popularity of the Chinese-owned business, it has also been banned in several countries such as India over privacy concerns. But that doesn’t seem to slow it down.
2. SpaceX
It’s almost impossible to imagine that a privately held business could send astronauts into space, but that is what Elon Musk’s aerospace startup SpaceX has been doing. In 2021, it was reportedly valued at over $74 billion. It manufactures the reusable Falcon 9 rocket, works closely with NASA to deliver payload and astronauts to the International Space Station, and is also working on a possibly revolutionary satellite Internet project. Musk believes that humans will become a multi-planetary species and sees SpaceX as a part of this in the future.
3. Stripe
With dual headquarters in Ireland and the US, Stripe is a fintech unicorn. The startup provides businesses with software to process online payments. It has also branched out into other financial services. Amongst its early backers was Elon Musk, who coincidentally founded PayPal. It’s been increasing its global reach, expanding to India over the past year.
4. Canva
Canva is an online graphic design site that allows even those with non-existent or basic design skills to create professional-looking products. Visiting cards, posters and even book covers are easy to design with Canva’s templates and drag-and-drop elements. The Australian startup was founded in 2013 and was valued at $40 billion in 2021. The Canva free version is comprehensive, and paid plans offer even greater functionality.
5. Northvolt
Sweden has been the birthplace of several startups, such as Spotify and Skype. Northvolt is another such organization that reached unicorn status in 2019. With a tagline of “Make Oil History”, it’s certainly aiming big with its green technologies, including household and industrial batteries. They also have grid-scale solutions to store electricity, which is a critical step to the widespread use of renewable energy.
6. InMobi
This digital advertising business became India’s first unicorn in 2011. It was the organization that taught the country the unicorn startup meaning. Based in Bangalore, the organization has grown substantially over the years. It provides a platform for targeted digital advertising on websites, primarily for mobile users. Group company Glance, which specializes in lock-screen ads, is also a unicorn in its own right.
7. PhonePe
InMobi was the country’s first unicorn, but many have followed. PhonePe is one of these, a digital payment app with wide adoption in India. Started in 2017 by Flipkart founders in Bangalore, it received its unicorn tag in 2019.
8. Urban Company
This is an app-based home-services business with a valuation of over $2 billion. Users can book anything from carpentry services to a haircut through the app. The service provider is paid through the app and comes to the desired address to complete their tasks. It was founded in 2014 as Urban Clap and underwent a rebranding on its road to becoming a unicorn.
These are just a few examples of successful startups that have disrupted their fields in some way. Both investors and consumers have seen value in their innovative solutions, which is why they have done as well as they have.
What Does It Take To Succeed?
Like every successful business, startups need to fulfill a strong need in the end customer to succeed. Let’s look at some of these:
1. Airbnb
During busy times of the year, booking a hotel can be prohibitively expensive or simply impossible. However, there are plenty of places to stay in most cities, and this housing stock can be unlocked to provide travelers a safe stay and property owners extra income.
2. Zomato
Diners sometimes enjoy eating at a restaurant, but often they want to eat a restaurant-quality meal in the comfort of their own home. However, not every restaurant can run a home delivery service. An app that connects the restaurant with the diner, fulfilling the order through an independent delivery service, allows them both to get what they want.
3. Spotify
Whether a music listener wants to hear a song by a particular artist or listen to a playlist that creates a certain mood, here’s an app that brings the world’s music to every listener’s device.
“What is a unicorn startup?” is a simple question to answer. How to build the leadership muscle to create an organization of such scale is much harder. There are many growth strategies for startups that founders – or founder hopefuls – can benefit from. With Harappa’s Rise In An Organization learning pathway, you’ll learn how to improve your execution skills and develop the commercial acumen to succeed in a demanding environment, such as a startup. Managing projects with a high level of competence and excellence will be easy once you’ve mastered the skills of building trust, leading with influence and learning from setbacks. Get on the road to stratospheric success with Harappa!
