Unicorns are not only mythical creatures but start-up companies that are worth more than a billion dollars.
Investors call them unicorns because such valuable businesses are as rare as the legendary beasts.
The name was first coined by American venture capitalist Aileen Lee in 2013.
The size and complexity of a unicorn business often restrict owning shares to private investors or venture capital firms.
Keeping a count of unicorn companies is tricky because most are start-ups that have yet to publish enough financial data to reveal their valuations. Investors and analysts believe more than a thousand unicorns worth $3.5 trillion are active worldwide – mainly in the US and China.
What Is A Unicorn?
A unicorn is a young business or start-up with fewer than three years of trading that is privately owned but has a market valuation of more than $1 billion.
Fewer than 1 per cent of businesses reach unicorn status.
A unicorn business must have an innovative idea, a growth path and an exit strategy for investors to reach the top of the pile.
Unicorns typically follow one of three routes:
- Staying private but run the risk of not raising enough investment to grow
- Going public with an initial public offering (IPO) selling shares on a stock exchange
- Selling to another company to accelerate growth
One of the first modern unicorn companies was Google, which later became Alphabet, with a 1990s valuation of more than $100 billion. A few years later, Facebook – now Meta – joined Google in the ranks of the super-unicorns.
A super unicorn is a company worth more than $1 billion without listing on a stock market.
How Is A Unicorn Company Valued?
Arriving at a $1 billion valuation before a unicorn has gone public involves smoke, mirrors and a lot of guesswork. Investors and analysts base their valuation on how they believe the business will develop. In some cases, accounts and forecasts can offer indicators of future performance, but start-ups do not possess much financial data to back their predictions.
Only some unicorns generate profits in their early years, while others never get past break-even.
More problematic still is estimating how much a start-up is worth that’s first in a sector, which means there is no business model or data for comparison.
Today, unicorn refers to start-ups in fintech, technology and information technology.
How To Spot A Unicorn
Businesses that grow into unicorns tend to demonstrate similar characteristics.
The start-up has an innovative idea that fills a customer need or disrupts an industry. This unique factor attracts angel investors through several funding rounds to provide financial support.
A unicorn grows fast and reaches a stage where the owners can sell through an IPO. Often, the founders stay on as executives.
Global Top 10 Unicorn Companies
Here’s a list of the world’s leading unicorn companies in August 2023:
|Rank||Unicorn||Valuation ($ billions)||Country||Sector|
|1||ByteDance||$225||China||Media & Entertainment|
|3||SHEIN||$66||Singapore||Consumer & Retail|
|4||Stripe||$50||United States||Financial Services|
|5||Databricks||$43||United States||Enterprise Tech|
|7||Revolut||$33||United Kingdom||Financial Services|
|8||Epic Games||$31.50||United States||Media & Entertainment|
|9||Fanatics||$31||United States||Consumer & Retail|
|10||OpenAI||$29||United States||Enterprise Tech|
|11||Chime||$25||United States||Financial Services|
|12||Xiaohongshu||$20||China||Media & Entertainment|
|14||Miro||$17.50||United States||Enterprise Tech|
|15||Yuanfudao||$15.50||China||Consumer & Retail|
|17||Discord||$15||United States||Media & Entertainment|
|18||Gopuff||$15||United States||Consumer & Retail|
|19||Yuanqi Senlin||$15||China||Consumer & Retail|
|20||Ripple||$15||United States||Financial Services|
|21||Blockchain.com||$14||United Kingdom||Financial Services|
|22||Plaid||$13.50||United States||Financial Services|
|23||OpenSea||$13.30||United States||Media & Entertainment|
|25||Grammarly||$13||United States||Media & Entertainment|
|26||Devoted Health||$12.60||United States||Healthcare & Life Sciences|
|27||Faire||$12.59||United States||Consumer & Retail|
|28||Brex||$12.30||United States||Enterprise Tech|
|29||JUUL Labs||$12||United States||Consumer & Retail|
|30||Bitmain Technologies||$12||China||Enterprise Tech|
Source: CB Insights
Unicorn Company Investment FAQ
Dive into the world of unicorn companies with answers to frequently asked questions about these remarkable startups. From their rarity to the fastest-growing unicorns, we provide insights into these billion-dollar businesses and related terms like decacorns and soonicorns.
A unicorn is a privately owned start-up business worth at least $1 billion.
A start-up has a 0007 per cent chance of achieving unicorn status – giving odds of about three of every five million companies making unicorn.
Artificial intelligence trail-blazers Avant, from Chicago, took 46 days to go from zero to a $1 billion valuation.
Unicorns are not a new phenomenon. 1901, 10 steel and manufacturing companies merged to form the US Steel Corporation. This was the world’s first company with a price tag of over $1 billion ($1.4 billion).
Although both companies have more than a $1 trillion valuation, neither is a unicorn, as both are publicly owned.
Unicorns are private start-ups seeking vast amounts of investment, which puts them beyond the reach of ordinary, moderate investors. Typical investors are venture capital groups.
A decacorn is a privately owned company worth more than $10 billion, while a hectocorn is a privately held company worth more than $100 billion. Investors value these businesses on their potential revenues rather than their performance as start-ups.
Some 53 companies had achieved decacorn status by July 2023, according to CB Insights – the top 30 are listed in the table above.
As the name suggests, a soonicorn is a privately owned start-up on the verge of a $1 billion valuation which would give unicorn status.
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