The unicorn is, of course, very much a mythical being, but in the business world, their numbers are growing by the year.
A unicorn company is one that is defined as reaching a $1bn valuation without yet being listed on the stock market. It’s a utopian state for a firm, whose value will increase exponentially when they do eventually decide to start selling shares.
It’s a great position for a startup to be in, and it can be just as profitable for stock traders too who recognise the potential of the company when the share price is low. Using the best UK trading platforms, they can easily invest in a unicorn and then sell their stake, ideally for a mammoth profit, once that potential starts to ascend towards realisation.
Examples of unicorn companies
A unicorn company that hits the $1bn mark does so because it has something exclusive, unique and value-adding to offer its customer base.
There are many examples around the world of firms that fit the unicorn tag, with SpaceX being one of the most commonly cited. Elon Musk’s firm designs spacecraft and rockets, but their innovation and stated ambition of bringing space travel to the masses has seen them secure a valuation of around $125bn – despite the personal woes of Musk and a looming recession.
There are examples of unicorn companies in the UK too, with firms such as payment processor Revolut and online banking outfit Starling just two to emerge in recent years.
The road to becoming a unicorn company from humble beginnings as a startup can be long and arduous, but those firms that offer a unique product or service are well on their way to a huge valuation even without the investment of Wall Street and individual traders.
How to become a unicorn startup
There’s no fast or loose template to becoming a unicorn startup.
Commonly, these firms bring something completely new to the table or offer an existing product or service in a better, faster or cheaper way.
Take Facebook, for example. This was the archetypal unicorn company, with a valuation of a whopping $100bn in even the earliest days of the social networking company.
Now, social media wasn’t a new phenomenon at this point in the 2000s when Facebook was launched, but the likes of Bebo and MySpace did ultimately fail. So, why were Facebook backers so bullish? Because they realised that this was a platform that could connect friends and family together in a way that their social media forefathers had not.
The best unicorns have a uniqueness upon which their success is built, but they also implement other, time-served techniques to power their growth.
Marketing and promotion
You can offer the best products and services, but if nobody knows you exist, then you simply aren’t going to be successful – not in the $1bn valuation sense of the unicorn. Innovation alone is not enough; a quality marketing and ad campaign is still a necessity.
Most unicorn startups solve a problem for their customers via their products and services, but they are also savvy enough to know that they still need to provide above-and-beyond levels of customer service and care. Without buyers, businesses fail no matter how game-changing they are.
To achieve a $1bn valuation, you need to be selling on a major level, or at least show that you can do so if given the investment to scale up your operations. Whether it’s international expansion or a core of lucrative repeat contracts, unicorns prove that they have the necessary expertise and appeal to expand and grow.
Here are some other examples of unicorn companies that have grown in recent years: Uber and Airbnb. Do they solve a problem for their customers? Yes, they enable them to access cheaper, personalised travel or privately rented accommodation.
Have they promoted their business well? Yes, both of those firms ran memorable advertising campaigns on TV, online and print that caught the attention of potential customers while building trust in their brand.
Have they been able to scale up their operations? Yes, both firms are now global thanks to the demand for their services.
Here’s some harsh truths. Less than 0.1% of startups go on to achieve unicorn status, and it can usually take in excess of five years – or more, in many cases – to reach that all-important $1bn valuation.
However, by disrupting established markets, creating unique products/services or simply doing things better than they have been done in the past, unicorn startups can be born and go on to become major multinational corporations.
It’s not easy… but then few things in life worth doing rarely are, right?