Monday, 3 august 2020 | Redacción CEU
Are unicorns real? Yes, they are, at least in the business world. We are referring to those companies known under the name of unicorn startups. These are companies that, just like with the mythological animal of the same name, appear only in exceptional circumstances. In fact, only an average of four companies each year is identified as a unicorn startup. This is not at all surprising, considering the fact that the main requirement of these firms to qualify as such is to reach head-spinning valuations without ever having been listed on the stock market. This is why most people would like their startup to become a unicorn. Nevertheless, what if your company is a camel instead? Would that be a bad thing? What are the characteristics of these types of companies? Why are such bizarre metaphors used in the business world? Today, at CEU IAM’s blog, we try to provide answers to all these questions. However, we must recognize that for the last question we have no answer yet.
While it is true that there are few unicorn companies, it is also true that their number has increased over the last years. This is largely due to the unstoppable progress of technological development. What previously seemed impossible is now a reality thanks to a new digital world universe. Seeing unicorns has never been so easy. But what exactly are they?
Unicorn startups: increasingly popular "rare birds"
The first person to introduce this term was Aileen Lee, founder of Cowboy Ventures, talking about the "The Unicorn Club". This venture capitalist used this unusual combination of words to name those companies that are capable of reaching a billion-dollar valuation without going public. Reaching this milestone is really difficult, especially if we take into account some statistics that point out that 9 out of 10 startups fail in their entrepreneurial goal.
Thus, which kind of companies become unicorns? Not only are these companies exceptional, but they are also well-known. For example, there are unicorn startups as recognizable as Airbnb, Uber, Space X, Pinterest and Facebook. Interestingly, we can mention that this last company, Mark Zuckerberg’s firm, has been named as a "superunicorn startup", since its value already amounts to 100 billion euros.
In most cases, we know the name of these companies since, at a certain moment, these companies managed to revolutionize and reinvent the sector in which they operated. Some of them even went so far as to practically create their industry out of nothing. One of the peculiarities of unicorn startups is their convincing and captivating innovative proposal. Unicorn companies are able to find a market niche never explored, and get the most out of it as well.
Another of the characteristics found in these types of companies are: their direct relationship with consumers (B2C companies), their ability to accelerate growth, the use of new technologies as their foundation and the youth of their staff.