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What is an unicorn startup?

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What is an unicorn startup?

By unicorn startup, we mean a private equity company with a value of more than one billion US dollars that is not yet traded on the stock exchange. That is, at some stage of the capital raising process. In other words, they are companies that have managed to increase their value rapidly, after a great deal of growth in a short time.

Aileen Lee, an investor and venture capital specialist, was the first to use this term in 2013.

Features

As mentioned above, these are characterised by a rapid increase in financial value, in a short time. These companies emerged with social networks, taking advantage of their boom and that of new technologies to consolidate and grow.

They are closely linked to them, they are the great ally for reinforcing communication, amplifying their message and impacting on a target audience thanks to the segmentation that social networks allow them to obtain. This with a smaller investment made by other more traditional media such as television.

Likewise, they achieve an accelerated global expansion by betting on internationalization.

It should be added that they are B2C (Business to Consumer), offering products or services directly to people, the consumers. Therefore, they develop a commercial strategy aimed at directly reaching the clients, the final consumers, highlighting the personal benefits they bring.

They are usually made up of teams of young people with an average age of no more than 34 years and the founders usually know each other before, sharing a common past, either in the academic or in the work field.

Finally, they are characterised by being disruptive business models, with a new way of giving value to customers.

They use different technological approaches thanks to new technologies. In conclusion, they really do things differently within a sector. They contribute something different and achieve their valuations according to the growth opportunities and estimate their long-term development in their own potential markets.

How many unicorn startups are there and in which sectors?

In January 2020, there were more than four hundred unicorn companies/startups worldwide. Most of them are located in the United States and China. Facebook, for example, is the “super unicorn”, the benchmark unicorn company, valued at over 100 billion dollars. Other examples of very popular and valuable unicorn companies today are Uber, Palantir, Pinterest, Xaiomi or Snapchat.

According to the data collected by Statista, a statistics portal, two Chinese companies are at the top of the ranking of unicorn startups. Thus, they are the ones with the highest market value. These are CB Insights, Bytedance in first place, a content manager with a valuation of 75 billion US dollars.

Followed by Didi Chuxing, with a value of 56 billion dollars. The five best unicorn companies that follow them in the ranking are of US origin, in the electronic cigarette sector, fintech, Airbnb platform specialised in offering tourist accommodation or in the aerospace sector.

As far as Spanish unicorn startups are concerned, two well-known companies should be mentioned, such as Cabify or Glovo, which are in the ranking of the most valuable unicorns.

In general, the sectors with the greatest presence of this type of company are those of Internet software, e-commerce, financial technology (Fintech), health care and on-demand services.

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