What is a unicorn startup?
Unicorns are privately held, venture-capital-backed startups that have reached a value of $1 billion. The valuation of unicorns is not expressly linked to their current financial performance, but largely based on their growth potential as perceived by investors and venture capitalists who have taken part in various funding rounds.
When was the term first used?
American venture capitalist Aileen Lee is credited with coining the term in 2013. It was used to emphasise the rarity of the emergence of such startups.
Features of a unicorn startup:
Although every unicorn startup is unique based on its idea and business model, there are some common features you can find in all of them. These include:
The core business model of many unicorn startups runs on technology. For example, Paytm started by making it easier for people to pay for limited utilities like mobile and DTH recharges. The company has grown as a comprehensive platform having payment products for both consumers and businesses.
Pioneers in their niche
Many startups have achieved the status of a ‘unicorn’ by venturing into a field not known or targeted before. Being the starters in a specific industry has given them an edge against the competition to ensure consistent business growth.
However, things have changed now as startups that are not pioneers are also moving towards or beyond the mark of being a unicorn.
Innovation at the forefront for consumers
Most of the unicorn startups in India have resulted in disruption in the industry they fall into with the power of constant innovation. Oyo rooms, for example, have changed the way people used to book accommodation while traveling. Paytm, particularly Paytm Wallet, changed the way people paid for things offline and online. They all have the vision to become a part of the daily lives of the end consumers.
Can only startups become unicorns?
Yes,It is because the term ‘unicorn’ is given only to the startup companies that have a valuation of over $1 billion. Next in line are super unicorns or decacorns – startups that have a valuation of $10 billion. For example – SpaceX, WeWork, and Dropbox