Definition
Unicorn: A unicorn is a privately held startup company valued at over $1 billion. The term was coined by venture capitalist Aileen Lee in 2013 to emphasize the rarity, akin to the mythical unicorn, of such successful companies. As delightful as finding a unicorn in the wild is, finding one in the investing world is equally as magical!
Unicorn vs. Decacorn Comparison
| Feature | Unicorn | Decacorn |
|---|---|---|
| Valuation | Over $1 billion | Over $10 billion |
| Rarity | Rare (less than 1,000 globally) | Extremely rare (very few) |
| Duration of Existence | Often young (5-10 years old) | Usually more established |
| Example Companies | Robinhood, SpaceX, Instacart | Ant Group, Stripe, and Databricks |
Examples of Unicorns
- SpaceX: A space exploration company founded by Elon Musk, valued at over $100 billion as of mid-2021, making it the most valuable private company in the world. 🚀
- Robinhood: A stock trading app that disrupted the finance industry, often touted as a pioneer of “zero-commission trading.” 💸
- Instacart: A grocery delivery service that gained massive traction during the pandemic, valued in billions while becoming the lifeline of many home chefs. 🥦
Related Terms
- Horn of a Unicorn: Not to be confused with magic! In finance, this refers to an element of “unicorn-status” where companies are often viewed through rose-colored glasses.
- Pegacorn: An even rarer breed (and unfortunately non-existent in fantasy) which refers to a company valued at $1 billion, but operates in a noble niche.
Diagram of Unicorn Valuation Journey
graph TD;
A[Startup Phase] --> B{Valuation}
B -->|<$1B| C[Not-a-Unicorn]
B -->|$1B| D[Unicorn]
B -->|$10B| E[Decacorn]
D -->|IPO| F[Public Company]
D -->|Acquisition| G[Acquired Unicorn]
Humorous and Fun Insights
- “A unicorn in venture capital is the same as a unicorn in fantasy. They’re breathtakingly rare, highly sought after, and can disappear before you know it!” 🦄
- Did you know that as of March 2022, unicorns were increasing faster than the speed of light… or at least faster than your Wi-Fi during a popular Zoom call! 💻
- Fact: The term can also describe overqualified job candidates; read: the applicant with 12 PhDs who just wants the intern position!
Frequently Asked Questions
Q1: What is the entry point to being considered a unicorn?
Answer: Generally speaking, the company must be valued at $1 billion or more during funding rounds. Think of it as the financial equivalent of getting into an exclusive club – only very rare and special companies make the cut! 🎉
Q2: How many unicorns are there currently?
Answer: Well, as of March 2022, there were over 1,000 unicorns; just enough to throw a big party, but not enough to fill a stadium! 🎈
Further Reading
- “Venture Deals” by Brad Feld and Jason Mendelson: An insightful book delving into the world of venture capital.
- “The Lean Startup” by Eric Ries: A go-to read for entrepreneurs looking to make it in their startup journey.
Online Resources
Test Your Knowledge: The Unicorn Challenge Quiz
## What is a unicorn in business?
- [x] A startup valued at over $1 billion
- [ ] A mythical creature that grants wishes
- [ ] A special offer in a pet store
- [ ] A rare comic book character
> **Explanation:** A unicorn in the business world refers to a startup company that has achieved a valuation of over $1 billion, standing apart from other typical startups.
## When was the term "unicorn" first coined?
- [x] 2013
- [ ] 2000
- [ ] 1995
- [ ] 1985
> **Explanation:** The term was coined by venture capitalist Aileen Lee in 2013 to highlight the scarcity of such high-valued startups.
## How many unicorns are there as of March 2022?
- [ ] Less than 100
- [x] Over 1,000
- [ ] Around 500
- [ ] Between 100 and 200
> **Explanation:** As of March 2022, there were indeed over 1,000 unicorns globally, registering a significant increase in the startup ecosystem.
## What is the valuation threshold to be a "decacorn"?
- [ ] $500 million
- [ ] $5 billion
- [x] $10 billion
- [ ] $1 billion
> **Explanation:** A decacorn is a startup valued at $10 billion or more, making them even rarer than unicorns.
## Which of these is NOT a unicorn?
- [x] A blue whale
- [ ] Robinhood
- [ ] SpaceX
- [ ] Instacart
> **Explanation:** A blue whale may be large and majestic, but it certainly does not fit the criteria for a unicorn in venture capital!
## In what context can “unicorn” also be used other than business?
- [x] Describing an ideal job candidate
- [ ] Labeling a new species
- [ ] Assigning a pet name
- [ ] Comic book fan club
> **Explanation:** HR professionals sometimes use the term "unicorn" to describe candidates who seem perfect for a position as if they were mythical!
## What is the common trait of unicorns in startups?
- [ ] Have frightening horns
- [x] Rarity in high valuation
- [ ] Are fictional
- [ ] Offer free candy to investors
> **Explanation:** The common trait is rarity in achieving a high valuation, making them highly sought after in venture capital.
## How can a unicorn become a public company?
- [ ] By being featured in a movie
- [ ] By acquiring more unicorn friends
- [x] Through an IPO (Initial Public Offering)
- [ ] By selling magical potions
> **Explanation:** A unicorn can become a public company through the process known as an IPO, transitioning from private to public markets.
## What is a major risk for investor unicorns?
- [ ] Unicorns forget their business plans
- [x] Valuation can decrease when public
- [ ] They don't know how to network
- [ ] They are scared of public speaking
> **Explanation:** One major risk is that the company’s valuation can decrease after it becomes public, leading to a surprising reality check!
## In general, what does the pursuit of unicorns imply for investors?
- [ ] A chance to financially ride mythical creatures into the sunset
- [ ] A rigorous sustainable environmental practice
- [x] Seeking high-growth startups
- [ ] A field trip to a petting zoo
> **Explanation:** The pursuit of unicorns generally means investors are looking for high-growth startups that promise significant returns!
Thank you for joining the enchanting trove of unicorn lore in venture capital! Remember: whether you’re chasing mythical creatures or building your billion-dollar startup, the explorations are always full of wonder and surprises!
