MoneyBestPal Team
A startup company that is privately held and valued at more than $1 billion.
Image: Moneybestpal.com

A unicorn is a startup company that is privately held and valued at more than $1 billion. Aileen Lee, a venture capitalist, originally used the word to characterize these exceptional and lucrative projects in 2013 to explain how they come to have such a high valuation.

Unicorns are typically inventive and disruptive businesses that provide novel goods or services that generate significant market demand. SpaceX, Robinhood, and Instacart are a few well-known unicorns.

As of March 2022, there were more than 1,000 unicorn startups worldwide, according to CB Insights. The number of unicorns has increased rapidly in recent years due to several factors, such as:
  • Fast-growing strategy: In order to obtain market share and a competitive edge, many companies take the "become big fast" or "blitzscaling" approach, in which they raise significant sums of money and grow swiftly.
  • Company buyouts: Larger publicly traded corporations frequently buy unicorns in order to gain access to their technology, expertise, or clientele. This can increase their market value and give investors and founders a way out.

Unicorns are essential for investors and entrepreneurs because they offer high-growth potential and high returns on investment. Yet, because many unicorns could not be successful or sustainable in the long run, they also carry significant risks and uncertainties. Hence, before making an investment or joining a unicorn, investors and company owners should thoroughly assess its business plan, market opportunity, competitive landscape, and financial performance.