Startup ABC #5: Unicorn

Unicorn - The dream of all founders

Whether in the startup world or in fairy tales, there is always a mixture of fascination, awe and longing when talking about unicorns. But what does the term Unicorn actually mean in the context of startups? One thing is certain: it's not about a horned horse with shimmering fur and magical powers.


Unicorns in startup-speak

Unicorns are startups that are valued by investors at at least one billion US dollars - and this before their IPO or the so-called exit (the point at which investors withdraw from the company by selling their shares). Such a high valuation by investors is extremely rare and is usually only awarded if a startup is characterized by particularly high sales, rapid growth and a high market value. Therefore, the name Unicorn is very appropriate here.

Former Unicorns that everyone knows

Unicorns that probably everyone knows are, for example, Pinterest or Xiaomi or the company ByteDance, which is behind the video platform TikTok. Facebook, Zalando or WhatsApp were also once Unicorns. Spotify, AirBnB and Snapchat were even among the Decacorns, the toe-horns that even reached a company valuation of over ten billion US dollars before going public or exiting. It is striking that Unicorns and Decacorns can be found to a large extent in the Internet and/or software industry. Many unicorns currently come from the fintech sector, and cybersecurity and e-commerce are also in demand.

Herds of unicorns

It's also striking that you're hearing more and more about Unicorns lately. There seem to be entire herds of Unicorns on the loose. In fact, thanks to smartphones, social media, and cloud computing, businesses are now able to reach a larger mass of people faster than they did just a few years ago, and grow faster as a result. Another aspect to consider in this context is that companies have been going public much later on average since the end of 2016. Whereas until 2016 this was the case after an average of four years, today they wait an average of eleven years. As a result, there are of course significantly more companies nowadays that have already reached an enterprise value of one billion US dollars before their IPO. However, this still remains rather the exception and unicorn startups are still something special.


Published on 22.09.2021
Author: Frauke Leuckefeld