You may have heard the term “unicorn startup” thrown around by venture capitalists, entrepreneurs, or business publications. It’s been used to refer to companies like Snapchat and Uber. But what exactly does it mean? How does a unicorn startup differ from a traditional startup?
What is a Unicorn Startup?
The phrase was first used by Aileen Lee, a venture capital investor and founder of Cowboy Ventures. Back in 2013, Lee referred to 39 startups as “unicorns”, since they were valued at more than $1 billion, a rare occurrence in the industry.
Today, the definition remains the same: a unicorns startup is any privately held startup company with a valuation of more than $1 billion. The only thing that has changed is the rapid growth in the number of unicorns.
Traits of a Unicorn Company
Innovators – Unicorn companies are seismic industry shifts, not passing fads. They represent a complete disruption in the industry and a radical new technology or service. For example, SpaceX has revolutionized reusable rockets for space exploration, while DoorDash has simplified mobile food ordering.
B2C – Most unicorn companies tend to be consumer-facing. According to Visual Capitalist, 62% of unicorns are B2C. One startup called Robinhood, for example, makes it easier for average consumers to invest in popular stocks.
Privately held – Unicorns are usually for-profit and privately held. Their funding and valuation come from investors and private stakeholders.
Tech-based – Unicorns are almost always software companies, with a small few being hardware or traditional goods and services. There are a few exceptions, like popular streetwear clothing company Supreme (valued at $1 billion).
Unicorn company statistics
How many unicorn companies are there in 2019?
Based on estimates by CB Insights, there are a total of 348 unicorn companies in 2019, with a total cumulative valuation of $1.16 trillion.
Where are unicorn companies mostly located?
55% of unicorns are found in the United States, 25% are in China, while the rest are found in UK (5%), India (5%), and Germany (4%).
What is the average founding team size?
Unicorn startups often accomplish big things with small teams. 35% of founding teams had two members. The second most popular team size was one.
How long does it take for a company to become a unicorn?
On average, it takes about 5 years to reach $1 billion or more.
For more unicorn company statistics, check out this infographic from the FounderKit blog.
Examples of unicorn startups
Uber – Uber is perhaps the most popular and most successful American unicorn. Now valued at $72 billion, the company was one of the first to popularize the ridesharing model.
Toutiao (ByteDance) – ByteDance offers content platforms powered by AI technology, and is used for TikTok, Vigo, TopBuzz and more. It is currently the most valuable unicorn at $75 billion.
Airbnb – Just as Uber revolutionized ridesharing, Airbnb has transformed the hotel industry by allowing ordinary homeowners to rent out their space to guests. It is valued at $29.3 billion.
Stripe – Stripe allows merchants to accept credit cards or other online payments. Most importantly, they ensure financial transactions remain secure. Stripe is currently worth $22.5 billion.
SpaceX – Elon Musk is perhaps most well known for his Tesla line of cars, but SpaceX has gained steady recognition as the world’s most innovative spacecraft manufacturer. They are valued at $18.5 billion.
Epic Games – Epic Games is most well known for their video games Gears of War and Fortnite, but they also developed the Unreal Engine, software used to design and create popular video games today. Epic is worth at least $15 billion.
Slack Technologies – Slack has become a staple in office and team communication, even replacing regular email communications. The instant messaging business is worth $7.1 billion.
Vice Media – A global youth media company, Vice specializes in highlighting modern culture, news, and technology. Vice Media is worth $5.7 billion.
The Path to Unicorn
While many founders would like to establish a unicorn startup, the reality is that it is much more difficult and rare than people would like to believe. Not only do you need the right idea and mindset, but they also require the proper resources and timing. It’s equal parts luck, hard work, and originality.
That doesn’t mean you shouldn’t try anyway! All the largest unicorns had humble beginnings and major ambition. Airbnb started when a group of friends rented an apartment out to visitors.
Learn more about the various startups that found ways to hack their growth.
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