Unicorn Startups

Coined by venture capitalist Aileen Lee, “Unicorn” represents a statistical anomaly of successful businesses. The reason for the use of this word lies in its rare definition: a unicorn is a mythical creature that is often used as a symbol of fantasy and rarity; usually portrayed in classic fairy tale books, unicorns are found at the end of a rainbow comparable to the billion-dollar startups.

But What are unicorns in this context? Why there are so many of them?
A Unicorn is a privately held startup company that has more than a $1 Billion valuation. These unicorns are expected to IPO at Bn $ or above, with the hope that they will become even more valuable once they go public. Unicorn corporations play by switching the game and making the first shot, they are generally the novice in their industry, for instance uber, which changed the way people commuted.

Nowhere near to being purely Mythical, Unicorns have witnessed unprecedented growth in the last decades, always being a regular feature in business and finance dialogues.
Some familiar Unicorns include SpaceX, Pinterest, Uber, Airbnb, Shein, Cred, ByteDance, N26, Revolut. There are more than 900 unicorn companies around the world as of January 2022.
Collectively they have raised more than $500 billion and values roughly around $ 2.995 Trillion.

Why do investors care about billion-dollar startups?
Top venture capital funds have driven returns from the ownership they have in the company.
One of the common questions people ask is how do we value Unicorns or companies that have Billion $ plus valuation, even though they have no net profit and cash flow yet?
The valuation approach for unicorns is identical to the cash flows that a company is going to generate. Instead of starting with today’s performance and trying to project its future since today, the company is not performing high, we lookout until they are going to be mature and then we estimate how big the market will be in the future.
The value of unicorns is generally based on how investors and venture capitalists feel startups will grow in the long term.

The world’s most valued private company Bytedance originated in China, artificial intelligence and robotics-based company followed by Elon Musk’s SpaceX at a 100 Billion dollars valuation.
Unicorn land has grasped the world and other countries gracefully adapting the trend countries like India, Israel, France, UK, Germany, South Korea, Brazil, Singapore, Hong Kong, Mexico, Australia, Japan, Indonesia, Sweden, Portugal, Switzerland, Argentina, Ireland, Netherlands, and 23 other countries are home to the Unicorn startups in the past years.

Finance industries selling stories pondering, which sectors are likely producing more unicorn club members. Entrepreneurs claim that fintech is the future; the fintech sector has a huge amount of expansion ahead of it and has enormous opportunities on offer and it is a clear indication of gearing ecosystem, with changing technology and this sector has a vivid scope for fresh opportunities but these are hoaxes in the market, in reality, all unicorns are completely diverse in business.

 It is often witnessed consumer-oriented unicorns aggregate more value as they have a lot to offer to comfort the life of consumers by bringing unimaginable ease. They enter the life of consumers like a disruption but end up having a consumer to depend upon like eCommerce, pharmacy, fashion, lifestyle-based startups.

Google, Amazon, and Facebook were consumer-centric companies. It was the decade’s only super unicorn. However, Amazon has not been considered a unicorn company as it is public now. Amazon did IPO and went public on May 15, 1997, it raised $54 million, which gave it a market cap of $438 million, still well below the key $1 billion mark.

Tech startups have a unique surge in the unicorn world when it comes to raising funds, but raising money is just not enough in the 21st century of a global mindset; and going public promptly might not turn out to be a good decision as Unicorns business is a marathon, not a sprint the path after crossing billion-dollar mark becomes even more demanding. 

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