People tend to appreciate rare objects, and the rarer they get the more valuable they become. Unicorn companies obtain their status by following one criterion. As simple as it may seem, it’s not an easy one to achieve. In order to become a Unicorn, the privately held company needs to be valued at over $1 Billion!
It all started in 2013 when venture capitalist Aileen Lee coined the term, using the mythical creature to represent the rarity of these companies.
Following Lee’s terminology, a few more were created to describe the rarest of the rare: decacorns, originated from the Greek and Latin words for the number Ten.
Decacorns are companies that are worth over $10 Billion; and Hectocorns, originated from the Greek word for One Hundred, indicating companies exceeding the $100 Billion value mark.
On March 2018, there were 279 Unicorn companies in the world (a large number in comparison to 2013, when there were only 39).
The largest ones include Ant Financial, formerly known as Alipay – an affiliate of the Chinese Alibaba Group, Didi Chuxing – a major Chinese ride-sharing, AI and autonomous technology conglomerate, and Xiaomi – another successful Chinese electronics corporation.
The popular peer-to-peer ride-sharing, taxi cab, food delivery, and transportation network company, Uber is also a unicorn, as is Airbnb – an ever-growing online marketplace and hospitality service.
There’s also Palantir – an American software company that specialises in big data analytics, and Pinterest – a web and mobile application designed to discover information on the Internet using images.
Companies don’t just wake up and become Unicorns; the transformation involves a process that often includes, among others, the Get Big Fast strategy (GBF), where a startup tries to expand at a high rate through large funding rounds and price cutting to gain an edge on market share and demolish the competition as fast as possible.
Another way of becoming a Unicorn is simply to acquire smaller companies and thus boost the company’s overall value.
There are, however, companies that take a different route and become public. The most recent one is Dropbox – an American company that offers a file hosting service, cloud storage, file synchronization, personal cloud, and client software.