Like the mythical creatures they’re named after, unicorn startups may seem nonexistent. The difference is that unicorn startups do appear every now and then, and here’s how to identify them.
Today, we’ll cover:
🚀 What are the 4 keys to a successful startup? Does your company have them all?
What is a “unicorn startup”?
In the plainest terms, a unicorn startup is a privately held startup with a value of over $1 billion.
Unicorn startups are typically tech startup companies, but what makes them unique is that they grow their value into the billions very quickly, with help from venture capitalists and other investors. They’re called unicorns because it’s extremely rare for startups to grow their value that much in such a small time.
While each unicorn startup is different, they have some pretty important things in common. This includes a stellar business plan, great leadership, the right team, and the right product at the right time.
Examples of unicorn startups
Some are tech companies that are almost household names, like Uber and Airbnb. But there are also lesser-known unicorn startups, such as Dropbox and Pinterest.
Here’s a list of companies that are considered unicorn startups, and what they did right.
In 2009, Uber was known as a luxury black car service in San Francisco until the company’s founder decided to expand its operations to New York City. At this point the company also changed its business model to become a taxi service, and in doing so became one of the most valuable unicorn startups in the world.
The founders of Airbnb were attempting to raise money for their new business, but they couldn’t get enough investors on board. In a last-ditch effort, they decided to rent out air mattresses in their living room for $80/night and promote the idea on Craigslist. Eighteen people showed up for this Airbnb open house, and the company raised $30,000. This was all it took to launch what would become a $25 billion unicorn startup.
The founders of Dropbox started out as software developers who noticed a need for user-friendliness in cloud storage. With only $2,000 and a few servers, they launched and eventually grew their company to be one of the most successful startups ever.
Three employees left Google in 2011 to launch their own web-based software company, and today Pinterest is a $12.3 billion unicorn startup. Where did they find their success? A unique, attractive user interface made it easy for brands to share their products and consumers to find inspiration from each other.
Potential unicorn startups to watch
There are plenty of upcoming unicorn startups that could soon become successful businesses. Depending on how you measure it, there are over 100 companies valued at over $1 billion that are considered unicorns.
As you can see, many of these companies have been in operation for more than 5 years already, and many people have never heard of them. There’s a lot of work that goes into a startup before launch, and even after revenue begins to grow, there’s a long runway.
Most startups fail, but these companies prove that startups can grow from small beginnings to do great things. Watch the companies in the table above to see what may happen with them in the next few years.
9 tips to become a unicorn startup
Many companies dream of their business ideas taking flight quickly and with much success, but it’s not easy. There are several tactics that will set you up for rapid growth in the right climate.
While you can’t create a unicorn startup overnight, there are some easy steps to follow if you want to get your early-stage business on the road to becoming a unicorn startup.
1. Know your niche
Before you decide to set your sights on becoming a unicorn startup, it’s important to know what kind of business you want to create. This decision will help determine many of the decisions that follow, such as if and when you start looking for funding and how much money you’re likely to raise.
2. Be realistic about your budget
Unicorn startups need a lot of money to succeed, but that doesn’t mean you can just go ahead and raise as much as you want without thinking it through. It’s possible for your company to grow too quickly if you have more cash than what you really need at the moment or if you don’t have enough cash to meet your needs down the road.
3. Know what you’re getting yourself into
As a startup owner, getting funding from investors is not a decision that should be taken lightly. Keep in mind that you’ll be somewhat limited by who can invest and how much they can invest. For example, VC companies are much more common in the United States than they are worldwide.
4. Work smarter from Day One
Streamlining day-to-day processes early on will let you focus on the important work of growing your business. One example: your communications. You’ll need a reliable business phone, a robust team messaging system for internal communication and project management, and polished video conferencing for those important investor meetings.
Putting all of these channels together, on the cloud, frees up time and helps your team run like a well-oiled machine. All-in-one apps like RingCentral cut out the clutter so you can focus on what matters most. You can message your team, start a video conference, and answer important phone calls from anywhere on any mobile device:
5. Don’t reinvent the wheel
Once you’ve decided on which business to launch, don’t try to create something completely different from what’s out there already. Do some research to make sure your idea hasn’t been done before and will be able to gain traction quickly.
6. Get feedback early and often
If you want your business to succeed, it’s important to get feedback from your customers early on so you’ll know when adjustments are needed. Keeping an active social media presence is one way to do this, but talking with customers in person or over the phone works well too, especially if they’re local.
7. Don’t limit your options
Another tactic for unicorn startups is to think beyond the traditional routes of funding, such as banks or VC companies. You might have friends or family members willing to invest in your business idea under certain circumstances. Meanwhile, crowdfunding sources like Kickstarter ensure that you’ll have the cash you need by pre-selling your product or service to customers.
8. Choose the right time
It’s not a good idea to set up a business website and start looking for investors before making any preparations. To increase your chances of getting funding, make sure you have a real business plan in place first, along with a road map that shows how much money you’ll need and how you intend to use it.
9. Hire the right team
Don’t limit yourself to your local area when it comes to hiring. Today, the global talent market is at your fingertips, and it’s never been easier to reach the best of the best. Brush up on how to recruit, hire, and onboard remote employees so you’ll be ready to find the best fit for your unicorn-in-progress.
Is your startup a unicorn on the rise? 🦄
The valuation of unicorn startups has made them appealing to investors because they usually have the potential to increase in value exponentially. However, there are still plenty of failures out there. Anyone who’s interested in becoming a unicorn should research the matter thoroughly before taking steps to start their own business.
One way to increase the chances of being a successful unicorn is to have a clear vision and a great understanding of your target market. You’ll also need a keen business sense and lots of passion for what you do. Always remember that unicorn startups are just normal people who have been willing to work hard to achieve greatness.
With perseverance, a great idea, and the right tools from Day 1, it is possible to become a unicorn. See our startup resources to help get your unicorn startup on the right track.
Originally published Mar 03, 2022
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