All About Unicorns
- Siya Heda
- May 16, 2022
- 2 min read
The news constantly reports the emergence of new ‘unicorns’ – but what do they mean by that?
A unicorn in the business world refers to a privately owned startup that has a value of over $1 billion. These companies are termed a unicorn because they are so rare - these companies have seen skyrocketing success or market traction, which has launched them into almost a mythical category.
History
The term was first coined by venture capital investor, Aileen Lee, in 2013.
The first unicorns were founded in the 1990s. Alphabet (GOOG)—then Google—she noted, was the clear super-unicorn of the group with a valuation of more than $100 billion. Many unicorns were born in the 2000s, though Meta (FB), formerly Facebook, is this decade's only super-unicorn (a company with over $100 billion) valuation.
As of May 2022, there are around 1100 unicorns around the world, with a cumulative valuation of approximately $3,671 billion. Popular former unicorns include Airbnb, Facebook, and Google. Variants include a decacorn, valued at over $10 billion, and a hectocorn or super-unicorn, valued at over $100 billion.
Reasons for High Valuations of Unicorns
The following reasons typically justify the abnormal valuations:
Fast-growth strategy: Such strategies encourage investing large amounts of money in every round of financing, in order to capture the biggest possible market share as soon as possible, as well as to prevent the emergence of major rivals in the marketplace.
Buyouts: Tech giants such as Facebook or Google acquire many startups to diversify their business and to prevent potential major competitors from arising in the marketplace, as many promising startups do not meet the requirements for an IPO.
Innovations: Innovations in technologies allow the faster growth of startups. By leveraging the new technologies, unicorn startups manage to reach their customers faster and shorten the time required to achieve mass production.
World and Unicorns
Here are the top 10 unicorns in the world and their valuations, as of May 9th:
1. ByteDance - $140B
2. SpaceX - $100.3B
3. SHEIN - $100B
4. Stripe - $95B
5. Klarna - $45.6B
6. Canva - $40B
7. Checkout.com - $40B
8. Instacart - $39B
9. Databricks - $38B
10. Revolut - $33B
India and Unicorns
India now hosts a total of 100 unicorns (as of May 2nd, 2022), with Neobank Open emerging as the hundredth. Just in the past four months, we have witnessed the rise of 14 unicorns with a total valuation of $18.9 billion, and in the last year, an astounding 44 unicorns, with a total valuation of $93 billion.
With this achievement, India now boasts of giving birth to 1 out of every 10 unicorns globally today. At this rate, India is expected to birth more than 250 unicorns or privately held startups with a $1 billion valuation or above, by 2025, according to the latest report from investment fund Iron Pillar.
Top 10 highest valued unicorns in India (as of May 2022)
1. Flipkart - $37.6B
2. BYJUS - $22B
3. PayTM - $16B
4. Swiggy - $10.7B
5. Polygon - $10B
6. OYO Rooms - $9.6
7. Dream11 - $8B
8. RazorPay - $7.5B
9. Ola Cabs - $7.3B
10. Postman - $5.6B
However, according to data shared by data analytics firm Tracxn Technologies, only 23 of the 100 unicorns, or startups valued at $1 billion or more, have managed to achieve profitability for a financial year.
- Siya Heda
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