Unicorn companies: the new entrepreneurs' dream

Its name refers to one of the best-known mythological beings and its results are the objective of many people who decide to turn their business idea into a reality. We are talking about unicorn companies, a term that has gained popularity in recent times.

Being an entrepreneur is much more than having a proposal to set up a company. It is true that, initially, we must have an idea, but then we must define it properly, that is to say, determine what we want to do, to later give way to the way in which we want to achieve it.

Subsequently, we will have to check the viability of the idea, both in terms that depend on us - we are talking about the capital invested, the analysis of the initial expenses, the place to carry out the activity, etc. - and those that do not - we will have to carry out a market study to understand its evolution and current situation, which agents are involved in it, what role each competitor plays, what the profile of the target public is, etc. -.

Once we have passed the initial stage, which includes steps such as those indicated above - in addition to others in terms of official registration of the organisation and other requirements -, it is time to develop our activity and try to meet the established objectives, such as achieving a certain growth or profits. Although this is a difficulty in the majority of cases, there are others in which the advance in value experienced in a short period of time is very significant, exceeding 1,000 million dollars. What are we referring to?

 We are indeed talking about unicorn companies.

What are unicorn companies?

Unicorn companies are those companies created less than ten years ago that, without being listed on the stock exchange or having been acquired by a third party, achieve a value of 1 billion dollars or more at a global level. They take this curious name associated with a mythological animal because it was first coined in 2013 by Aileen Lee, founder of Cowboy Ventures, when she wanted to refer to those organisations in the technology field that reached that value without being present on the stock market.

+1.100unicorn companies in the world until July 2022

According to data from the consultancy firm CB Insights and following this definition, there are currently more than 1,100 unicorn companies on the planet; figures that are growing steadily thanks, to a large extent, to the use of new technologies. The United States is the country with the most organisations of this type.If we analyse the type of companies that these companies are, we will see that most of them are start-ups -especially those in which ICTs (information and communication technologies) play a key role-. In this sense, we must remember that a start-up is not the same as an SME. In the first case, we are referring to recently created companies that have a scalable business model and rely on technological innovation to maximise their growth possibilities. All this is achieved with a reduced cost of resources, which has a positive impact on their profit margin; and the financing comes from third parties - here we have the so-called business angels, individuals who seek to become involved both financially and in terms of management in the company, distinguishing themselves from traditional investors in this last aspect. In this Openbank article, you can find out more about them. 

On the other hand, when we talk about SMEs, we are referring to those companies that are small or medium-sized in terms of turnover or human capital. Unlike start-ups, these types of companies do not necessarily have a short track record, their financing is rarely external and their scope tends to be, in general terms, more local. Such a more traditional perspective will condition other aspects such as the intention of scalability and, therefore, the pace of growth. 

Last but not least, the use of new technologies stands out: although they may be present, their business models do not revolve around them.

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What are the defining characteristics of a unicorn company?

When talking about this type of organisation and the keys to building one, the answer is that there is no standard formula for success, as success depends on a multitude of factors and we cannot influence all of them. However, if we analyse the most common features of unicorn companies, we could highlight the following aspects:* New creation: these are emerging organisations that, taking advantage of business niches that are little or not exploited, achieve success in the initial stage, achieving - as we have mentioned - a value greater than 1. billion dollars. This youth is also reflected in the teams that make them up, whose average age tends to be between 30 and 40 years old. 

Innovation: new technologies are a fundamental part of the business, making the most of them both in the most operational part and also in communication. Social networks are positioned as the channels par excellence to increase their notoriety; 

Scalability: they increase their magnitude and benefits, without increasing costs. All this is done in short periods of time. 

Financing: they have a very strong capacity to attract the interest of investors, achieving completely private capital. In this sense, as indicated above, they are not listed on the stock exchange.

Business model: the strategic plans of these organisations are oriented towards the end consumer, presenting themselves as a disruptive alternative that understands and meets their needs at all times. Moreover, they do not only focus on the product, but go beyond: they seek to generate satisfactory shopping experiences.