What is a Unicorn Startup?

In the venture capital industry, the term unicorn refers to any startup that reaches the valuation of $1 billion.

Recently, SaaS platform LeadSquared became a unicorn and raised $153M USD in Series C funding.

We often talk about unicorns like Uber, Airbnb, Snapchat & Pinterest but little do we discuss what a unicorn exactly means. Ever wondered why some startups are given this title? What are the criteria to get this title? Or have you just wondered, how to be a unicorn?

If yes, this guide is for you.

Read further to know all things unicorn!

What is a unicorn Startup? – Meaning

In the venture capital industry, the term unicorn refers to any startup that reaches the valuation of $1 billion.

The term was first coined by Aileen Lee, founder of Cowboy ventures when she referred to the 39 startups that had a valuation of over $1 billion as unicorns. The term initially was used to lay emphasis on the rarity of such startups. The definition of a unicorn startup has remained unchanged since then. However, the number of unicorns have gone up.

Features of a unicorn startup

To be a unicorn isn't a piece of cake and each unicorn today has its own story with a list of features that worked in its favor. We have listed down a few pointers that are commonly seen across all the unicorns:

  • Disruptive innovation: Mostly, all the unicorns have brought a disruption in the field they belong to. Uber, for example, changed the way people commuted. Airbnb changed the way people planned their stay while travelling and Snapchat disrupted the usage of the social media network etc.
  • The ‘firsts’: It is seen that unicorns are mostly the starters in their industry. They change the way people do things and gradually create a necessity for themselves. They are also seen to keep innovation up and running to stay ahead of competitors which might later boom.
  • High on tech: Another common trend across unicorns is that their business model runs on tech. Uber got their model accepted by crafting a user-friendly app. Airbnb made the world seem smaller by making the best of the world wide web.

A recent report suggests that 87% of the unicorns products are software, 7% are hardware and the other 6% are other products and services.

  • Consumer-focused: 62% of the unicorns are B2C companies. Their goal is to simplify and make things easy for consumers and be a part of their day to day life. Keeping things affordable is another key highlight of these startups. Spotify, for example, made listening to music easier to the world.
  • Privately owned: Most of the unicorns are privately owned which raises their value when an established company invests in it.

According to CB Insights List of Unicorn Companies, there are 1,194 private companies around the world valued at over $1 billion. The US has 664 of these companies, taking 55 percent of the overall share.

Can only a startup be a unicorn?

The answer is yes. Unicorn is a term only given to ‘startups’ who have a valuation of over $1 billion. The startups that exceed the valuation of $10 billion are grouped under the term called decacorn (a super unicorn). Dropbox, SpaceX and WeWork are some examples of decacorns.

For startups based out of Canada, there is an exclusive term for what we call a unicorn. It is ‘narwhal’. This means that any Canadian startup company with a valuation of over $1 billion is called a narwhal. Hootsuite and Wattpad are two examples of Narwhal companies.

Some Examples of Unicorn Startups


Unicorn Companies in 2022

unicorn companies in 2022

In Conclusion

The word ‘unicorn’ has come a long way from just being a mythological creature to recognized jargon in business and finance discussions. Today, every entrepreneur dreams of becoming a unicorn. Of course, not every unicorn will end up being a successful startup. The moral of the story is that any startup shouldn't stop hustling after touching a milestone at any stage.

Hope this article helps plan to attain all that you have been dreaming of!