UNICORNS

In business world, UNICORN is a privately held Start-up firm with valuation over $1 Billion
(just like the rarity of the animal, Unicorn Companies depict the rarity of the start-ups with the
valuation like this). Companies with a value over $10 Billion and $100 Billion are called as
Decacorn and Hectocorn. Some popular Unicorn companies can be- Uber, SpaceX, Airbnb, Ola,
Paytm, Flipkart etc. Whereas, companies that has potential to become a Unicorn company soon
are called as Soonicorns.

Unicorn is a term flipped by Aileen Lee in the year 2013. Back then, there were only 39 Unicorn
Companies in the global world. Adding past 6 month’s 66 new companies in the bucket, this
figure grew to more than 500 companies in 2021. China has the highest number of Unicorn
Companies, followed by U.S. and then India.

There are various reasons behind the surge in Unicorn funds, like:

-Get Big Fast Strategy: With the increasing Get Big Fast (First Mover Advantage) strategies of
the Venture Capitalists and Investors, Startups are getting a chance to expand at high growth rate
with the help of high fundings and price cutting techniques to avoid competitors. This higher
funding in every round of financing is helping these startups to skyrocket each time and capture
maximum market share possible.

The reinvestment by investors in companies like PayPal, Facebook and Apple are examples of
Blitz scaling or Get Big Fast Strategy.

-Increase in Venture Capitalists: There has been an increase in investments by Venture

Capitalists. Basically, not just Venture Capitalists, but banks and private Equity have also joined
the party. Thus, this pumps up the Valuation of the Companies.

With the increased private capital available to the unicorns, these startups need not go through
IPO to attain higher valuation. Instead, they can ask their investors to invest back in the firm.

-Super platforms: There has been an increase in the smartphone's demand. Smartphones help
startups in increasing connectivity by contacting the customers as and when required with the
help of Mails, Messages, Calls and other facilities. With the rise in the number of smartphone
users, there has been a rise in the super platforms like Apple Store, Google store and others as
well. These stores help in reaching people in the least time possible and thus reach millions
within a few years.
-New Way of Operating: Increasing use of Smartphones, cloud computation and low-priced
censors, Companies are able to ditch traditional tech-deprived methods for operating the business
of hotel, taxi and beyond. This modernization has led to emerging of more Unicorns like Uber
and OYO.
-Mergers, Takeovers and Acquisitions: Big firms taking over or merging with the start ups
can be an important reason behind the surge. Generally, big firms like Apple and Facebook
acquire start-ups to expand and avoid competition in the market place. Large Companies(in order
to acquire the start-ups and diversify), are often ready to pay the premium so as to avoid
competition from rivalries. This results in the higher valuation of the Targeted Company. Recent
Example of this can be Byju’s acquiring Aakash Educational for $1 billion.

Rise in the number of Unicorn Companies need not always be beneficial because sometimes
companies like flipkart have a valuation above $1 billion but it is not earning profits. So, startups
should not just focus on becoming a Unicorn company. Instead, it should also be able to persist
in the external forces as well as trends that ultimately defines a business.

It is important here to prioritize the balanced growth which will help startups in surviving the
market shocks and also thrive in the good as well as bad times. In nutshell, these startups can run
successfully if they can turn their adversity to advantage.

Source: https://www.linkedin.com/pulse/unicorn-student-welfare-committee/?trackingId=
%2BDNFhOguTdOHt6T7vW4LUg%3D%3D