These are private companies that have grown to $1 billion or more in less than 10 years. Unicorn companies excel at getting it right from the start. For example, they quickly attract new customers, earn a lot, or make some kind of unique product.
The term “unicorn” was originally coined because there were few such companies. Just eight years ago, experts counted “Welcome to the Unicorn Club: Teaching Billion-Dollar Startups/TechCrunch” just 39 of those startups. This was less than 0.07% of all US companies. In 2021, 765 Unicorns from the Complete Unicorn List / CB Insights will operate worldwide, up to 1,774 Unicorns from the Unicorn/Dealroom Club. Experts Explain 1. J. Sterman, RM Henderson, ED Beinhocker, LI Newman. Growing Up Too Fast: Strategic Dynamics with Higher Profits and Bounded Rationality / MIT Sloan Research
2. Grow Fast or Slow: Why Unicorns Stay Private / McKinsey & Co.
3. What is driving the growth of the billion-dollar Unicorn startups? / Forbes drives investor interest and technology. The capitalists are actively investing in new companies and demanding the development of the latter. In turn, large companies often by promising companies and thus create unicorns. And innovations help young companies develop quickly.
Why it makes sense to follow unicorn companies
There are several other fast-growing startups in Russia, usually not listed. Only sometimes exceptions appear, such as Avito, Ozone and Yandex. Most of the “unicorns” are from the United States or China and have not yet entered the stock market, much less the Russian stock market. Consequently, private investors need at least several hundred thousand dollars and access to foreign venture capital funds to invest in these companies. But even just tracking unicorns is useful for three reasons:
- See trends. Some companies have grown dramatically during his time. In the mid-2010s, it was all about social media and IT services. Now: fintech and delivery services, especially food. If an investor has an idea of which companies are doing well, then he can explore the prospects of individual sectors of the economy and even entire countries.
- Make a list of investments for the future. Many successful startups will one day go public, and their shares will be available to private investors. Those who know about these companies and buy the shares early on will likely get the most out of them.
- Find out where the money is. You don’t have to wait for a startup to go public. There are probably other companies in the fast-growing industry that you can invest in now and make money in the future.
And if you can not only keep track but also invest in unicorn companies, congratulations: the companies are growing rapidly and can generate good profits. But don’t forget that this is a high-risk investment. Information about the assets and finances of new businesses is often scant, and experts can be misled.
How to search for unicorn companies
There is no single criteria or list. Venture capitalist and term writer Eileen Lee listed Welcome to the Unicorn Club: Learning from Billion-Dollar Startups/TechCrunch as three features beyond cost and rarity:
- Unicorn companies accompany innovation. For example, with the invention of semiconductors, the Internet, or social networks.
- Startups are mainly focused on e-commerce (like AliExpress or Ozon), software (like Microsoft), or software as a service. This is when you don’t need to maintain a team of your own developers, but can simply buy a subscription to a commercial off-the-shelf app.
- 90% of unicorn founders have technical knowledge and experience in creating and managing other projects.
Key Features of Business Insider Business Publishing Here are some of the features of the $1 Billion Unicorn Startups / BusinessInsider, two other features: targeting the consumer (rather than other companies) and commission-based earnings. For example, streaming service Spotify compiles Spotify’s 2020 annual report for the latter, typically all of its earnings.
But for an investor, the easiest way is not to personally analyze hundreds of companies, but to study the “unicorn cards”. These are analytical portals that track companies from all sectors and countries. They also post short descriptions, costs, key investors, and key startup news. This information is hosted on three main sites: CB Insights, Dealroom, and Crunchbase.
Which unicorn companies to watch out for?
The ten largest unicorns in the world are startups from different countries and sectors of the economy. All companies are rapidly growing their customer base and revenue, and each has its own competitive advantage.
- ByteDance. China, 140-180 billion dollars, social and artificial intelligence. The most expensive unicorn in the world owns TikTok. Companies rate ByteDance at $250 billion in Private Trades/Bloomberg due to the app’s algorithms that help users see relevant content. The value of the company shows the investment potential in referral services.
- Group. The US, $95 billion, fintech. The startup helps businesses build Under the Hood: A Closer Look at Stripe, the most respected private company in US online payments/ Crunchbase: transact money, write checks and bills, create a payment infrastructure. And it all works in 42 countries with different laws. But still, only 18% of purchases are made online, which is the share of e-commerce in global retail sales from 2015 to 2024 / Statista, so these companies have great potential.
- SpazioX. The United States, 74 million dollars, space exploration. Elon Musk’s company designs build and launches satellite rockets that can accurately return to Earth. US Aerospace and Defense Market: Growth, Trends, COVID-19 Impact and Forecast (2021-2030) / Mordor Intelligence predicts that the US Aerospace and Defense Market will grow by at least 2-3 % per year in this decade. And without taking into account space tourism.
- Klarna. Sweden, $45.6 billion, fintech. Unicorn develops payment systems for online stores. In the first place, the installment and fraud insurance mechanisms. This industry is expected to grow at 21% per annum based on Buy Now, Pay Later/Continuous market information.
- Instacart. The United States, $39 billion, logistics and shipping. The startup combines products from thousands of small stores into a single app, then delivers orders to customers within an hour. Express Delivery Likely Raises Express Delivery Market Forecasts to 2027: Impact of COVID-19 and Global Analysis by Destination; Business Type; and Geography/Insight end-users and partners: 6% per year, and even faster food delivery: 15%.
- Revolution UK, $33 billion, fintech. In fact, the company works like a bank, only on the Internet. Even in rich countries, banks do not open an account for everyone and do not do well on the Internet. Therefore, 95% of US customers want more online services for the disruptive trends and companies that are transforming digital banking in 2021 / Business Insider.
- Nubank. Brazil, $30 billion, fintech. The startup offers almost the same services as Revolut, only the market is even bigger. 38%, or approximately 200 million, from South and Central America, remain unbanked in the most unbanked countries, 2021 / Global Finance Magazine.
- Epic games. United States, $28.7 billion, video games. The company develops and operates one of the most popular online games, Fortnite, and also owns the Unreal Engine, which is used by many developers. The gaming market (Growth, Trends, COVID-19 Impact and Forecast (2021-2026) / Mordor Intelligence) is growing at 9.5% per year, and this process has only accelerated after disruptions.
- Databrick. The US, $28 billion, data management. The startup sells solutions to classify, process, and analyze information using artificial intelligence. In business, more and more information is accumulated, on the basis of which new products are developed, and existing ones are improved. In just six years, this market could quadruple the market research market for master data management/transparency.
- Rivian. The US, $27.6 billion, automaker. Unicorn develops technologies, prototypes, and infrastructure for an electric pickup truck. At the same time, trends and developments in the EV/International Energy Agency markets are expected to significantly increase demand for all EVs.
What is worth remembering
- The Unicorn Company is a private company that has grown to $1 billion or more in less than 10 years.
- There are between 765 and 1,774 such startups in the world, depending on how you count them. There are only a few of them in Russia: Avito, Ozon, and Yandex.”
- It is difficult for a private investor to invest in a “unicorn”: he needs access to foreign venture capital markets and at least several hundred thousand dollars.
- Perusing the list of unicorns helps you understand which sectors of the economy are growing fast, which companies to watch out for, and if there are any competitors you can buy right now.
