Identifying a Unicorn in Today’s Business Climate

Unicorns in fairytales, ancient mythology and folklore are valued for their rareness. According to legends, unicorns were hunted for their magical abilities after they appeared on a white horse with a single spiral-grooved head.

The word “unicorn” is often used today to refer to an uncommon positive phenomenon. If it happens, it should be regarded as a tremendous blessing. It can be used in many ways, but most often it refers to private-owned companies that have a market capitalization of at least $1bn before they are listed on the stock exchange. Private investors or venture capital firms may back a unicorn, but they could remain in private ownership to continue earning value. Most investors dream about becoming shareholders in a unicorn or potential unicorn.

Innovative ideas

Reef Kitchen is a virtual restaurant company that Reef Technology recently created. While the parent company was originally founded in Miami to provide digitally enabled parking facilities, it began expanding into the realm of ghost-kitchens in order to achieve its unicorn status. Today the company is valued at over $1bn. This is due to innovative shipping container-based cooking units which provide high quality food for both independent and national businesses.

Breezing through the mould

One definition of a unicorn business is not the same. While there is no one definition of a unicorn company, it can be found in almost any industry. What they have in common though is an innovative idea or approach to solving problems that challenges the established norms. Unicorns leverage technology to solve problems in a different way, one that either hadn’t been thought of before, or wasn’t possible. 

Instacart (Facebook and Google) and Airbnb are examples of the many mold-breaking unicorns. They either disrupted the industry they were in or created a new market that was quickly flooded with imitators. Looked at this way, it’s easy to see why unicorns are so rare.


The first person to use the phrase ‘unicorn’ in this context was venture capitalist Aileen Lee. Cowboy Ventures founder Aileen Lee wrote in 2013 that 1bn was the limit for software startups created during the 90s.

Lee estimates that only 39 unicorns were known to exist at the time she wrote her article. The number of unicorns in existence has grown exponentially since Lee’s article, which makes their rare status questionable. 2018 saw another 151 unicorn-certified companies, with over 450 globally by 2020. The number of unicorns worldwide was over 900 by 2022.

Decacorns as well as hectocorns

Although Unicorns are less common than in the past, there is still a lot of decacorns and hectocorns. While the former can be described as privately owned startups with a value of over $10bn while those in the latter category are valued at over $100bn. This level was reached by both Google and Facebook before they had their initial public offerings. At the time of her article, Lee referred to them simply as “super unicorns”.

Too many unicorns

Some claim that unicorns have grown in number due to over-valuing certain startups. It’s been claimed that investors are pouring capital into new businesses without thoroughly analyzing their growth potential. Although many unicorns may be worth over $1bn on paper, this isn’t always reflected in their profit or revenue. 

Critics of the unicorn phenomenon say that it’s a self-perpetuating bubble that’s bound to burst. They suggest that incautious investors are buying into over-valued startups because they don’t want to miss out on being stakeholders in a future unicorn.

It is possible that unicorns have become more popular than ever before for other reasons. New technology has made new solutions possible, and startups are able to use this tech in a way that slower-moving, hidebound legacy businesses can’t. These investors seek out lucrative online businesses that they can invest with. A unicorn company that seems to have made new inroads into the target market is a sign it’s a real animal, and not just a fantasy.

It is still a rare find

Although there are certainly more unicorns around than there were when the term was first coined, we definitely shouldn’t start taking them for granted. There is a very slim chance that a startup will ever become a unicorn. Reddit. Epic Games. Reddit. Patreon. BrewDog. SpaceX. These are the rare exceptions to a market in which most startups fail within 12 months. So, if you do come across a genuine unicorn in the wild, don’t let it go. It is possible that you will never again have the opportunity to see such an amazing beast.

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