Unicorn startup is a term used to describe startups that are valued at over $1 billion. Unicorns are imaginary creatures, associated with rarity. Currently, unicorn startups that have achieved a $1 billion valuation in 10 years account for only 0.07% of all startups.
The term “unicorn startup” was first used by Aileen Lee – co-founder of investment fund Cowboy Ventures – in an article published on TechCrunch in 2013. Aileen Lee wanted to use the word “unicorn” to describe the nature of the group of technology startups valued at more than $1 billion and founded in the US after 2003. At the time of publication, only 39 companies had been found to meet these criteria.
Unicorns rise to the top quickly, and they do it by disrupting the market with groundbreaking innovations. Forbes has outlined some valuable lessons that business leaders can learn from these unique startups.
Develop both product and brand at the same time
Unicorns don’t create a product or service and then look for a market. They start with the end user. By developing services that future customers find irresistible, unicorns create brand enthusiasts.
These businesses are looking for smart marketing, mainly focusing on online marketing, making it as convenient as possible for customers. The strategies of accessing products and services have helped unicorn companies grow rapidly. For example, food delivery services via mobile apps have definitely changed the way customers eat. This marketing method also creates a new dining experience for customers.
People don’t order through Uber Eats because they’re hungry. The truth is, they want the experience of eating restaurant food at home. They want their favorite foods and potentially new dining experiences at their fingertips. The technology behind the app is the product, the medium, and the brand.
Mission Oriented
Unicorns like Tesla and InstaCart operate with a clearly defined mission. These businesses are very good at letting the world know what their purpose is.
A mission can be encapsulated in how a business helps solve a problem. This problem is often something that the target customer cares deeply about. It can be a social issue, such as climate change or clean energy; or it can reflect a personal trait, such as the desire to escape the daily grind. Whatever the mission, unicorn leaders make it central to what they do. Their mission is more than just a slogan on their website and in their advertising. Every business decision, including the design of their products or services, is guided by the company’s purpose.
Respond quickly to new market developments
Anticipate what might happen and play the “what if” game. Think about when you start your car and hit the road. You can avoid accidents with defensive driving techniques when you learn to anticipate what other drivers might do.
Unicorn leaders do the same with market conditions. They are constantly looking for signs of impending change. These changes can be temporary or permanent, and unicorns are good at adapting to new, unexpected developments. Unicorns are not afraid to quickly rethink their company strategy, as Airbnb was forced to do when it launched its ambitious expansion plans during the COVID-19 pandemic. Their teams are keen to analyze trends, consumer behavior, and economic and social developments to anticipate the impact on their business.
In other words, they’re not slow to react. Unicorns are also open to new ideas and find success through experimentation. Adaptability helps them “fight” new competitors and change the way businesses serve customers.
Don't call for investment from the early stage.
Forbes also quoted the opinion of Mr. Dileep Rao - an investment expert and advisor to many startups without raising capital - that startups should not seek investment funds too early.
Expert Dileep Rao points out that 99.9% of startups fail to raise capital. Even if they do, only 20% of businesses can succeed.
Startups that turn to venture capital too early often find themselves in a weaker position. The funds take control of the company, install their own people as CEOs, and move the company away from its original vision.
On the contrary, if you can "go it alone" in the early days, the business owner will protect control of the company as well as the profits the business brings.
Dileep Rao found that among 22 entrepreneurs with a net worth of over $1 billion, those who had not sought venture capital funds had double the returns of those who had raised capital from the start. For those who had not sought funding at all, the number increased to seven times.
VOV.VN - The number of unicorns has increased significantly amid a surge in venture capital, making 2021 a record year for private startups achieving unicorn status (over $1 billion).
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