What is a Unicorn in the startup world?

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Note: This is a guest post written by Madeline Statham

As our world becomes more internet-oriented and digital, many trends change drastically. This digitalization and “internet pandemic” has changed our lifestyles from top to bottom. Because of this, a significant trend that we see now is that many people are inclined to begin their own businesses. This does not align with the previous trend, where people usually focused on getting a high-paying job.

When it comes to starting a new company or a business, people usually focus on a startup. In simple words, a startup can be defined as a company in its initial stages and focusing only on one product. Usually, one or more entrepreneurs participate in starting a startup business with a high amount of capital investment but with little expectation of generating revenue. These entrepreneurs believe that their product has a demand in the market, and by employing the correct strategies, they can make their idea work.

Which Sectors Provide Optimum Opportunities to begin a Startup Business?

Not every industry is worthy enough to be ventured to start a business. Careful calculations and precise rationale have to be put in before planning to begin a startup in a particular industrial sector. If you do not understand this, you might face a bankruptcy challenge very soon!

With that being said, these are some of the tried and tested industrial sectors that are the most suitable for beginning a startup business. These sectors are:

  1. Software

The software field is extensively versatile. It offers its services in all fields of life. Post covid-19 pandemic, the software sector has seen a surge in providing e-commerce facilities. This makes the software field an extremely lucrative field to start a business. Regarding software, you must note here that every new business requires software that is tailored according to its own needs. These needs can be fulfilled by a custom software development company for startup like Bekey.io that can understand the requirements and provide the business with its custom software product.

  1. Healthcare

Appropriate healthcare services are not available everywhere in the world. And by providing people with such facilities as hospitals, pharmacies, and clinics, one can generate profits and provide service to humanity. Also, telehealth has seen an upsurge along with genetics and biomedical research.

  1. Delivery Services and Logistics

Like other fields, the pandemic has greatly affected the fields of delivery services and logistics. Now, this field has been greatly modified, and businesses look for those delivery service providers and logistical facilities that can ensure an uninterrupted supply chain of their products. Today, only those logistics and delivery services providers are [referred that can provide digitalized and automated fleet monitoring, warehouse and inventory management, dealer management, etc.

  1. Artificial Intelligence (AI)

AI has been revolutionizing various fields across the globe. Some particular fields in this regard include the healthcare industry, engineering and construction, and gaming. Again, the progress and success of AI depend on the quality software that forms its backbone.

A commonality among these is that software or related startups will always be on top of the board. This shows the importance of a software company in today’s era and age. Of course, software companies help industries a lot, especially by cutting down their operational costs. And this is why almost all the industries today have completely automated themselves or are preparing to adapt to a digitalized and automated environment. This can be a golden opportunity for people who aspire to launch their own startup business.

What is a unicorn startup?

As we can see, starting a software startup can be incredibly lucrative, and unicorns are prime examples of this. According to https://www.investopedia.com/terms/u/unicorn.asp, a unicorn is a private startup company with a value of more than $1 billion. As of 2022, more than 1000 unicorns are working around the globe. Creating this much fortune is entirely possible if a software company innovates new ideas and presents them to its customers perfectly.

Understanding Unicorns

Achieving a 1 billion dollar mark is not a walk in the park. It takes a lot of hard work, dedication, and teamwork. But most importantly, the unicorn status cannot be achieved by having an innovative idea. A workable and solid business plan and goal-oriented vision are also necessary to persuade investors and capitalists to chip in their money.

How can Unicorns Proceed?

For a unicorn company, there are several options it can opt for if it wants to continue its growth. These are:

Staying Private: Company owners who want to retain the power of their unicorn companies can remain private. But choosing this option can put limitations on their growth. Also, with the lack of funding, they will have to find ways to provide their funders with sufficient ROIs (Return on Investments).

Becoming Public: if a unicorn chooses to go public, it can generate more capital with an Initial Public Offering (IPO). However, the owners of many unicorn companies think that going public will lead them to dilute their company leadership.

What Determines Value of a Unicorn?

A unicorn’s value is determined by its potential to develop. This contrasts with other companies whose value is determined by their financial performance. Hence, this calls for an immense trust of capitalists and investors so that they can lend loans or give enough funding to a unicorn if they are confident that it will see immense growth in the future.

Unicorns and Venture Investing

Investing without Analyzing Risks

When it comes to ventures to invest in a unicorn company, we witness different types of behaviours. For example, some investors fear that they will miss out on the opportunity to invest in such a lucrative opportunity, so they drop their traditional risk analysis and proceed to invest in the company.

Investment Driven By technology-Dependent Factors.

Additionally, other investors think that the future will depend completely on digital technology, and that’s why they prefer to inject their money into any unicorn that provides digital services.

The Role of Central Banks and Global Economics

Both factors play a crucial role in modifying investors’ behaviour concerning the funding of unicorn companies. With central banks devising the monetary policies for most countries and a dynamic global economy, many venture capitalists prefer to invest in unicorns because they consider them the most lucrative opportunities. And this also holds out to be true, as software and IT-related companies are least likely to be affected, even in the worst economic situations.

Examples of Unicorns

Unicorn companies are becoming more and more common in the global economic scenario. Until March of 2022, it was estimated that there were approximately 1000 unicorns across the world with a combined value of $3516 billion.

Examples of Unicorns Based in the USA

The USA boasts of being the hub of world-renowned unicorn companies, such as:

  • Space X
  • Uber
  • Airbnb, and
  • Palantir Technologies

Examples of Unicorns Based in China

Some of the popular unicorns based in China are:

  • Lu.com
  • Didi Chuxing
  • China Internet Plus Holding, and
  • Xiaomi

Other Popular Unicorns in the World

Apart from those mentioned above, you can also learn about some of the best and most renowned unicorns worldwide. These are:

Nuro

Two esteemed engineers from Waymo founded this autonomous delivery vehicle delivery company. Nuro was founded in 2016 and received funding of $940 million from SoftBank Group, after which it became a unicorn with a value of $2.7 billion. Like every unicorn, Nuro came forward with a unique idea focused on local delivery vehicles with zero emissions. It developed prototypes of vehicles that were able to deliver medical supplies in California and groceries for Fry’s Foods. As of March 2022, Nuro managed to generate $8.6 billion.

Instacart

Another famous unicorn company was Instacart, founded in 2012. The company claims over 500,000 different items belonging to big names, such as Costco, Harris, Teeter, Safeway, and Whole Foods. The company had around $39 billion in its funding pool, bringing it down to $24 billion to combat the economic insecurity after the covid-19 pandemic.

What Is a Unicorn in Business?

As mentioned above, a startup business with a valuation of $1 billion is called a unicorn. They are so called because of their rarity in achieving such success in very little time. A common confusion among people is that every company with a valuation of $1 billion is considered a unicorn. However, this is not true, as unicorns are only those companies that are privately held. Consider Amazon, for example. It went public in May 1997, and although its valuation is well above the $1 billion mark, it is not considered a unicorn as it is a public company

Unicorns offer a perfect opportunity to business geeks and enthusiasts always looking for the most daring places to invest. Investing in a unicorn is almost always a win-win situation since such companies always have a unique idea that quickly attains attention worldwide. However, taking the necessary precautions before investing in such companies is still best.

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