Preamble:
In business, a unicorn startup is a private company that is placed at a value of over US$1 billion. Aileen Lee, a Venture capitalist of 2013, popularised this term, by choosing the mythical creature to represent how rare such a successful venture can be, statistically.
Unicorn companies are not on the stock markets and are the ultimate dream of every technology startup. Unicorn investors also are typically private investors or venture capitalists, which implies they are out of reach for retail investors because of their magnitude.
Many unicorns work their way to becoming public, even if it isn’t required. It is very rare to achieve Unicorn status. Companies must have an innovative idea, a clear vision for growth, and a sound business plan to become unicorns, as well as a workable way to reach out to venture capitalists and private investors. Explore 4 Insightful Ways to Attract Angel Investors as a Startup in Nigeria.
IMPORTANT TAKEAWAYS
- What is a unicorn startup? A unicorn startup is a private company that is placed at a value of over US$1 billion.
- How many unicorn companies are present? More than 1,000 unicorn companies are around the world as of March 2022. Generally, they are at a value of about $3,516 billion.
- Chippers Cash, Andela, Flutterwave and Interswitch are examples of Unicorn companies in Nigeria.
- Nuro and Instacart are other examples of Unicorn companies in the world.
- Most unicorn startups are privately owned.
Origin of Unicorn
Aileen Lee, the founder of Cowboy Ventures, a seed-stage startup capital fund based in Palo Alto, coined the name UNICORN STARTUP. She first mentioned them in her article, “Welcome to the Unicorn Club: Learning from Billion-Dollar Startups”, in which she examined software startups created in the 2000s and projected that just 0.07 percent of them would ever attain a $1 billion value. According to Lee, startups that have attained this milestone are as rare as Fabled Unicorns.
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The first unicorns, according to Lee, were created in the 1990s. She pointed out that Alphabet (GOOG)- then Google- was the group’s unambiguous super unicorn, with a value exceeding $100 billion.
In the 2000s, many unicorns were born, but Meta (META), previously Facebook, was the decade’s single Super-unicorn. Airbnb, Epic Games, a video game developer, and Finance companies (fintech) Robinhood and SoFi are among the more well-known unicorns established in the United States.
Read- Top 14 Startups in Nigeria that You Should Know About in 2022
How to Become a Unicorn Startup
Unicorn startups are highly respected in the world of business, so it’s no surprise if you want to become one.
Although not impossible, becoming a unicorn can prove to be difficult. Records state that a business only has 0.00006% of getting to the unicorn status, and it takes an average of seven years for incipient startups to expand into unicorns.
Hard as it may seem, some startups rise to that status despite the unfavourable odds.
Below are some common characteristics and growth tips successful unicorns exhibited.
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5 Characteristics of a Unicorn Startup
| Characteristics | Explanations |
| Unicorns cause disruption: | Disruption is a positive thing in business, especially for aspiring unicorns. Disruption is a term used to describe innovation in an industry that has a significant impact on how the industry functions. Disruptors typically begin at the low end of the market, offering simpler, less expensive solutions that solve the same problems as high-end items. Because of how affordable they are, these products become increasingly enticing to consumers, and the company steadily advances up the market, possibly taking it over. Netflix, for example, has wreaked havoc on the video and television industries by offering low-cost streaming services. |
| Unicorns show technology expertise: | Growing businesses take advantage of existing technologies and tools to help them scale. Leveraging technology, whether through cloud computing, Customer Relationship Management (CRM) systems, or business software, allows businesses to operate more efficiently with fewer resources. AI advancements have made AI one of the most versatile technologies enterprises can take advantage of. Artificial Intelligence may be used to automate operations, improve customer service, and personalise user experience among other things. In addition to employing technology, you may base your product or business on it, as most unicorns do. Roughly 90% of unicorns are software companies.Take Kabbage as an example, it is disrupting the banking business with AI. |
| Unicorns are extremely productive: | The concept of MVPs is based on the Lean Startup business model, in which firms (startups) can improve efficiency by repeatedly testing and updating their MVPs based on user feedback. MVPs cost more to build because they only have the ‘must-have features’. This allows you to pivot without sacrificing a fully finished product. |
| Unicorns are Customer-focused: | A B2C (business-to-consumer) business system is used by over 60% of unicorns, which means their business strategy concentrates around offering inexpensive products and services to everyday people. You must identify ways to make the lives of a specific target better, to build items that people genuinely want. In addition, your products must have an intuitive UX design that is simple to use and understand by users. |
| Unicorns are privately owned: | Most unicorns are privatised, which increases their value when a larger corporation invests in them. |
6 Growth Tips from Recent Unicorns
Growth isn’t something that happens overnight, it requires patience, finance, and skill.
To obtain the UNICORN STATUS, even the fastest-growing firms require multiple rounds of funding.
A definite method to become a unicorn is to learn from recent unicorn startups.
Here are some growth tips every unicorn startup followed.
- For a successful startup, you will need a team of strong members who will drive growth. Hire people that share the same values as you and have the skill sets you need. This applies to team members as well as board members.
- Ensure that you solve a problem. Having a solution to people’s problems will naturally gain users. This will ensure that you have an audience that cares about your company.
- Know your onions! The key to success is having confidence in yourself and your business. Lucy Liu, CEO of Airwallex, said that, when it comes to fundraising, you need to demonstrate to investors that you know your business and your competitors inside out, otherwise they won’t trust you with their money.
- To become a unicorn you must persevere, be resilient, and have the ability to adapt to every situation you find yourself in. This mindset is helpful during times of business uncertainty, for example, during the 2020 pandemic, as it allows you to scale through crises and sustain growth under unpredictable conditions.
- Building relationships is a very important part of a successful business. Having a good network of connections allows you to find business partners, prospective clients or potential investors. Having a strong rapport with successful and established business leaders can be beneficial to newer companies.
- Although ambition ensures growth, building and having a strong foundation guarantees sustainable growth. If you go too fast, you could end up crashing down real fast.
Read- What Owning a Business has Done for Me and/ What it can do for You
List of Unicorn Startups in Nigeria
- Chippers cash (Over $2 billion)
- Opay (Over $2 billion)
- Andela ($1.5 billion)
- Flutterwave ($1 billion)
- Interswitch ($1 billion)
- Jumia ($1 billion)
Conclusion
Unicorn startups exist in Nigeria and are obviously striving to maintain a strong existing foundation. Moreso, there is no exact manual to becoming a unicorn startup, but following the footsteps of existing unicorns can make a great good difference in your business. Read- Scientific Grant Writing Tips for Startups – Key Mistakes and How to Avoid Them.
