What is a unicorn company?

In finance, a privately-held start-up company is considered a “unicorn” if it’s valued at over $1 billion. Investors often go hunting for unicorns to benefit from their success.

The investing term was first used by venture capitalist Aileen Lee in a 2013 TechCrunch article, where it was defined as meaning “something extremely rare, and magical”. Achieving billion-dollar success with a young new company is considered to be of similar rarity among investors as coming across a magical horned horse in the woods (side note - one collective noun for a group of mythological unicorns is a “blessing” of unicorns).

The term has since taken on a life of its own, with start-ups valued at $10 billion becoming “decacorns” and those worth over $100 billion becoming “hectocorns”.

Financial unicorns are becoming less rare over time, with CB Insights listing over 1100 around the world as of July 2022. In Australia, our unicorns include: 

• Canva
• Airwallex
• Immutable
• SafetyCulture
• Culture Amp
• LinkTree
• GO1
• Pet Circle

It’s not always possible to invest in unicorn companies, due to these companies being privately held. Some venture capitalists look for companies and start-ups with the potential to become unicorns and attempt to invest “at the ground floor”. Other investors may need to wait for a future IPO to benefit from a unicorn’s success.  

It’s also not always easy to identify which start-up companies are likely to evolve into unicorns. Several notable unicorns have been tech start-ups that are the first to introduce innovative new ideas that disrupt their industries. Of course, there is also the risk that a wannabe unicorn’s value could be over-hyped and may not achieve its potential.