the most expensive startups in the world

The unicorn is a mythical creature usually represented as a horse with a single horn. According to legends, a unicorn is an extremely rare and powerful animal, it symbolizes purity, strength, chastity and luck. But what does business have to do with this?

Unicorn Hunting Investors

This term first appeared in the business world in 2013 and first appeared in the item by American venture capitalist Aileen Lee, where she compared companies that were rapidly increasing in value in a short period of time to mythical creatures not found in real life.

Lee complained about the difficult life of venture capitalists, the difficulty of choosing the exact startup that will blow up the market and bring investors a multiple increase in invested funds. At that time, she had only managed to find thirty-nine unicorns. Facebook, LinkedIn, Twitter, Palantir, Airbnb were among them.

According to the estimates of Aileen LEE, only 0.7% of emerging startups are doing business so well that their value reaches one billion dollars. This mark is the entrance ticket to the Unicorn Club. Those who have invested their capital in such startups justify all the rest of their less successful investments and therefore are extremely cautious when scanning the market for a lucky startup.

Calculate the unicorn population

Since the term was introduced, there have been some changes, and unicorn startups are no longer a rarity. The number of the world’s most expensive startups that cost more than $ 1 billion has almost increased tenfold.

According to research by CBI, in January 2019, there were already 310 of these companies. In the ranking of Crunchbase – 293 startups. Wikipedia knows about 277 unicorns. The difference in numbers presented in such ratings is quite understandable: calculating the market value of a startup is not easy, as modern understanding of the parameters of a business claiming the honorary title of unicorn allows for different interpretations and is often associated with subjective assessments. .

Thus, it is now believed that the unicorn is a private company, a startup that has been around for more than a decade, the cost of which has reached the billion dollars.

There are several subjective points in this definition that can affect the assessment. A private company is a company that has not gone public, has not been the subject of an IPO, investments are made behind closed doors, and shares are equally divided. The strict regulations and restrictions that state-owned companies are forced to follow mostly don’t apply to unicorns.

Since unicorns are rapidly developing startups, they may not have stable and consistent metrics and responsibilities to gauge their capitalization and justify the cost in the usual economic metrics. Therefore, the cost of unicorns is often only a subjective assessment by their owners or investors, supported by rough forecasts and calculations.

Aileen Lee wrote that the biggest super unicorns signify the advent of new technology, on which they base their business. With the help of advanced research in areas insufficiently explored by other players, they become able to capture markets. A startup, in fact, is any new private company that was created to test a business idea, test a market sector, implement a technology. The Unicorn is a startup that has successfully implemented these plans and has attracted a large number of users and investors.

Unicorn Strategy – an expansion and very rapid seizure of the largest possible slice of the pie, a constant and intensive increase in customers, growth in economic indicators, the attraction of new investments.

Unicorn tactics – protection of know-how, making it possible to overtake competitors; price dumping to increase market share; the expansion of media coverage and the formation of the company’s image to underline the revolution it is bringing to old and established neighborhoods; continuous improvement of management.

Unicorn goal – make an IPO and go from a startup to a stable and prosperous company. It is also possible to sell the business to a bigger player (it sometimes seems that the latter is more often true).

Economic bubble of unicorns

The Unicorn Economy is the global hype, which accompanies the emergence of every new Club member “from a billion dollars and up”; the hunt for venture capitalists for startups that could potentially take off; entrepreneurs who dream of starting a unicorn business and entering the Elite Club. But not everyone actions the universal cult of this new economic phenomenon.

Sometimes we talk about bubble unicorn economy, very similar to the bursting of the dot-com era bubble. On the one hand, any innovation meets a similar opinion, and often the opponents only contribute to moving forward in a sustainable manner, creating feedback. On the other hand, if the criticism seems reasonable, then society must be aware of the possible danger.

The main claim of the fashionable fascination of unicorn startups is that they are unreasonably overrated (up to 50%). When listing stocks, many unicorns become much cheaper. This means that the investor valuation and the market valuation do not match. The former usually significantly overestimate the cost.

The continuous pursuit of capital increase, number of clients, market share, new investments has the effect of cycling (you pedal – you go, you stop – you are on the ground) when any delay or slowdown has devastating consequences. Startup owners don’t have time to think, catch their breath and roam the battlefield – they need to move, grow, develop, meet investor expectations and maintain a media image. .

The desire to move is driven by investors who want to bring a new unicorn into the world quickly and pump companies with unverified business models and uncertain future capital. Giants may fall and lose stability if they do not have a permanent source of investment.

FinTech Unicorns

We offer several examples of unicorns, whose main activities are financial technologies, the so-called most expensive startups in the FinTech market. To compile this small list of FinTech companies, we have selected representatives from countries with the most developed startup culture, therefore, the largest number of unicorns with the highest value are concentrated there.

Revolution

The company was founded in 2015 by Vlad Yatsenko and Nikolai Storonski in London. The line of business is considered one of the most popular in FinTech – a money transfer and exchange system.

The main feature of the product offered by Revolut is that the commissions and rates are at interbank level, the full range of services is provided online. Over 150 currencies and 24 cryptocurrencies are available to the company’s three million customers. The reason the startup hit the Unicorns Club is the news that the company’s value will increase to $ 1.7 billion after the next round of investment.

Bandaged

This company was founded in 2011 by Patrick and John Kolison. Stripe’s head office is located in San Francisco. Business: an online payment system focused on working with businesses and organizations. The ecommerce market is growing and Stripe has a lot of work to do and good potential ahead. The value of the company is $ 22.5 billion.

PayTM

The company was established in India in 2010, its founder is Vijay Shekhar Sharma. The PayTM business line is a payment system aimed at both organizations and individuals. The current cost of the business is $ 10 billion.

Nubank

A startup from Brazilian Sao Paulo was founded in 2013. The founders are David Vélez, Cristina Junqueira and Ed Wible. NuBank is an online bank offering its customers an international bank card served free of charge. The cost of the business is $ 1 billion.

Lufax

The Chinese company was founded in 2011 and started its work as an online lending platform. Later, Lufax’s profile changed and it is now a marketplace for financial assets. The value of the company after the last round of investments in December 2018 was $ 3 billion.

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