A unicorn company is a privately held startup worth $1 billion or more. The term "unicorn startup" was invented by venture capitalist Aileen Lee in 2013. Lee chose the legendary animal to signify the statistical rarity of such successful businesses.

According to McKinsey & Company the myth around unicorns as startups with a $1 billion valuation or more may make for great storytelling, underneath them lies a set of facts that helps explain unicorn success.

This means that there are factors that make unicorns a special breed that they are (more on this later). What makes unicorn startups stand apart is not just their soaring valuations of $1 Billion in the business world.

They are fueled by a potent blend of audacity, innovation, and an unwavering belief in their game-changing ideas. They possess a remarkable ability to disrupt industries. They fearlessly embrace risks. And they conjure groundbreaking strategies that rewrite the rules of the game.

Let's venture into the world of unicorn startups. As we uncover the enigmatic qualities and elusive strategies that you can employ to achieve unicorn status for your startup.

Advantages of a unicorn startup over other startups

The limitless potential for growth and profitability of a unicorn company are two of its most alluring advantages. Their ground-breaking concepts and game-changing business strategies enthrall investors, generating sizable funding rounds that support their expansion aspirations.

With this influx of money, unicorn businesses hire the best employees, spend money on cutting-edge technology, and accelerate their growth.

Additionally, unicorn companies frequently benefit from being first to market in their respective industries. Because they launch ground-breaking goods or services. They upend established industries and carve out a distinct niche. They can gain a considerable market share, establish a solid foundation, and develop brand recognition.

Unicorn startups additionally can affect change and have tremendous influence in addition to their financial success. They challenge established norms and conventional business practices with their disruptive inventions.

For example Canva, GoCardless, and Benevolent AI among others. By breaking down barriers and changing processes, they create a wave of creativity and encourage other businesspeople to dream big.

The enormous network and resources that unicorn startups have access to are another benefit. These businesses draw alliances and collaborations with powerful individuals, investors, and industry titans because of their heightened stature.

Through this network effect, they can benefit from the knowledge and influence of established players, gaining access to insightful information, mentoring, and distribution channels.

These partnerships not only help them thrive, but they also provide a safety net, offering support and direction when things become tough.

Finally, the process of creating a unicorn startup generates incredible levels of growth on the personal and professional fronts. Founders and team members go through a whirlwind of struggles and victories that push them beyond their comfort zones and help them hone their talents.

Character is formed and priceless knowledge is cultivated via the relentless pursuit of innovation, perseverance in the face of hardship, and the capability to travel new waters. Even if a startup ultimately fails to become a unicorn, the lessons discovered along the road lay the groundwork for subsequent entrepreneurial attempts.

Attributes of a unicorn startup

Many startups start with the goal of becoming unicorns. But eventually, some of them fall out while a selected number manage to turn into unicorns. For startups to succeed and mature into full-fledged unicorns, they must concentrate on a few key areas.

These make up the attributes or characteristics of a unicorn startup. These attributes include:

#1. A unicorn Startup is always driven by growth

You need to define your company's vision and growth objectives clearly if you want to scale your business like a unicorn. Identifying prospective sales channels and using key performance indicators to keep you on the course will help you create a plan to scale.

Unicorns use tactics that enable businesses to scale at exponential rates. As a result, they are known as "exponential organizations."

Because unicorn startups are exponential organizations, they operate with an ambitious objective. That motivates the team and inspires them to think creatively to achieve it.

Because of their growth focus, unicorn companies can scale. By verifying their marketing and sales channels. Through local testing and then copying the effective techniques in other places.

#2. A unicorn startup has innovation/ Disruption at its core

Disruption is a positive thing in business, especially for aspiring unicorns. Disruption is defined as an invention in an industry that has a significant impact on how the industry or market functions.

Disruptors typically begin at the bottom of the market by offering simpler, less expensive solutions that meet the same needs as higher-end items.

Because of their affordability, these products become increasingly enticing to consumers. And the company steadily advances up the market, possibly even taking it over. Netflix is a famous example, having disrupted the video and television industries by offering low-cost streaming services.

Disruption necessitates startups to develop novel and creative solutions that deviate from the norm.

#3. They are highly tech-savvy

Growing businesses make use of available technologies and tools to help them scale. Leveraging technology, whether through cloud computing, Customer Relationship Management (CRM) systems, or business software, enables businesses to run more efficiently with fewer resources.

AI advancements for instance are now one of the most versatile technologies available to enterprises. AI may be used to automate operations, deliver personalized user experiences, and improve customer service, among other things.

DoorDash, for example, employs AI for logistics, whereas Kabbage uses AI to disrupt the banking business. And Benevolent AI uses AI to discover drugs.

In addition to employing technology, you may base your product or business around it, as the majority of unicorns do. In fact, approximately 90% of unicorns offer software services.

#4. Absolute concentration on the customers

According to Jess Desjardins, a visual capitalist at Business Insider, over 60% of unicorns have a B2C (business-to-consumer) business system. This indicates that the core of their business strategy is to offer regular consumers reasonably priced goods and services.

You must find methods to enhance the lives of a specific target group to develop things that people genuinely want. To make things simple for customers to use and comprehend, products must also include intuitive UX design.

Unicorns make a compelling case for why and how their products will be valuable to buyers. Your sales and marketing efforts will improve if your value proposition is robust.

These helpful tools can help your firm succeed as technology becomes more integrated into business operations.

Steps to Building a unicorn startup

No business owner ever wants to find a company that would eventually fail. And even though building a startup to become a unicorn isn't something you can do with a clap of a hand, it's not impossible. Below is a compilation of well-researched and trusted steps to building a unicorn startup.

Develop a Minimum Viable Product

To embark on the journey of building a unicorn startup, one pivotal step is crafting a captivating Minimum Viable Product (MVP). At its core, the MVP serves as the initial incarnation of your vision, enabling you to validate your ideas and fine-tune your approach.

Start by delving into the depths of user problems, seeking to unravel their intricacies and conceptualize ingenious solutions. By understanding the pain points and challenges faced by your target audience, you can propose a compelling solution that addresses their needs effectively.

However, it's crucial to exercise restraint and prudence during the MVP development phase. Embed only the necessary features that are indispensable for users' needs. Avoid the temptation to overload your MVP with excessive functionalities that may delay the launch or confuse users.

Test your MVP with users and solicit their valuable feedback. This feedback becomes a guiding light, illuminating the path toward improvement.

In parallel, embark on a thorough exploration of the costs involved in constructing your product. Calculate both tangible and intangible expenditures, including development, marketing, and operational costs.

This comprehensive understanding allows you to make informed decisions, allocate resources effectively, and maintain financial sustainability.

Armed with a comprehensive understanding of your target market, a refined MVP based on user feedback, and a clear picture of the costs involved, you can forge ahead, marching resolutely toward the ultimate culmination.

The journey from MVP to unicorn startup is an arduous but rewarding one, requiring dedication, adaptability, and unwavering determination.

Develop a strong team by hiring the right people

A strong team is generally one of the pillars of a successful startup and the case is not different with a unicorn startup. The employees are the core assets of any company.

Hence, finding people who share the company's values and vision is just as important as recruiting people with the appropriate skill sets. This is imperative because collaboration is easier when everyone is on the same page about the direction the company is taking and can work together to achieve similar objectives.

This rule applies to choosing people for the board. Guild Education's co-founder and CEO, Rachel Carlson, emphasizes the value of a board in identifying business risks and potential development areas in her statement:

“A shared value system and a level of trust are really important because it’s easy to get sideways,”

Effective decision-making is made possible when a board is built on a solid basis of shared values and trust. Which also creates an atmosphere where opposing viewpoints may be constructively discussed.

Consider potential applicants' qualifications and experience while building a team. Also, consider how well they fit with the company's culture and values. Your business can reach its full potential and achieve the desired position of a unicorn startup by building a strong team that is committed to a similar goal.

‍Solve a problem

At this point, it's appropriate that we look at one of the Unicorn startups in the world today that truly figured out a major problem and solved it – Canva.

Canva was founded with the straightforward goal of democratizing design so that anyone may use it regardless of prior experience in the field.

They observed a common issue in the real world: making designs that are both beautiful and professional-looking may be a genuine pain. It's true that not everyone is proficient in using sophisticated software or has the necessary skills.

Now, the creative minds at Canva brought that solution. So that today, anyone and everyone can now develop eye-catching graphics for social media, presentations, posters, and even t-shirts.  

With a ton of themes, graphics, and customization choices, Canva made sure their platform was incredibly user-friendly.

Why did this help Canva scale like crazy while also solving a real-world problem? Well, consider it. Before Canva, learning complex design tools took hours. Or you had to pay a high-priced graphic designer to create something spectacular. Who has the time or resources for that always?

All of that has changed. Anyone with an internet connection and a dash of creativity can now become an expert designer. It sped up, was reasonably priced, and was enjoyable. People adored it, and word of it quickly spread like wildfire.

Canva attracted a sizable user base of people who were happy to have access to an easy and affordable design solution, including individuals, small enterprises, and even large corporations.

Products that satisfy consumer demands or wants will inevitably attract users. Because of this, it's crucial to decide on a problem that your company will try to fix right away. This was how Canva achieved unicorn status in 2020.

You may be wondering where to get ideas from or how to discover people's pain points. Personal experiences or widespread problems might serve as sources of inspiration for new problems.

Zoom for instance was founded based on personal experience. Once the initial issue has been resolved, keep your product developing by incorporating improvements that customers have requested.

Secure funding by winning investors

According to Lucy Liu, the visionary CEO of Airwallex, a groundbreaking cross-border payment platform that achieved unicorn status in 2019, unwavering self-assurance in both yourself and your venture is the ultimate key to triumph.

Liu adds, "Investments are not mere loans or donations; they are fruitful business relationships."

You must skillfully convince venture capitalists that your company holds substantial worth and is worthy of their support.

To achieve this, entrepreneurs must adopt the perspective of an investor themselves. Thinking critically and analytically. Evaluating the potential return on investment and the long-term viability of the venture.

"To appeal to investors, you have to think like an investor," asserts Liu.

By comprehending their perspective, entrepreneurs can tailor their pitch to align with investor expectations. Addressing concerns before they are raised and presenting a compelling case for financial support.

This approach empowers entrepreneurs to showcase their businesses in a manner that resonates with investors and establishes a solid foundation of trust and confidence.

As the CEO of a unicorn startup, Liu's advice holds significant weight and offers valuable insights into the art of securing investment.

Manage cost-effectively

To become a unicorn, you might need to adopt the mindset of a camel - an animal that stands for adaptation, tenacity, and persistence due to its capacity to endure in the desert.

You need this mindset every time as a founder but you may need it most in times of business uncertainty. Such as during the pandemic. Having this mindset is very helpful since it enables you to get through the crisis and maintain growth despite unforeseen circumstances.

Achieving a long-term growth curve calls for sound financial planning and efficient cost management across the firm’s life cycle. By eliminating wasteful expenses, you can lower your burn rate and put more money into the things that matter most, like your staff and your product.

According to Matt Glotzbach, CEO of Quizlet an online study platform that gained Unicorn status during the pandemic

"You want to have a business that can survive the ups and the downs."

Glotzbatch opined that resiliency has two components: the unit economics of the business for user acquisition and the amount of staff invested in front of the revenue curve to fuel that growth. Here is where we deliberate and set goals for the investments that we make.

Glotzbach also said, "If we're right, we grow significantly, and if we're wrong, we won't suffer significantly.

Strive to build a Strong Relationship

Making connections is essential to running a successful startup and eventually scaling to a unicorn. You can more quickly locate ideal business partners, possible customers, or potential investors if you have a network of contacts.

For startups especially, building good relationships with seasoned business executives can be extremely helpful since they can offer insightful business advice and impart practical business skills that would otherwise need trial and error.

Babatope Awotona CEO and founder of Calendly a Calendly software company for scheduling appointments that raised a valuation of $3 billion in early 2021 once advised:

“Aim to strike a balance between peers that are currently at the same stage and those that are a few years ahead of where you’d like to be.”

Common Challenges Encountered in Running a unicorn startup

Running a unicorn startup, despite its allure and potential for exponential growth, is not without its fair share of challenges.

One of the most prevalent hurdles faced by such companies is the relentless competition within the industry. As a unicorn, the spotlight is often fixed on your innovative products or services. This attracts formidable competitors eager to replicate your success.

This fierce rivalry necessitates continuous innovation and strategic differentiation to maintain a competitive edge.

Furthermore, the overvaluation that frequently accompanies unicorn status can pose a significant challenge. While this may bring initial excitement and funding opportunities, it can also create unrealistic expectations and hinder sustainable growth.

The pressure to deliver extraordinary results can become overwhelming.  Leading to a lack of focus on core business strategies and long-term sustainability.

Another obstacle faced by unicorn startups is the increased cost of customer acquisition. As the company scales rapidly, acquiring new customers becomes costlier due to the need for extensive marketing efforts and expansion into new markets.

This heightened cost can strain financial resources and impact profitability, necessitating careful budgeting and resource allocation to mitigate the risk.

Speaking of financial resources, a lack thereof is yet another challenge that can impede the growth trajectory of a unicorn startup. Despite the high valuation, the company may struggle to convert that perceived worth into tangible financial assets.

Securing additional funding or attracting strategic investors becomes crucial in overcoming this hurdle.

An incompetent team can significantly hinder the success of a unicorn startup. Scaling at an accelerated pace requires a highly skilled and adaptable workforce, capable of navigating complex challenges and executing ambitious plans.

Hiring, training, and retaining top talent becomes a priority, as a single weak link can disrupt the entire organizational structure.

Additionally, the absence of supportive infrastructure can pose significant challenges. Rapid growth often outpaces the capacity of existing systems and processes, resulting in operational inefficiencies and bottlenecks.

Investing in scalable technologies and streamlining internal operations become imperative to sustain the momentum and accommodate future expansion.

Lastly, the absence of strong relationships can be a stumbling block for unicorn startups. Building strategic alliances, partnerships, and a robust network of industry connections is crucial for accessing resources, expertise, and market opportunities.

Without strong relationships, the company may find it challenging to navigate regulatory landscapes, access new markets, and forge collaborations that can drive growth.

Final thoughts

Unicorn startups have distinct advantages over other startups, including the potential for explosive growth and market disruption. The attributes that set unicorn startups apart include a focus on growth, innovation and disruption, efficiency, and customer at the center among others.

The steps involved in building a unicorn startup involve developing an MVP, assembling a talented team, securing funding, and building relationships among others.

Along the way, entrepreneurs are likely to encounter common challenges that test their resolve such as fierce competition, over-evaluation, and lack of financial assets.

However, for those who embrace these challenges as opportunities for growth, the rewards can be extraordinary. Building a unicorn startup is not an easy feat, but with unwavering determination and a commitment to excellence, entrepreneurs have the potential to create a truly transformative venture.

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