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Unicorns represent privately held startup companies whose value exceeds $1 billion.
The term itself was coined by venture capitalist Aileen Lee back in 2013, with Unicorns since assuming the gold standard of companies.
At the time of writing, approximately 465 unicorns exist, with standouts becoming ubiquitous in everyday life. This includes Ant Financial, DiDi, Airbnb, Stripe, Lyft, and Palantir Technologies, among many others.
While all wildly successful, many unicorns are themselves the products of company buyouts, given its existing designation.
For example, many of these companies’ valuation has swelled due to buyouts from large public companies.
This has proven to be a recursive trend in with major industry players such as Apple, Facebook, and Google focusing on acquisitions rather than capital expenditures and development of internal investment projects.
This strategy has played out over the past few years with large companies opting to instead augment their own technology portfolio via buyouts, rather than in-house developments.
Unicorns Benefitting from New Technology
Of note, many unicorns have succeeded without launching their own Initial Product Offering (IPOs), which run multiple risks.
Traditionally, many large brands and companies have relied on such stock offerings as a means to bolster valuation and raise money.
However, IPOs can result in the evaluation of a company if the public market thinks a company is worth less than its investor base.
Unicorns also have benefitted from other factors, including the availability of new technology.
Social media in this sense has been an integral component to unicorns’ success, helping achieve economies of scale.
Furthermore, the advent of Peer-to-Peer (P2P) technology, platforms, and cloud computing has also played a key role in the growth of unicorns.