Key takeaways

  • Unicorns are seen as the ultimate in startup success, earning the (becoming less) rare billion dollar valuation.
  • 2018 is shaping up to be a bumper year for unicorns, more than previous years if trends continue.
  • The unicorn status may not be the best goal for startups, as it’s one built on a lot of ‘mythical’ statistics, but there’s still value in emulating their trajectory.

The hype surrounding unicorns doesn’t seem to abate.

Whether they’re flocking in record numbers or putting strain on VC coffers, the news cycle eagerly awaits the next mythical emergence.

But what is fact in the fiction? Should startups be aspiring to such status? Can business compete with such massive injections of capital? Or is the myth to good to be true…

What’s in
a horn?

So-called because of the rarity of such an occurrence, a unicorn is a privately owned company valued at or over US$1billion. Despite their historical scarcity, their ranks are growing, and the mythos surrounding their status is often part of the ultimate goal of ambitious startups.

Depending on who you ask, there are currently around 100-200 active unicorns in the world.1,2 When unicorns that have lost their horns (gone public or been acquired) are included, that list grows to around 350.3 The ambiguity, much like spotting a ‘real’ unicorn, is due to their opacity. As private companies, they are not required to report on their value, and it is often only through VC funding rounds that their status is made public.

Decacorns, valued at over $US10 billion are a much more exclusive club, and where more well known ‘corns, such as Uber, Airbnb, SpaceX and Pinterest reside. As for hectocorns, unicorns valued at over US$1 billion, Ant Financial, is currently the only one.

State of unicorns
in 2018

According to Crunchbase, 2018 is shaping up to be a bumper year for unicorns. While 2017 brought 82 new companies into the club, 2018 so far has delivered 65.4 And they’re being bolstered by a phenomenal amount of cash. Those 65 are the result of venture-capital rounds totalling US$73 billion – very near to edging out 2017’s US$86 billion. The rapid growth comes as the capital available expands.

Of the newcomers this year, China and the US are neck and neck when it comes to origin, with 26 from each country, followed a long way back by India’s three, tallying with China’s overall 149 and the US’s 146. And there is no one industry or sector where unicorns are more likely to reside, they remain ambivalent when it comes to their home stomping ground. This year’s batch is no exception.


In China, unicorns are emerging from many different sectors, following the global trend. PwC’s Unicorn CEO Survey 2018, released in June this year, talked with CEOs of 100 Chinese unicorn companies. Of all of them, over 50% had revenue growth of over 100% in the last year.5 Following changes by the Hong Kong Stock Exchange and The China Securities Regulatory Commission, unicorns that had previously flown the coop for better potential IPO listing are being lured back to China.

So far, the rise of Chinese unicorns is being driven largely by capital.

Yuqing Guo, PwC China Centre of Excellence Partner, explains that the abundance of capital is allowing “local unicorn companies [to] focus more on long-term strategies such as talent and corporate culture.” This will be key to survival for Chinese unicorns, the majority of whom have an average age of employee is between 25 and 30.6 Rather than cost, or efficiency, unicorn executives in China believe a shortage in talent will be the most important factor in their sustainable corporate development, particularly in areas such as technology development, senior management and leadership, and marketing.

Are unicorns

When it comes to companies whose goal is the fabled unicorn (or rather, its funding), there is reason to be cautious. For one thing, unicorns may not be real. Shocking.

A study conducted by Stanford Graduate School of Business and UBC’s Sauder School of Business, nearly half of all unicorns are not worth their billion dollar price tag – by as much as 50%.7 While pricing a startup is a challenge at the best of times, particularly given their fast-growing (and often unprofitable) nature, the researchers found unicorn status was further complicated by the conditions and preferences associated with with their different share classes.

Once a unicorn does list publicly, its actual value can be starkly different that expected. For example, Snapchat founder, Snap Inc, was valued at $US24 billion and after its initial listing, rose to $US30 billion at around US$27 a share, but since then its share price has dropped to more than half that.Blue Apron, a meal kit service initially valued at around US$2 billion, suffered a similar fate.9

After listing, unicorns must adjust to a very different lifestyle, where they live under intense scrutiny and reporting requirements, and a need to become profitable; self-sustaining on their own revenue. Combined with abundant capital,  there’s a growing trend of private companies staying private.

Myth or

With the large amounts of money feeding unicorns, it’s understandable why startups might aspire to their lofty heights. But unicorn status does not equal success, and sometimes leads to a unicorpse.10 With only 1% of startups becoming unicorns (and many startups not surviving at all), perhaps the myth needs to be taken instead as a warning.11

Kate Eriksson, PwC Australia’s Head of Innovation acknowledges that while “people pursue startups for a range of reasons, if the market assessment of you at a future point of time is the goal, it’s hard to imagine it will be enough to motivate your daily progress.”

Instead, Eriksson suggests, startups should ignore the hype, which is often not sustainable, and focus on making a difference. “Imagine how the world might be better for what you’re working on – and track a path to it.”

Marina Paronetto, Senior Innovation Manager, concurs, urging startups to put vanity metrics and labels aside and instead “look for investors interested in sustainable metrics that will provide a holistic return on investment.”

The pointy end
of the conversation

Whether your goal as a business is to achieve astronomical growth or to change the world, unicorns are something to watch out for. While they may just be the more famous horses in the race, often their success can point to trends beyond money.

A glance at unicorn leaderboards shows companies who, in many cases, have taken risks on new technology, new business models and changing consumer desires. There’s something to that success that goes beyond luck that all startups should tap into.

Perhaps that is the thing with unicorns. Even if they’re not real, the idea of them is fascinating. In an uncertain and changing landscape, that little bit of magical inspiration can go a long way, even to us regular horses.