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How To Become A Unicorn Startup

Privately held startups valued at $1 billion, or roughly 7,500 crores in Indian rupees, are known as unicorn start-ups.

Compared to listed firms whose market capitalization is known, the valuation of startups is more challenging. You can compare them to other listed firms to see whether they are undervalued or overvalued using their price-earnings ratio, price-to-book value ratio, and other metrics. Profits allow for an analysis of each of these aspects.

Start-ups typically don’t make any money. Therefore, unicorn businesses are start-ups that venture capitalists and other investors want to invest in. These assessments aren’t strictly based on the company’s actual financial performance; rather, they are based on the growth potential and anticipated development of the company.

The phrase was first used by renowned venture capitalist Aileen Lee, who used the mythological creature to symbolize the statistical rarity of successful startup businesses. Since then, while the number of unicorns has increased, the most basic definition of a startup has remained the same. Within the worldwide startup market, the term “unicorn” has now gained popularity. When a startup becomes a unicorn, it demonstrates how attractive investors find the company’s value proposition and business plan. The unicorn contributes to the organization’s growth in terms of visibility and operational expenditure, which frequently directly results in more commercial prospects.

Each unicorn has a unique history, and becoming one is not an easy process. All unicorn businesses share a set of characteristics that define them as unicorn startups.

Innovative breakthroughs: The unicorn businesses have caused a disruption in the industry to which they belong. 
Demand Creation: Unicorn start-ups frequently carve out a niche for themselves where a more established sector has long operated. Using Uber or Paytm as examples, you can see how they both entered the market with creative solutions and generated demand by educating consumers about alternative, more effective ways to complete tasks.
Unique and leading innovations: Unicorn businesses are typically the pioneers in their respective fields. They alter people’s behaviors and gradually become necessary to themselves. They are also renowned for their constant innovation and ability to keep one step ahead of potential rivals.
Modern technology: The business models of the majority of unicorn companies are more technologically advanced. Eighty-seven percent of unicorn products are software, seven percent are hardware, and the other six percent are based on goods and services.
Consumer-oriented startups: Startups that prioritize serving customers have as their major objective to simplify, make things simple for customers, and become a part of their daily lives. Particularly, almost 62% of unicorn startups are B2C businesses. Maintaining the affordability of their goods and services is another essential component.

Private ownership: Nowadays, many well-known unicorn startups are privately held, which raises their valuation when a well-established company invests in them. There are more than 361 privately held businesses worth $1 billion or more worldwide. 16 of these businesses, or 4% of the market, are located in India.

The term “unicorn” has evolved from being only a mythical animal to becoming a frequent topic in discussions about business and finance. Today, unicorn businesses have established themselves in the market and gained notoriety. Having said that, not every unicorn will turn out to be a successful startup. The point is that after reaching a milestone, any startup must continue to work hard.

It’s crucial to keep in mind that investors don’t just support businesses for their innovative ideas; they also fund them based on how well their people perform. Unicorns differ from other companies in that they have the appropriate personnel, resources, and data.

The core team of a startup must continually monitor the products’ ability to make a profit. For the next six to 18 months, they should be able to predict growth patterns. This demonstrates to potential investors the organization’s commitment to attaining its objectives.

There is probably no true secret to success, which is one of the main lessons we can learn from unicorns. Although the qualities listed above may position you for a smooth startup experience, there are various paths to becoming a unicorn, and going your own route may also be successful. To scale your business and help it reach its full potential, you need a solid foundation and a team that encourages growth more than anything.

Read more: Why Startups Should Consider Mergers and Acquisitions

Snigdha Basu
Snigdha Basu
A multifaceted writer, Snigdha Basu is a freelancer and a columnist at Entrepreneurs Today. She also spearheads Chic Life Edition - her own Digital Magazine with sustainable fashion, beauty, and culture at its core. Reach out to Snigdha at [email protected] for inquiries.
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