Unicorn Companies Explained: How Startups Achieve the $1 Billion Valuation

Unicorn Companies Explained: How Startups Achieve the $1 Billion Valuation
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A unicorn company is the equivalent of winning a gold medal at the Olympics or your band’s music album being certified platinum. For entrepreneurs, it means you’ve hit the pinnacle of what most in your field dream of. It’s not easy to achieve, but more startups are achieving unicorn status than ever.With that in mind, it’s worth examining how they get there and what it means to be one.

What is a unicorn company?

In simple terms, there are two requirements for a unicorn company. Firstly, it needs to be privately held. Secondly, it needs to be valued at over $1 billion. We call them “unicorns” because they are traditionally extremely rare. A startup must be doing an incredible job of addressing a market need to attract that level of interest from investors.

With that said, we’ve seen a herd of unicorns emerge in recent years. For entrepreneurs, it's now an audacious goal rather than lightning in a bottle-style “miracle”. It’s certainly challenging—just as winning that gold medal is!—but it’s achievable. It all comes down to how well you formulate and execute the startup plan.

Who coined the term “unicorn company”?

It seems strange that “unicorn” is such a ubiquitous term now, because it was only coined in 2013. Aileen Lee, having sorted through more than 60,000 tech startups, discovered that between 2003 and 2013, just 39 of them were valued at over $1 billion. This then seemed like a good threshold to distinguish between the greatest success stories, and the rest of the pack.

How is unicorn company value determined?

Because unicorn companies are startups that are still building revenue streams and onboarding customers, valuation works differently than with established companies. You can’t look at the annual report and extrapolate the company value from the revenue generated throughout the year.

Instead, unicorn companies are valued based on what investors think a company is worth. As a simple example, if an investor takes a 20% equity stake in a startup for $200 million, the investor believes that the startup is worth $1 billion.

It’s critical to understand that this really is an “on paper” value. ByteDance—the Chinese super-unicorn behind Tiktok—has “only” raised $13.1 billion in venture capital, but is valued at $360 billion. When we talk about unicorn companies, we refer to the “post-money value” and not the actual equity funding put into the startup.

The rise of unicorn companies

From just 39 between 2003 and 2013, the number of unicorn companies has accelerated rapidly over the last decade. The question is, why?

How many unicorn companies are there?

There are now over 1,200 unicorns, worth over $3,840 billion in total. This is some extreme acceleration within the club, and has led many to wonder whether the frenzy of startup investment is too hot. In other words, are we facing a potential dotcom scenario where what we thought were "unicorns" are really just horses?

Why are so many unicorn companies emerging?

When you look at where unicorns are emerging, it would be difficult to argue that investor hype was not part of the reason. For example, last year, cryptocurrency and blockchain startups accounted for around half of the really big emerging unicorns. Cryptocurrency was the hot trend (before the meltdown of FTX put a chill on that space, at least temporarily). Investors wanted to make sure they were part of the conversation, so there was fierce competition to find and back exciting startups.

However, it would also be inaccurate to say that over-enthusiasm was the sole reason for the rapid growth in the unicorn population.

Remember, being a privately-held company is a key characteristic of a unicorn.Traditionally, the only way to get a company to $1 billion in value was to take it public via an IPO. This is changing, however. Startups with a strong founding team and great ideas to address market problems can raise large amounts of private funding earlier on, resulting in those billion-dollar valuations before going public.

The characteristics of a unicorn startup

The threshold for a unicorn startup is clear: it needs a $1 billion valuation, and this is something that all unicorns obviously share. Within that, however, we can also see several trends that most startups that achieve this valuation share.

Unicorn companies are examples of disruptive innovation

It’s not enough to have a compelling idea in a profitable market.

Many great startups have incredible products but never reach unicorn status. That $1 billion valuation only comes from disruptive innovation. It is for companies that change the way we think about a sector, and challenge what we take for granted. Google—the first super-unicorn—changed the way we interacted with the Internet. AirBnb challenged the monopoly that hotels held, and Uber showed us the weaknesses in the taxi industry.

Likewise, crypto fintechs have been the biggest unicorns in recent years because they are extremely disruptive to traditional finance.

A unicorn company is probably built on technology

About 87 percent of unicorns have some form of software at the core of their product, and a further seven percent are focused on technology hardware. You can start up a business in any sector and offer any product and service.However, unless it’s tech, it’s unlikely to gain the investment needed to be a unicorn.

A unicorn company is probably consumer-focused

B2B companies have a tougher time achieving unicorn status. Around 62 percent of unicorns are B2C. This is a story of scale. B2C companies can tap into billions of people if they become essential to day-to-day life.B2B companies that target the right sector with a solution that solves a problem can still achieve unicorn status, but only if investors are impressed by the TAM and the potential to scale.

A unicorn company grows fast

On average, a unicorn company will punch through the $1 billion barrier in five years. That’s blistering fast growth. A unicorn company is focused on going through as many rounds of large funding, as quickly as possible. It’s a risk, because if the market doesn’t move with the startup the value can collapse. It’s also the only way a startup can stay ahead of the competition and ensure that it is the disruptor.

The leading unicorn companies in 2023

Unicorn companies can pop up anywhere in the world. Ten nations, as varied as the US, Israel, Brazil and South Korea have at least ten unicorns, and are centers of global startup culture. However, unicorns can be found in Mexico, the UAE, Estonia, Czech Republic, Bermuda and Seychelles.

One really interesting trend to watch is that in recent years, China has challenged the US (and particularly Silicon Valley) as the home of unicorn startups. China now has the two largest unicorns, and its percentage of the overall unicorn population is growing every year.

The ten largest unicorn companies currently are:


Current valuation: $360 billion

Location: China

Sector: Big Data

ByteDance was founded in 2012, and has become famous (or infamous, depending on who you ask) for the video sharing platform, TikTok. However, that's only one part of ByteDance’s portfolio. The company also runs a news platform (Toutiao), enterprise collaboration platform, Lark, and video game publisher, Nuverse. Data collection, analysis, and targeting are the keys to the success of the company's products.

Ant Group

Current valuation: $200 billion

Location: China

Sector: Fintech

Ant Group isn’t really an international entity, and has a relatively low profile despite being the second-largest unicorn. Its core product is a digital payment platform, Alipay, which serves over 1.3 billion customers—predominantly in China—and 80 million merchants.

Interesting fact: Ant Group very nearly left the list of unicorns as it attempted to go public in 2020. The only reason it didn’t was that the President of China, Xi Jinping, personally scuttled its efforts to IPO over concerns about what that would do to the company.


Current valuation: $152.0 billion

Location: USA

Sector: Fintech

Stripe is an excellent example of unicorn disruption. There was a real market gap, in which small businesses struggled to find payment options in the new digital world. Stripe solved this by introducing a simple and convenient way to accept payments online. In helping millions of small businesses launch their own businesses, Stripe launched itself into the unicorn community.


Current valuation: $100.0 billion

Location: USA

Sector: Space

Elon Musk’s SpaceX—perhaps the highest profile privately-owned space tech company ever—has the lofty ambition to, ultimately, put a human colony on Mars. That’s straight out of science fiction and wouldn't result in a $100 billion unicorn status by itself. However, Musk has used SpaceX to launch innovative products such as Internet service, Starlink, and this has helped get investors on board with his grand vision.


Current valuation: $100.0 billion

Location: Singapore

Sector: E-Commerce and Retail

SHEIN is the highest-value company that targets Gen Z consumers. It is a global retailer that delivers to 150 countries and focuses on affordable yet stylish apparel. In the early stages of its life, it was not involved in design or manufacturing. However, from that foundation the company built its value by establishing a complete, end-to-end supply chain.


Current valuation: $67.7 billion

Location: USA

Sector: Environmental technology

If someone asked you what the big name in electric cars is, you’d probably respond with "Tesla." In reality, Rivian is bigger. In 2022 it was listed as one of TIME’s top 100 most influential companies, and one of the major reasons behind its success is its electronic delivery van—a vehicle that Amazon has said is critical to convert its massive delivery fleet to 100 percent renewable energy by 2023.

Reliance Retail

Current valuation: $63.4 billion

Location: India

Sector: Retail

India’s largest unicorn is a black sheep in the top unicorn’s list. It has an E-Commerce service, but Reliance Retail primarily operates as a traditional retailer, with more than 14,000 stores across the country. It is, however, a true giant, with over 45 different subsidiaries and brands covering everything from groceries to mobile handsets and fashion. This highlights how critical scale is to investors.India’s population is about to eclipse China’s, and investors from the US, Singapore and other nations have invested in Reliance because of its access to that population.


Current valuation: $60.9 billion

Location: China

Sector: Social Networking and E-Commerce

TikTok’s main rival in China is itself a top-10 unicorn company. Kuishou is less well-known than its counterpart in the West, but it has been a popular app in nations like Brazil and Indonesia.Its point of difference is engagement. Where TikTok is designed to be something you check in on quickly and then move on with your day, Kuaishou rewards creators that have deeply engaged audiences. This in turn allows the company to make the bulk of its revenue from subsequent E-Commerce sales, rather than advertising.


Current valuation: $45.3 billion

Location: USA

Sector: Gaming

If you have children, you probably know Roblox. Roblox allows younger kids to make, share, and play games created by other users. It’s a creative sandbox, and has grown to over 164 million monthly active users, with more than half younger than 16.


Current valuation: $41.5 billion

Location: Brazil

Sector: Fintech

Brazil’s biggest unicorn is the neobank (a digital-only bank with no branch offices) Nubank. This company’s valuation has been boosted with investments from major corporations such as China’s Tencent, and has steadily grown to offer services in other Latin American nations.

Are you going to be the next unicorn founder?

Building a company to a billion-dollar valuation isn’t easy, and never will be. No matter how enthusiastic investors are about your sector, you need a truly exceptional startup to have this achievement in your sights.

At the same time, the unicorn herd is no longer an exclusive club. Where once you needed to be the darling of Silicon Valley, now you can reach these lofty heights from anywhere in the world.It’s entirely down to the quality of your idea, and your ability to execute it. The unicorn club is becoming a true meritocracy.

Ready to launch your own startup? Apply to one of Antler’s residency programs. Located in 25 cities around the world, Antler supports founders from pre-seed, pre-team and even pre-idea.


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