Last editedJun 20222 min read
In the start-up world, unicorns are privately owned start-ups with a value of £1bn or more. Netflix, Airbnb and Uber are all examples of unicorn start-ups.
However, just as the mythological creature is rare and mystical, so is the likelihood of a start-up becoming a unicorn.
In this guide, we’ll answer some frequently asked questions around unicorn start-ups, including what sets them apart from the crowd, and how your business can become one of them.
What are unicorns in business?
As stated, unicorns are start-ups that go on to be valued at least £1bn. They also tend to share a number of characteristics which contribute to their success. These include:
They solve problems
For a start-up to achieve unicorn-level success, it has to be innovative and dedicated to addressing existing problems in the market.
The concept behind Uber, for example, was the result of extensive study into urban transport and target markets. Indeed, the company was the first to acknowledge certain issues in transport and offer a solution tailored to its target market, i.e. a ride-sharing application. One of the solutions the application offered was a direct line of contact with drivers, as well as clear information concerning location, time of arrival, car number plate and driver photo ID. Having all this information in a single page on an app made getting a ride much easier and more convenient. In fact today, many couldn’t get by without it.
They focus on consumer needs
A large proportion of unicorns are business-to-consumer (B2C) companies. A key concern for such businesses is providing customers with goods and services at affordable prices.
The website builder Squarespace is an example of a company which focuses on affordability for its consumers, providing plans ranging from £10-30 per month. In exchange for these affordable prices, a quality service is provided, with 113 website templates and SEO tools available. This dedication to providing inexpensive but high quality products and services is a huge reason for Squarespace’s success.
They’re technologically driven
The majority of unicorn businesses are in the technology sector. This is largely due to the convenience and efficiency tech provides, as well as the ability to scale and grow tech start-ups using limited physical resources.
GoCardless is a tech unicorn that has innovated the payment process. As a global leader in account-to-account payments, GoCardless makes it easy and convenient to collect recurring, one-off and variable payments from customers worldwide. Plus, it offers a solution to the problem of late payments that many businesses face. With pull payments, companies are in charge of when they get paid, virtually eliminating the risk of late payments.
Countries with most unicorn start-ups
The United States is leading the way with the largest number of unicorn start-ups globally. However, China is hot on their tail, and both India and the United Kingdom are also among the countries with the most unicorn start-ups.
How to become a unicorn start-up?
Becoming a unicorn start-up is clearly the ultimate goal for new start-ups. While very few go on to achieve unicorn status, if you follow the steps laid out below, you can certainly increase your chances.
1. Develop a minimum viable product (MVP)
Developing a MVP involves identifying a problem that affects a large and homogenous target market.
Next, you must find a solution to that problem by way of a product. After carrying out testing on this product and making changes based on feedback, you are then ready to build and launch your problem-solving product.
2. Choose your business model
Based on your product and its target market, you should be able to determine which business model is right for you. This involves deciding on the scale, locality, pricing and sales channels for your start-up.
3. Get funding
Through a combination of personal funding, venture capital acquisition, angel investment and crowdfunding, you will need to obtain sufficient funds to get your start-up off the ground.
4. Scale your start-up
After ensuring you have an excellent product-market fit, you will need to look into marketing and advertising, as well as opportunities to expand into new locations and markets. At this point, you may also need to make new hires and attract new investors.
We can help
GoCardless is a global payments solution that helps you automate payment collection, cutting down on the amount of financial admin your team needs to deal with. Find out how GoCardless can help you with one-off or recurring payments.