The term “unicorn startup” has become synonymous with extraordinary success in the business world. First coined by American venture capitalist Aileen Lee in 2013, the term uses the mythical unicorn to represent the rarity of startups achieving a billion-dollar valuation. Over time, the number of unicorn startups has increased rapidly globally. In 2013, there were only 30+ startups considered “unicorns.” However, according to CB Insights, as of December 2024, there are 1,200+ unicorns around the world. Let’s delve deeper into the meaning of unicorn startups and how they achieve their success.

What is a Unicorn Startup?

A unicorn startup is a privately owned start-up company with a valuation exceeding US$1 billion or Rp140 trillion. Unicorn startups are often characterized by their rapid growth, innovative business models, and significant market impact. Above unicorn startups, there are decacorn startups, which describe companies with valuations exceeding US$10 billion or Rp160 trillion. Some unicorn startup examples in Indonesia include DANA, Gojek, Tokopedia, and OVO.

What are The Characteristics of a Unicorn Startup?

Several criteria make a unicorn startup different compared to other kinds of businesses. These criteria are:

• Disruptive Innovation: Unicorns typically introduce innovative business models that disrupt established businesses. They identify overlooked opportunities and offer more affordable and convenient solutions. For example, Gojek offered the first ride-hailing app in Indonesia, providing convenience for daily commuting.

• Rapid Growth: On average, unicorns can achieve a US$1 billion valuation in approximately five years through multiple startup funding rounds. Product-market fit, valuable prospects, and broad business objectives support this rapid growth.

• Technologically Driven: One thing unicorns have in common is a technology-based business approach and how they leverage technology to its best capacity. It’s crucial as a competitive edge to enhance efficiency and improve customer experiences with lower costs.

• Visionary Leadership: Unicorn founders excel at learning, decision-making, persistence, and communicating their compelling vision. This helps them to build, iterate, recruit, fundraise, and scale effectively.

What are The Factors Contributing to Unicorn Startup Success?

Several factors contribute to the exceptional success of unicorn startups:

Innovative Ideas

Unicorn startups typically introduce groundbreaking products, services, or technologies that disrupt established industries, challenge the status quo, and create new markets. They foster a culture of creativity and innovation, allowing them to identify existing market gaps and deliver compelling solutions to their customers.

Scalable Business Models

Unicorn startups develop business models allowing rapid growth without proportional cost increases. They prioritize scalability by leveraging technology, automation, and efficient processes to maximize their market potential.

Strong Leadership and Team

Effective leaders in unicorn startups guide the strategic direction of the startup, make critical decisions, and inspire their teams to achieve ambitious goals. This will become the foundation of a unicorn startup’s success. They also attract top talent by offering competitive compensation, fostering a positive work culture, and providing growth opportunities.

Successful Funding and Investor Support

No startup can succeed without adequate funding, as it is crucial to support growth. Unicorn startups seek funding from venture capital firms, angel investors, and strategic partnerships. They build strong relationships with their investors through transparency and consistent communication. Funding not only provides the necessary capital but also valuable expertise and guidance.

How to Achieve Unicorn Status for Startups?

Achieving unicorn status represents a significant milestone in a startup's development. If you are an aspiring entrepreneur looking to achieve success like the unicorn startups, you should focus on some key strategies, such as:

Develop a Minimum Viable Product

Every unicorn startup begins with a strong, original idea.  Early planning should include a robust business plan, a clear product vision, and a defined target market. Identifying your customer's problem and target market is important to develop an accessible, cost-effective solution. This forms the foundation for your minimum viable product (MVP), a basic version of your product with only essential features, which you’ll test and iterate based on user feedback.

Craft an Effective Business Model

In the pre-seed stage, after developing your MVP, you should plan for the rapid growth of a unicorn startup. This includes defining your market strategy, strategically pricing your product, and determining your sales channel (online and offline). Test your MVP and gather user feedback to refine your products. Develop a compelling value proposition and execute a small-scale rollout to validate your business model. Focus on early customer experience to generate positive reviews and testimonials.

Secure Seed Funding

No matter how good a product idea is, it won’t get off the ground without the necessary funds. Secure all the funds needed to support your startup growth. Start with seed funding as the first capital injection to fund your product development and business operations. There are several ways to obtain seed funding, such as from friends and family, angel investors, venture capitalists, or business loans.

Pitch Major Investors

The most important step in becoming a unicorn startup is a plan to secure investments through venture capitalist funding. Series A funding is generally the first of several investment rounds a unicorn startup will receive. Venture capitalists will give cash in exchange for shares of the company.

Scale Your Startup

Getting series A funding is a milestone, but many unicorns require several rounds before entering an Initial Public Offering (IPO). As your startup grows, you will need more funds to push the company further. Focus on accelerating growth, reaching new markets, improving products and processes, and building a solid team. As the company grows, it will attract more VC investment, which will help expand business operations.

Plan an Exit Strategy

High-growth startups typically have two main exit options: going public (IPO) or acquisition. Taking a company public allows the selling of shares on the stock market. Many unicorns are acquired by larger companies that see value in their technology, customer base, or market position.

From Seed to Unicorn: Grow Your Startup with Phintraco Natha Kapital's Expertise

The journey from developing ideas to a unicorn startup demands more than just capital, strategic guidance, a deep understanding of the market, and access to a robust network. Phintraco Natha Kapital offers comprehensive investment and advisory services to empower businesses at every growth stage. By leveraging our expertise, industry connections, and commitment to sustainable development, we help ambitious entrepreneurs navigate the complexities of the market and achieve extraordinary success. Our focus extends beyond financial returns, emphasizing the importance of supporting the people behind the business and fostering sustainable growth.By partnering with Phintraco Natha Kapital, businesses will get all the resources needed to secure long-term success and sustainability.Editor: Trie Ayu Feminin & Irnadia Fardila