Owning a unicorn startup is every entrepreneur’s dream. For a private company, achieving a spot in the coveted unicorns list is always on the goal-setting agenda.
While entrepreneurs diligently work towards clocking those billion-dollar valuations for their company, there is much more to the game than what meets the eye.
An opportunity to call your private company a unicorn company or a unicorn startup is not only about achieving that one billion dollar valuation, but also about facets like your investment portfolio, the functioning of the industry, and future growth prospects of the business.
All these factors combined make the perfect unicorn company – one that is counted among the ranks of unicorn startups like Udemy, ByteDance, and Quora.
So how exactly can one convert their privately held startup company into a unicorn startup? Let’s break it down for you.
Tip 1: Valuation
This is quite a no brainer. For the venture capital sector, unicorns include all startups and privately held companies that have crossed a one billion dollar valuation.
Valuation here means your company’s total value or the sum of resources, startup costs, business expenses, human capital, notional profits/ losses, and future progressions.
If your business were to be sold tomorrow – this is the amount you can potentially expect to be the asking price.
Tip 2: Funding
Once you have determined your business’s valuation aspect, the second factor that you must consider is funding.
There are unicorns like Mailchimp and Shutterstock, that moved mountains and achieved unicorn status without raising external funding for many years.
However, to create more value for your business and increase its valuation, resorting to venture capital or private equity funding is not uncommon.
Leading unicorns in the US have used the funding method at various stages of their startup to increase the company’s valuation and plow back the resources in their business.
Funding for a business is done in a series of rounds or tranches which venture capitalists number alphabetically or numerically based on the local parlance.
Read up about the investment criteria for startups on our blog.
A classic and recent example of this method is the Indian Edtech Startup Unacademy that transitioned to the unicorn list after receiving funding from Japan-based venture capital fund SoftBank.
Tip 3: Build your value proposition
This is virtually your primary product or service. As discussed earlier, building a unicorn company is not only about achieving that billion-dollar figure. It is also about sustaining it.
After all, you don’t want to make it to the unicorn list one year and then be pushed right out of it the next. Hence, you must ensure that your value proposition is on point and updated at all times.
As an entrepreneur, you must ensure that your service is relevant to your target audience and generate approximately the same or more revenue than is forecasted by growth charts. This will help you swim above the wave and make sure your unicorn startup’s valuation is always in the green.
Further, you should never underestimate the power of learning and unlearning and make sure you are well informed about your sector’s developments. This will help you take corrective measures as soon as a disaster is anticipated, thus saving your unicorn company’s valuation from dipping.
Tip 4: Manage the human factor
Human resources, employees, staff, or managerial strength – this factor may have lots of different names in different contexts, but the universal level of importance remains the same.
While a good product is essential to make a high-profit gearing company – it is also the team behind it that takes it to great heights. This team is the founder and manager of the company and each and every executive working towards the collective goal.
Thus, your unicorn startup’s human resources form an important component when a venture capital values your business.
The importance of human resources is such that companies have often suffered a decreased valuation due to their archaic management policies.
Tip 5: Create disruption
Unicorns are generally famed for being the ‘first’ in their industry or creating a disruption that nobody before them has created.
They heavily rely on technology and are highly consumer-centric with solutions to problems that never existed a few generations before them.
Thus, to ensure that your company is considered a part of the unicorn list, this should be a feature you should aim for. It would be best if you strived to create a disruption in the market with your product and make sure it becomes valuable to your customers.
Generating brand recall also plays an important role here. The more brand recall your product has, the more significant its revenue building capacity will be in its final valuation.
Tip 6: Learn from your mistakes
As an entrepreneur, you are constantly in a cycle of learning new things about yourself and your business, and you will also stumble and make mistakes.
The key is to overcome these mistakes and keep moving. You need to accept constructive feedback from your peers, customers, and investors and apply them to your service delivery model. This will help you reinvent your product and make it more relevant to your target audience.
Seeking the feedback of your stakeholders will also help you build a good image for your unicorn startup in the eyes of your investors making future fundraising requests smooth and seamless.
While this may not directly impact the unicorn status of your startup, learning from mistakes will help you become a better entrepreneur which surely pays off in the long run.
Tip 7: Keep an eye out for expansion
Ambition and expansion is the holy grail of building a unicorn startup. To build a company that holds a one billion dollar valuation, you will naturally need economies of scale. These economies can only be achieved by having an eye for rampant expansion.
Even companies that were started in backyards and garages achieved unicorn status once they moved out of their geographic locations and spread their footprints in farther locations.
The expansion increases the volume of your business and helps you cater to a broader consumer base. This, in turn, makes your product relevant to more people, thereby greatly helping you reach your target valuation sooner.
It also helps in making your brand an internationally renowned brand solving a globally relatable issue.
The tips mentioned above will help you take your company from startup to unicorn in no time. However, there is no set path for this.
These factors are indicative but not conclusive. Every entrepreneur is different, and what works for one person may not work for another.
You need to focus on being true to yourself and your brand and making sure you use the best and most ethical practices while conducting business.
Lastly, studying great unicorns and following their footsteps will also serve as a guiding light on your way to the unicorn list.
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