Unicorn companies are technology companies that reach a value of 1 billion dollars in capital raising stages.
The term is attributed to Aileen Lee, founder of the equity investment company Cowboy Ventures, who was the first to use it to refer to technology companies that reach a value of 1 billion dollars at any of the stages of their process of raising capital or market value. According to Lee, these “unicorns” used to be a myth.
These companies usually offer a service related to technology, i.e. many of them begin as startups that end up having an impact on society such as Uber, Facebook, or Airbnb.
These types of firms are often seen as disruptive and offer flexibility and different benefits to both their employees and their customers. Also, being only a few years old, they are usually companies that make the most of social media to reach new users.
Segmentation based on the use of data means that these types of companies prefer to advertise through platforms such as YouTube so as to have a mass audience and reach a large number of potential customers.
According to data from the analysis company CB Insights, there were a total of 308 unicorns worldwide in 2019, spread across 13 different sectors. The consulting company shared that the sector with the highest number of unicorns is that related to Internet Software services with 24 %, followed by e-commerce and fintech companies with 13 % and 10 %, respectively.
Among the most valuable companies on the list are the fintech company Stripe, and the Chinese firm ByteDance, owner of TikTok.
Within the entrepreneurial ecosystem, pink unicorns are those companies that have the aforementioned characteristics, but which were founded by women.
According to data from the business publication Bae Negocios, only 2 % of venture capital invested goes to female entrepreneurs, and only 0.4 % of those funds go to startups led by Latin American women.
In early October this year, the Latin company Transparent Business, founded by Argentinian Silvina Moschini, became a unicorn after a valuation estimated at more than 1 billion US dollars, driven by the coronavirus pandemic. The company offers a solution to managing talent remotely, and it increased its value after the adoption of home office working policies in various parts of the world because of the pandemic.
Moschini assured Expansión magazine that this project, in addition to providing job opportunities, seeks to increase the representation of female talent in the corporate world.
Unicorn companies such as Mercado Libre, Despegar, Rappi, and Globant have also been created in the region.
AlphaCredit is the startup which has raised the most capital in Mexico; it was founded by Augusto Álvarez and José Luis Orozco. According to experts, fintech companies have an important place among the unicorns because of the benefits they offer to users which, for the most part, are different from those of banking organizations.
“Fintech companies and business models applied to personal finance allow people to have a certain sense of control over their money. The banks don’t have an image of intimacy with the user, and these companies respond to the need for financial education,” said Wilbert Luna, a lawyer specializing in fintech issues, in an interview with Tec Review.
The trigger for generating more unicorn companies will come together with investors entering the region. This is thanks to the benefits offered by these countries, such as a lower cost of attraction, the retention of users, and the penetration of smart phones worldwide, which, according to the Global Mobile Trends 2020 report by GSMA Intelligence, will reach 80% in 2025.
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