What is a Unicorn in Finance?

We all know what a unicorn is since this magical creature has become so popular on Children’s TV or in gift stores.The unicorn started as a fierce creature found in the furthest corners of the known world. Now it is symbol of magic and miracles.

In finance, A unicorn is a term used in the venture capital industry to describe a privately held startup company with a value of over US$1 billion.

The term was popularised by venture capitalist Aileen Lee, founder of a VC fund based in Palo Alto, California, who first used it to describe software startups, to include companies like Alphabet (Google), Facebook, Airbnb, SpaceX, and Robinhood.

There are an increasing number of popular unicorns in China as well, including Didi Chuxing, China Internet Plus Holding (Meituan Dianping), ByteDance, and Ant Finance.

In fact, unicorns are concentrated in a few countries/regions. By the end of 2019, top 4 countries are China (125), United States (122), India (26), South Korea (11), UK (10).

The value of unicorns is generally based on how investors and venture capitalists feel they will grow and develop, so it all comes down to longer-term forecasting. Many of the unicorns are looking for IPOs at their later stage of capital raising. Then its shares become market available for each individual investors to buy.

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