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A Unicorn

“Unicorn” is a term used in the venture capital industry to describe a privately held startup company with a value of over $1 billion. The term was first popularized by venture capitalist Aileen Lee, founder of Cowboy Ventures, a seed-stage venture capital fund based in Palo Alto, California.

Unicorns can also refer to a recruitment phenomenon within the human resources (HR) sector. HR managers may have high expectations to fill a position, leading them to look for candidates with qualifications that are higher than required for a specific job. In essence, these managers are looking for a unicorn, which leads to a disconnect between their ideal candidate versus who they can hire from the pool of people available.

Understanding Unicorns

A unicorn is what most people in the financial world call a startup that is privately-owned with a valuation exceeding $1 billion. Some of the more popular unicorns based in the U.S. include home-sharing giant Airbnb, video game company Epic Games, as well as fintech companies Robinhood and SoFi.

Aileen Lee first wrote about unicorns in the venture capital world in her article, “Welcome to the Unicorn Club: Learning from Billion-Dollar Startups.” Here, she looked at software startups founded in the 2000s and estimated that only 0.07% of them ever reach a $1 billion valuations. Startups that managed to reach the $1 billion mark, she noted, are so rare that finding one is as difficult as finding a mythical unicorn.

According to Lee, the first unicorns were founded in the 1990s. Alphabet (GOOG)—then Google—she noted, was the clear super-unicorn of the group with a valuation of more than $100 billion. Many unicorns were born in the 2000s, though Meta (FB), formerly Facebook, is the decade’s only super-unicorn.

Unicorns and Venture Investing

Since the publication of Lee’s article, the term has become widely used to refer to startups in the technology, mobile technology, and information technology sectors—usually at the intersection of all three—with very high valuations questionably supported by their fundamental finances.

Benchmark Capital partner and investment guru Bill Gurley wrote about the difference between late-stage private capital fundraising and an IPO in a blog post, saying that “an unprecedented 80 private companies have raised financings at valuations over $1B” since the 2010s, and that “late-stage investors, desperately afraid of missing out on acquiring shareholding positions in possible ‘unicorn’ companies, have essentially abandoned their traditional risk analysis.”

The question of whether the technology sector’s unicorns constitute a reinflation of the dotcom bubble of the late 1990s continues to stir debate. Some, like John Mullins who wrote the book The Customer-Funded Business, argue that the increase in the number of new companies valued above $1 billion is a clear sign of froth in markets.1 Others argue that a large number of companies with high valuations is a reflection of a new wave of technologically-driven productivity, similar to the invention of the printing press nearly 600 years ago. For example, data show that as of 2019, SV Angel has made the most early-stage investments in companies valued at over $1 billion.2 Still, others argue that globalization and the monetary policy of central banks since the Great Recession have created great waves of capital that slosh around the globe on a hunt for unicorns.

Valuations of Unicorns

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. This means their valuations have nothing to do with the way they perform financially. In fact, many of these companies rarely generate any profits when they first get running.

Investors and capitalists may come across some hurdles, though. If there are no other competitors in the industry—making the startup a first of its kind—there may be no other business model with which to compare, making it a somewhat complicated process.

While unicorns are startups with valuations of over $1 billion, companies with valuations of over $10 billion are sometimes referred to as “decacorns”.

Examples of Unicorns

Far from being merely mythological creatures, unicorns are a regular feature in popular business and finance discussions. Some familiar U.S.-based unicorns include Uber, Airbnb, SpaceX, Palantir Technologies, WeWork, and Pinterest. China claims a number of unicorns as well, including Didi Chuxing, Xiaomi, China Internet Plus Holding (Meituan Dianping), and There are more than 600 unicorns around the world, as of June 2020. Collectively, they have raised $442 billion and are valued at around $2 trillion total.3


One hot unicorn startup is Nuro, an autonomous vehicle delivery company that was founded by two engineers from Waymo, Google’s self-driving car project. Founded in 2016, Nuro became a unicorn startup after receiving a $940 million investment from SoftBank Group, which put the company’s valuation at $2.7 billion.

Nuro found a unique space in the autonomous vehicle industry, focusing on zero-emissions local delivery vehicles. Since then, Nuro has grown and acquired other startups including Ike Robotics. The company now has a few pilots, including its R1 and R2 generation of cars that is prototyping deliveries of medical supplies in California, as well as groceries in Fry’s Food and Drug and Kroger stores. In November 2020, Nuro hit a $5 billion valuation.4


Instacart, the grocery delivery app, is also another unicorn company with over $2.7 billion in funding. The company was founded in San Francisco in 2012 and boasts over 500,000 items from local stores including Whole Foods, Safeway, Jewel-Osco, Costco, and Harris Teeter. As of June 2020, the company had a $13.7 billion valuation with its most recent $225 million funding round led by DST Global and General Catalyst.5

Unicorns in the Business World

When a company strives for the best employees for the job, its expectations may be far too lofty when compared to what’s available in the labor pool. Hiring managers may look for or hold out for candidates with much higher qualifications than what’s required for the job.

For example, a medium-sized firm may want to recruit someone who has marketing, social media, writing, sales, and management experience, and speaks three different languages. While it may be cost-effective to hire one person with all those skills instead of multiple employees to handle separate tasks, it may be too much for the new hire to handle and can lead to disappointment.

Unicorn FAQs

What Is a Unicorn in Business?

A unicorn is used to describe a startup company that has a valuation of over $1 billion.

How Many Unicorn Companies Are There?

There are 907 unicorns around the world, as of November 2021, according to CB Insights’ Unicorn Tracker. Collectively, they are valued at $2.995 trillion total.6

Is Amazon a Unicorn Company?

Unicorns are typically used to describe privately-held startup companies with market caps of over $1 billion, so Amazon is not considered a unicorn company, as it is public. When Amazon went public on May 15, 1997, it raised $54 million, which gave it a market cap of $438 million, still well below the key $1 billion mark.78

Why Are Startups Called Unicorns?

Startups worth over $1 billion are called unicorns because they are so rare–often, these companies have seen skyrocketing success or market traction, which has launched them into almost a mythical category, since they are so rare.

How Can I Invest in a Unicorn?

Unless you are a private investor or venture capitalist, unicorns being startup companies don’t really accept a lot of moderately-sized investments. However, investors who are interested should track the growth of these unicorns if they ever decide to become public companies and IPO.


  • Unicorn is the term used in the venture capital industry to describe a startup company with a value of over $1 billion.
  • The term was first coined by venture capitalist Aileen Lee in 2013.
  • Some popular unicorns include SpaceX, Robinhood, and Instacart.
  • There are more than 800 unicorn companies around the world, as of August 2021.
  • The term unicorn can also be used by human resources managers to describe their ideal candidates, who may be overqualified for a certain position.