Startups from varied industries have started to populate the market, and the number continues to increase. Many startups show a lot of promise since most develop innovative business models and intend to grow on a national or global scale. But not many make it big.

The Small Business Association (SBA) says 30 percent of new businesses fail within its first two years, and only 25 percent last up to 15 years or more. Startups try to be strategic and innovative with their marketing strategies and operations to avoid becoming part of this statistic. Some seek help from business coaching apps and services, while others opt for more modern methods, like engaging consumers in online challenges and contests.

Despite these discouraging numbers, some startups become successful. And more than that, they become internationally recognized brands.

“Unicorns” are Real

Airbnb, SnapChat, Spotify, Uber – these are brands that everybody must have heard of and used by now. But not everyone knows how and where they started. Startups like these – the kind that sprouted and soared in a few years – are called unicorns.

More accurately, unicorn companies are privately owned startups that reached a $1 billion valuation in just a few years. The term “unicorn” started in the venture capital industry when Cowboy Ventures founder Aileen Lee published the article “Welcome to the Unicorn Club: Learning from Billion-Dollar Startups.” The mythical animal’s name represents the statistical rarity of ventures achieving such a feat.

Lee said that the first unicorns began in the 1990s. In this period, Google, and parent company Alphabet Inc., was the clear super-unicorn with a valuation of $100 billion. Come the 2000s, Facebook blazed the trail as the sole super-unicorn of the decade.

Today’s Unicorn Club

As of June 2019, 360 companies are valued at over $1 billion around the globe. The US takes the lion’s share of unicorns at 49 percent, with China placing second at 25 percent. The industries that produce the most number of unicorns are internet software & services, financial technologies, and e-commerce and direct-to-consumer.

The most valuable private company in the world is China’s Bytedance. This artificial intelligence company is valued at $75 billion. Didi Chuxing, a ride-hailing service provider, follows at $56 billion. E-cigarette maker JUUL Labs ($50 billion), co-working company WeWork ($47 billion), and accommodations marketplace Airbnb ($29 billion) complete the world’s top 5 most valuable private companies.

The Role of Venture Capital

These unicorn companies didn’t follow a blueprint to achieve massive success. This partly explains why they’ve become household names since their business model is unique and innovative. But most unicorns have one thing in common: venture investors.

Venture capital refers to financing specific to startup companies. High net-worth individuals, angel investors, and venture capital firms finance startups and small businesses that they believe have long-term growth potential. Venture capital doesn’t always come in monetary resources, it can also be in the form of managerial or technical expertise.

This capital investment ups the valuation of startups. This means that the more venture capital they raise, the more valuable they become. It also means that the value of unicorns represents how venture capitalists and investors perceive their growth. Although valuation is based on the startup’s long-term forecasting, it doesn’t necessarily reflect the company’s financial performance.

Venture investors receive equity in the company in exchange for their capital investments. After four to six years, they make their exit by liquidating their share, initiating a merger or acquisition, or going public through IPO.

Again, unicorns didn’t follow a blueprint to succeed. Most, if not all, have introduced a revolutionary service or idea, which is what makes them attractive and marketable. Uber, for example, is the first to perfect the app for a ride-hailing service and employ its own fleet of drivers, making them almost a necessity for day-to-day transportation.

If you want your startup to reach unicorn status, you have to make your mark in the market as well. Start with a potentially life-changing product or service, look for people who believe in your brand, boost your marketing efforts, and hopefully, the unicorn will follow.