Do tech unicorns really matter?
Business Management

Do tech unicorns really matter?

They're called tech unicorns because they are supposed to be rare, the elite of the start-up scene reaching that ultimate milestone of $1 billion in value or more. Yet the number is growing and that magical figure seems less rare, and more run of the mill now. In 2015, there were over 130 tech unicorns; now, according to CB Insights, there are close to 400, and the figure is set to rise.

This spate of billion dollar valuations, for some, is emblematic of a return to the kind of tech boom bubble that ultimately imploded into the dot-com bust in the early 2000s. Keith Wright, instructor of accounting and information services at the Villanova School of Business, predicted in an opinion piece for CNBC that "higher interest rates and the return of market volatility may usher in the end of this tech bubble."

So are tech unicorns really a marker of success? Or merely a symptom of a massively overhyped tech start-up ecosystem on the brink of collapse?

A leg up but not a guarantee of success

Kevin Bianchi, Assurance Partner at BDO Ventures, explains that when the term ‘unicorn' was coined by Aileen Lee back in 2013 to describe private startups valued at over $1 billion, just 39 of them existed. But, he adds, the fact that there are more unicorns today doesn't mean the path to get there has gotten any easier or that a $1 billion valuation is insignificant.

"The spike in tech unicorns can largely be attributed to the influx of startups that were born as the economy rebounded from the 2008 recession. Many of these companies are just now reaching the massive valuations that we've been seeing," he says. "Being a unicorn tech company in 2019 is a notable achievement - the percentage of startups that achieve this is still staggeringly low - but a $1+ billion valuation doesn't automatically spell success."

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Bianca Wright

Bianca Wright is a UK-based freelance business and technology writer, who has written for publications in the UK, the US, Australia and South Africa. She holds an MPhil in science and technology journalism and a DPhil in Media Studies.

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