Unicorns are startups worth more than one billion dollars. All entrepreneurs around the world dream about building a unicorn. Sadly, 90% of startups fail before they become even multi-million-dollar ones. According to the founder of Climate, each startup has only a 0.00006% chance of becoming a multi-billion-dollar firm.
To better understand how to build a successful product, we will go through some statistics about unicorns in the past decade (2008 to 2017). This infographic contains the common characteristics of the most successful startups around the globe. Founders will want to know these factors that successful unicorns share. In addition, this information can be useful to anyone thinking about starting a new business. We brought most of the data from Fortune and CrunchBase.
Unicorns operate in 23 business areas. Retailing has the lion’s share (25%), followed by technology (19%), financial services (11%), transportation (6%), media (6%), food delivery (5%), social networking (4%), health (4%), augmented reality (3%), gaming (3%), and HR (2%). Every other sector accounts for only 1%.
The most successful retailing firms are located in China (12), followed by the US (5), India (2), and Germany (2). Unlike in retailing, the US is dominant in the technology sector (13), followed by China (4), India (1), and South Korea (1). The US also dominates the financial services sector (6), followed by China (3) and the UK (2).
Unsurprisingly, 87% of unicorns’ products are software. As expected, the US leads the world in the software sector, with 44 out of 87 software unicorns. It is followed by China (21), the UK (5), and India (4). In addition to the software sector, the US dominates the hardware industry. Five of the top hardware firms are located in the US, followed by China (1) and Israel (1).
Some firms produce what they sell to their end customers. Others act as distribution channels. For example, online gaming firms (like DraftKings and Machine Zone) are responsible for developing, hosting, and selling their games. On the other hand, ride sharing firms (like Uber and Lyft) provide a platform for those who wish to provide the ride sharing service. Most unicorns (61%) distribute others’ products or services through their platforms.
Most unicorns use the web as a delivery channel. Among the recent multi-billion-dollar firms, 76% rely on websites, mobile apps, or a combination of both. Meanwhile, 73% of them have both websites and mobile apps. Only 20% rely on websites alone (no mobile apps). Finally, 7% offer their services through mobile apps alone.
Successful startups usually take five years to worth more than one billion dollars. However, some of them managed to reach this stage in less than 2 years. For example, Airbnb reached a $1.2 billion valuation in just 2 years. WePiao value exceeded a $1.5 billion in less than 2 years. On the other hand, some startups took more than 5 years to make it to this list. For example, Hootsuite took around 9 years to be considered a unicorn. The same applies to FarFetch, KiK, Zomator, Zscaler, and Womai.
Unfortunately, only two multi-billion-dollar unicorns are led by female CEOs. These companies are Lamabang and Mia. Both firms are located in China and operate in the retail sector.
The most successful business model among the rising unicorns is the one that relies on commissions or brokerage fees. This model is very common among online stores, financial services, and freelancing sites. Among the top 100 unicorns, 33% use this model. The most famous ones using this model are Uber, Airbnb, Didi Kuaidi, Lufax, Lyft, and Stripe. The second most common model is the asset sale. Among the multi-billion-dollar unicorns, 22% use this model. It is worth noting that this model is used primarily in the retailing and manufacturing sectors.
Advertising and subscription models come after the asset sale model. Each of these models has a share of 15%. The advertising model is commonly used by media and social networks. Famous startups adopting this model are Pinterest, Tango, and Nextdoor. On the other hand, the subscription model is quite popular in technology sector. The most famous unicorns relying on this model are Slack, Zenefits, and Gusto.
As you might know, products can be sold to either individuals or other firms. Business-to-business (B2B) transactions occur between two different businesses. Meanwhile, business-to-consumer (B2C) transactions occur between a business and an individual. Although B2B firms have a much longer sales cycle than B2C ones, they usually need less funding to reach the growth stage. According to the list, 62% of unicorns are B2C firms, while 32% are B2B ones.
Founding Team Size
Among the past decade’s unicorns, 35% have a founding team of 2 members. Most of them are located in the US (19), followed by China (7), India (4), Canada (1), Germany (1), Russia (1), Singapore (1), and the UK (1). Although it sounds odd, the second most common team size in the unicorn list is 1 member. Single-founder startups account for 27% of the unicorn list. Most of these firms are located in China (16), followed by the US (7), South Korea (2), the UK (1), and Israel (1).
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