Opinion | The only thing mythical about unicorns these days is their valuation
Unicorns, a term coined five years ago for billion dollar start-ups, used to be rare, but now anyone raising a couple of hundred million dollars can claim that status
They used to be the billion dollar start-ups. Now we call them unicorns, a term coined five years ago by Aileen Lee of Silicon Valley-based Cowboy Ventures. In mythology, unicorns are rare, beautiful creatures. It was the perfect name – until recently.
Now unicorn is taking on new meaning: start-ups that perpetuate the myth that they are worth a billion US dollars.
These days, it does not take much money to claim a US$1 billion valuation – under US$200 million in some cases. Nor do you have to be a leading edge or disruptive tech company. Many unicorns, especially those in China, are simply smartphone apps applied to businesses that have been around for decades.
Who determines the value of a unicorn? Turns out it is the investors themselves. Online Chinese brokerage Tiger Brokers, backed by Wall Street guru Jim Rogers, said investors putting in US$80 million of C series funding last month determined a valuation of US$1.06 billion. That is despite a global equities slowdown, with Hong Kong stocks hitting a 10 month low last week and mainland Chinese market turnover at a four-year low. A Tiger spokesman did not immediately reply to a question on this matter.
