In today’s tech world, you will hear many of the hottest companies referred to as “unicorns.” But what exactly is a unicorn, and what do unicorns mean for the economy?
The term “unicorn” was first coined in 2013 by venture capitalist Aileen Lee, founder of Cowboy Ventures. In a popular article, Lee discussed software startup companies founded in the early 2000s that received a valuation equal to or exceeding $1 billion dollars before going public. Lee estimated that only about 0.7% of software startups founded during this time met the $1 billion dollar mark, making unicorns appropriately rare. Since Lee’s article, the term unicorn has been used to refer to any company without an established performance record valued at more than a billion. Facebook and Google are both considered to be “super-unicorns,” exceeding the $100 billion dollar goal post.
Since the term was popularized, unicorns have become more plentiful, with 80 such companies meeting these standards between 2010-2015, compared to the 39 companies discussed in Lee’s initial article valued in the decade starting in 2003. This has led some economists to anticipate a tech bubble similar to the dotcom bubble of the late 90s. Other economists disagree, calling the current time a period of prosperity in the tech world. Still others believe that the rise in unicorns is a product of globalization and current monetary policies that have created large waves of capital.
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