The odds of seeing a mythical unicorn are slim to none. A new private company valued at $1 billion or more is just as unusual, which is why angel investor Aileen Lee dubbed these businesses “unicorn startups.” In addition to funding, unicorn startups disrupt the industry they’re part of, such as technology.
There are around 1,068 unicorn startups around the globe. About 50% are located in the U.S. and the rest are in China, Hong Kong, India, the U.K. and Germany. A smaller number reside in places such as Africa and Latin America — unicorns are located on every continent.
How Do You Reach Unicorn Status?
To hit such a high level of funding, unicorns must seek funding from multiple sources. Venture capitalists are a good place to start, but they don’t always have enough alone to reach $1 billion in cash flow.
For example, non-discretionary banking clients keep some control of their investments rather than letting an advisor fully manage their portfolio. They might have a percentage of their money allocated to investing in startups but it’s unlikely one person would throw in $1 billion.
How can a new company without a history of proven success attract investors and raise capital?
1. Choose Aggressive Growth
A typical startup might begin in the basement or a small apartment and grow over time. To achieve unicorn status, the founders must commit to rapid growth to satisfy investors and bring in additional funding.
Start with a vision of where to take the company and write out a clear business plan showing how to get there from start to finish.
2. Build an Amazing Product
To achieve unicorn status, the product must be worthy of attracting investors and attention. You’ve likely heard of some of the bigger unicorn players in recent years:
- Airbnb
- SpaceX
- Uber
A unicorn startup needs something exciting and fresh — but it must be easily scalable to achieve the rapid growth needed to hit huge asset numbers.
3. Embrace New Technology
Be open to trying new technology that might make daily tasks easier. Artificial intelligence (AI) is an example of a thriving technology that keeps advancing and changing the way the world does business. Brands can even utilize the technology to automate tasks or hire the top candidates in the industry.
4. Crowdfund the Rest
Perhaps the founders of a startup have tapped their personal savings, gotten investment funds from family and friends, sought the help of some angel investors and are still short of the $1 billion mark.
Crowdfunding is another way to fill the gap. Offer the new product first to those who invest in its beginnings. Help people catch the dream. Use sites such as Kickstarter to get going.
5. Apply for Loans
Another option is applying for loans from local banks. If more than one person founds the unicorn startup, having everyone guarantee the loan may gain more funding than a single person responsible for paying back the money.
Seek the lowest rate possible as the company can pay back the money when times are good and put more toward the principle. Be cautious with some loans as they become sharky and the interest makes it impossible to ever get out from under the debt.
Can You Achieve Unicorn Status?
It isn’t easy to raise massive amounts of money, but most companies can raise enough to launch and find success in the early days of their startups. Strive for the status wanted and know that even if the total funds fall a bit short, success is still possible.
Devin Partida writes about investor technologies, big data and apps. She is also the Editor-in-Chief of ReHack.com.
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