Just like the mythical creatures said to be worth more than gold, the creators of a unicorn start-up company have the same hopes for their business.
These start-up companies are usually privately owned and worth more than USD$1 billion, making them just as rare as the fabled creature with a horn. As they rocket into success, these businesses are scarce and thus worth investing in.
Before any interested party backs a unicorn, they should do some homework. Here are a few things to take into consideration:
The Market
Each business has a product that they make available to the public, whether the product is something tangible or service rendered.
Investors would need a thorough understanding of the unicorn start-up industry, including their target market. Knowing the market would assist the investor in making informed decisions about where they will spend the money.
Understanding the market would give the investor personal knowledge of creating a successful business. This comprehension will be crucial if the start-up wants mythical unicorn status. Investors should pay attention to investment tips regarding start-ups from other investors and use their knowledge wisely.
Unicorn Business Models
Having a simple plan is not enough to start a business. A complete business model with each part of the business explained should be in place before investors decide to support the company.
A start-up would have a different model than the more well-established businesses, and the investor should be aware that tweaking this model could be part of the venture. Investing would entail more than just money, as time and effort could be worth more than currency.
Investors with years of experience would guide the new business executives to make the best decisions for their company. Still, they should ensure that they agree with the business plan before putting forward any of their money.
Competitive Advantages
Some businesses have been doing things the same way for years, and why wouldn’t they? If something isn’t broken, they don’t think to fix it.
With fresh pairs of eyes, new business start-ups usually have a brilliant idea that they want to share with the world. In the case of unicorns, they have such a good idea that it may revolutionize the current business models for many other companies.
When investors spot this exceptional thinking, they should jump at the possibility of investing money before others adopt the idea. When the project is first launched, the one-of-a-king appeal could make the shares skyrocket, giving initial investors an excellent return on their investment.
Executive Support
Although the new business owners may have a good idea and launch a great product, they may need the business sense and savvy that more seasoned people in business would have.
The executive team could make or break the success they are trying so hard to achieve. Investors could step in and offer advice on where pitfalls could potentially arise. If the executive team is not open to this process, they may butt heads with the investor and lose their support.
Being open to new learning opportunities would go both ways. The investor should be aware that there may be areas of the business that the executive team may have more knowledge about, and they would only be in a supportive role.
Financial Layout
One of the main factors for investors to consider is the cost they will have to lay out. The unicorn start-up may need significant financial assistance to get the business going.
With the initial capital set aside, the investor may incur ongoing costs if unforeseen circumstances. Even the best plan may need adjustments and re-evaluation along the way, and investors should be aware of this.
What Other Investors Say
The pandemic has undoubtedly caught a lot of businesses off guard, and many had to hurry to find solutions for the new normal.
With this boom in technology-driven times, many unicorn start-ups could undoubtedly be on the horizon. Investors are currently looking for start-ups in quantum technology which they believe would take the world by storm.
Investors look at the market trends to see where there may be a gap that needs filling. When a potential unicorn arises in this area, they may want to jump in and offer their assistance before other investors do.
Considering Outcomes
In the end, investors want a good return on their investment, and they would assist the unicorn start-up in achieving success. When the company reaches the level of maturity that the investor has hoped for, it could benefit them and the start-up. The situation is a win-win for all. Investors are constantly searching for ‘the one’ that would be victorious, but finding that unicorn may be a once-in-a-lifetime experience.
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