We all know that unicorns are mythical creatures loved, in particular, by little girls that are enamored by their powers, elegance and beauty. There’s even such a thing as unicorn poop (yes, that’s real I'm afraid).
But in the tech world when someone refers to something as a ‘unicorn’ it has an entirely different meaning and if there’s any beauty in a tech unicorn, well, I suppose that’s in the eye of the beholder.
A tech unicorn is, quite simply, is a privately held start up valued at over $1 billion. Companies that are valued at over $10 billion are referred to as decacorns, while anything valued at over $100 billion is known as a hectocorn. The term was coined in 2013 by venture capitalist Allan Lee who derived the term because of the uniqueness of such business.
Unicorns include the likes of Apple, Amazon, Google although to be fair these companies could technically be referred to as decacorns or hectocorns at the very least.
But they're no longer as rare a concept as you think. According to TechCrunch, back in 2013 when the term ‘unicorn’ was coined, these type of tech businesses were quite unique with only 39 companies being able to claim that title. Fast forward to 2019 and a lot of things have changed with now at least 227 active tech unicorns, according to Pitchbook a financial data and software company.
So why all this talk about the growth in tech unicorns? Well if the Centre for Policy Studies, a leading think tank, gets its way here in the UK there will be many more unicorns created in the future. This is because it’s calling on the government to unlock the potential of this growing tech sector and expand its herd of unicorns.
In its aptly named ‘Herding Unincorns’ report it highlights some of the barriers to creating unicorns such as finding the right talent. It’s calling on the government to introduce a range of incentives to help high-growth tech companies to address their skills shortages, including:
- Introducing the ‘Unincorn Visa’:This would allow tech companies to hire the brightest and the best of the world with ‘miniumum fuss’.
- Create a skills review: This would be led by the private sector and unicorn companies to help to imporove the availability of homegrown talent.
- Create a mentorship programme:This would be done through the introduction of a ‘National Tech Entrepreneur Mentoring Scheme’ for Unicorn CEOs and staff.
- Boost funding availability:This would be done through changes to the tax-advantaged venture capital schemes such as Enterprise Investment Schemes (EIS), the Seed Enterprise Investment Scheme (SEIS) and Venture Capital Trusts.
- Change ISA rules:This would involve amending the rules so that individuals could invest in privately held growth businesses. It would also mean encouraging pension funds to allocate more capital towards growth companies.
The report was generated from interviewing founders and funders about the many challenges they face and encompassed feedback from roundtable discussions. In a nutshell, the main concerns were access to finance and talent.
With Brexit still on the cards it’s important that companies have the ability to entice talent to the UK, especially if they are in the start-up phase and want to make a success of it.
Watching what the government does or is encouraged to do in this space, particularly if you’re an aspiring tech entrepreneur hellbent on creating your own unicorn, will be well worth it as it could point you in the right direction when it comes to funding and hiring the best of the best.