UNICORN COMPANIES (WHAT REALLY ARE THEY)

In business, a unicorn is a privately held startup company valued at over $1 billion 

The term was first popularised in 2013 by venture capitalist Aileen Lee, choosing the mythical animal to represent the statistical rarity of such successful ventures.

According to CB Insights, there are more than 803 unicorns as of August 2021.The largest unicorns included ByteDance, SpaceX and Stripe. Also according to CB Insights, there are now 30 unicorns with over $10 billions valuation in the world, including SpaceX, Stripe, and Klarna.They have been given the name “decacorn”.

But as at today there are over 1000 unicorn companies

Many unicorns were created through buyouts from large public companies.

In a low-interest-rate and slow-growth environment, many companies like Apple, Facebook, and Google focus on acquisitions instead of focusing on capital expenditures and development of internal investment projects.

Some large companies would rather bolster their businesses through buying out established technology and business models rather than creating it themselves.

But unicorns have been long in the making in Africa. Jumia, founded in 2012, emerged as the first tech startup with a valuation of $1 billion in 2016.

“Jumia’s unicorn status was very fast as it had a lot of backing from inside and outside the continent. Big names like Goldman Sachs, MasterCard, MTN group, etc,” notes Farouk Olamide Yusuf, an African tech analyst in an interview with Quartz. Jumia is now publicly listed in New York.

Attaining a $1 billion valuation is a difficult but desirable feat for many tech startups, especially those hailing from Africa. Accessing funding and deeper innovation to tap into the continent’s diverse markets and unique positioning are considered key in speeding up valuation and scaling operations.

Africa’s second unicorn, Interswitch, was founded in 2002. The Nigerian founded Interswitch became a unicorn in 2019 when Visa took up a 20% stake in the company for $200 million.

“Interswitch was born when no one was taking a look at Africa; and despite the fact that it set the pace and dominated the African landscape, it had little or no funding from the outside in the early years. The company became a Unicorn in 2019 and they have plans to go public in London very soon,” added Yousuf.

Currently today, fintech sector, and some companies have already emerged as the continent’s biggest fintech bets, becoming unicorns in Africa.

African fintech companies have raised more in the first seven months than they have in the decade before, according to one report. Between January and September last year, African fintech companies have raised a touch near US$1.5 billion. That, against the US$1.06 billion they raised all across 2011 to 2020, is a clear indication of accelerated interest in the market potential of fintech in Africa.

There are a total of seven tech unicorns in Africa right now, with fintech unicorns in Africa holding the majority of five. The other two are Jumia (ecommerce) and the most recent unicorn in the continent Andela (HR solution for software engineers). The space also includes ‘soonicorns’, or companies that are one their way to becoming future unicorns, such as Kuda Bank. The Nigeria-focused challenger bank raised US$55 million in a Series B this year, at a valuation of US$500 million.

List of Unicorns include

Toutiao – Bytedance (China): news platform with customised content.

Uber (U.S.): mobile taxi app.

Didi Chuxing (China): vehicle hire company.

WeWork (U.S.): job sharing company.

Airbnb (U.S.): holiday and tourist accommodation platform.

SpaceX (U.S.): aerospace transportation company.

Palantir Technologies (U.S.): big data analysis specialists.

Stripe (U.S.): company that allows individuals and businesses to receive payments via the Internet.

JUUL Labs (U.S.): electronic cigarette company.

Epic Games (U.S.): video games company. E.g. Fortnite.

Here are 7 Unicorns in Africa
1. Flutterwave:
2 Interswitch:
3. Jumia:
4. Fawry:
5. Chipper Cash:
7. Andela:

Five of which are from Nigeria while Fawry is from Egypt and Chipper cash was created by the Ugandan-born Ham Serunjogi and Ghanaian Maijid Moujaled.

This is very huge for Africa more especially Nigeria, it goes to show that indeed dreams do come true and it’s possible to make it anywhere in the world

Hope you now know what unicorn means in business?

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