What is a Unicorn? – Definition from Divestopedia

What Does Unicorn Mean?

The term “unicorn” has three different, separate meanings in the business world. The first meaning of this term refers to privately owned startup companies in the tech sector that have achieved a valuation of more than $1 billion. The valuations that have been assigned to these companies often bear little to no relation to the company’s fundamental metrics, such as profitability, cash flow or assets. The term became widely used after Aileen Lee, a venture capitalist and founder of CowboyVC first coined it in her article, “Welcome to the Unicorn Club: Learning from Billion-Dollar Startups” that was published in 2013.

Unicorns can also refer to a potential employee who takes on an almost mythical status among human resources professionals. In today’s competitive marketplace, many HR departments are looking for candidates who are capable of wearing many hats at once and smoothly integrating many different unrelated tasks. But in many cases, companies are looking for a caliber of employee that does not exist in the real world. They want someone who is overqualified for the job to work there so that they may cut costs by hiring only one or a small handful of employees instead of an entire department. But this approach can often lead to disappointment for both hirees and their employers.

Finally, the term “unicorn” can also be used to signify a company that is viewed as a possible target for buyout. When there are a large number of companies available for takeover, a unicorn would be a company that meets many additional characteristics above and beyond those that are strictly required for it to be a viable takeover target. This type of company is therefore said to be a unicorn because of its extreme rarity.