Just about every startup founder’s dream is to join the herd of unicorns — becoming a statistical rarity or household name like Uber, Lyft or Postmates. But it much easier said than done. These days, just establishing a startup takes a talented and dedicated team, especially when the failure rate of U.S. companies after five years is over 50% and over 70% after the ten-year mark.
Do unicorns simply emerge from the thousands of entrepreneurs in some Darwinian-like journey or is there a pattern to be found? To help you better understand unicorland and how to model your startup, Embroker put together this guide dives into some of the factors that make unicorns unique, including geographical placement, industry breakdown and lessons you can apply to your startup.
Below, we’ve highlighted three major components from the guide.
Where should the birthplace of your unicorn be? If you looked at unicorns a decade ago, nearly all resided within the U.S. However, today things look a little different. While it makes financial sense to situate yourself next to a hotbed of innovation like Silicon Valley, in a major tech hub like Seattle or set up shop next to Wall Street bulls, unicorns have gone global.
Over the years unicornland has expanded from U.S.-based startups to a global club, meaning that unicorns can really be born anywhere. So while the U.S. still dominates the unicorn map another 37% are based in China, with more and more popping up in countries like India, Great Britain and Brazil.
Leading Unicorn Industries
True, it helps to be in the right place, but one of the most important factors to consider is which industry your startup will reside in. It’s a question that every entrepreneur must take seriously when developing their startup idea. Unfortunately, there’s no black and white answer to this question, especially as technology changes this framework year over year. However, we can still look at the herd as a whole to pick out patterns and see which industries have historically dominated the club.
The bulk of unicorns exist within four different spaces, fintech (12% of all unicorns), eCommerce (11%), internet software (9%) and on-demand (6%).
That doesn't mean funding isn't available outside of these industries. Startups have flourished in industries like 3-D printing, clothing, entertainment, gaming, HR tech, music, and even tech for kids and babies. In other words, don't assume the only valuable idea is one in one of the top four categories — although there are hot areas, and investors may focus on them, looking for a big opportunity.
Founding Team Size
The next important topic to consider is your founding team size. Should you go at it solo, take on a co-founder or establish a founding team? Again, there’s no single answer to this question, but if you look at the founding size of the top 23 unicorns, you’ll notice a trend — most are well under 10 founders.
In fact, of the top global unicorns, over half had a founding size of 1-2 people. Because disagreement, stress, and conflict are inevitabilities during the startup journey, one school of though is that these are more easily resolved with a smaller founding team, which could explain the trend.
That said, two heads are better than one and starting a business (a successful one at that) requires a variety of skills that few people possess on their own, so having two or more founders can help make the representation of that entire skillset more complete. If it was just knowledge and resources that determined success, then teams would always win. However there are multiple social factors that contribute to a startup’s success.
To learn more about tips from startup leaders and the unicorn ecosystem. Check out the full guide here.