What is a Unicorn?

by Kaitlyn Ranze

The investing world is full of strange and wonderful creatures. You have bulls, bears, and crypto bros, but none are quite so elusive and mysterious as the unicorn.

The origin of the unicorn in finance

It turns out that unicorns have been part of the financial landscape for centuries. The first known use was in 1713, when Scottish author Tobias Smollett wrote about “the great unicorne of money”.

Smollett was referring to the large sums of money that were being invested in joint-stock companies at the time.

What are joint stock companies

A joint stock company is an entity in which money is raised by selling shares to investors. This money can then be used to finance a variety of different ventures, from money-making enterprises to public works projects.

Joint stock companies were first popularized in the 18th century, and they have since become a key part of the global economy. Many of the world’s largest and most successful businesses are organized as joint stock companies, including Walmart, Google, and Apple.

Pros and cons of joint-stock company

There are several advantages to organizing a business as a joint stock company. First, it allows a business to raise large amounts of money by selling shares to many different investors. This can be especially helpful for businesses that require a lot of money to get started, such as manufacturing companies or fintech startups.

Second, a joint stock company can help to spread the risk of investing in a new venture. By selling shares to many different investors, a business can ensure that no one person bears the entire risk of the venture. This can make joint stock companies more attractive to potential investors, and thus help a business to raise even more money.

Image of a hand flat, palm up with a silver and red rocket flying up and away from it. The overlaid text reads Break into startup investing even if you're not a millionaire. The read now button links to the article How to Break into the Exclusive Club of Startup Investing.

However, there are also some disadvantages to joint stock companies. One is that they can be quite complex to set up and run. This is because businesses must carefully track the ownership of shares, and ensure that shareholders have a say in how the company is run.

Another downside is that joint stock companies are often less nimble than other types of businesses. This is because their decision-making process is typically slower, as it must involve the approval of a large number of shareholders.

The term “unicorn” was originally used to describe these companies that were attracting a lot of investment money.

Today, the term is still used to describe companies that are highly valued by investors. However, it now has a more specific meaning.

A unicorn company is a startup that has been valued at $1 billion or more by venture capitalists.

These companies are rare and elusive, which is why they’re called unicorns.

There are only a handful of unicorn companies in the world, and they’re all located in Silicon Valley. Some of the most famous unicorn companies include Uber, Airbnb, and Pinterest.

Why are modern unicorns so rare?

Unicorns are so rare in investing for a few reasons. First, it takes a lot of money to get a startup off the ground. Even if you have a great idea, you need money to make it happen. And most people don’t have millions of dollars just sitting around.

Second, unicorns are usually only created when there’s a new technology or market that’s being tapped into. For example, when Uber first came out, it tapped into ride-sharing. That’s why they were able to grow so quickly and become worth billions of dollars.

And finally, unicorn companies are just plain rare. There are only so many companies that can meet all the criteria: a new idea, a lot of money, and fast growth.

How to invest in a unicorn (even if you’re not a millionaire)

Unicorns have become increasingly popular investments in recent years, as they offer the potential for high returns. However, they are also risky investments, as most potential unicorns are loss-making and may never achieve profitability.

There are a number of ways to invest in unicorns, including through venture capital firms, angel investors, and crowdfunding platforms.

How to Invest in a Start-Up for as Little as $100

Venture capital firms typically invest large sums of money into unicorns in exchange for equity stakes. Angel investors are typically wealthy individuals who invest their own money into startups. And crowdfunding platforms allow everyday investors to invest small sums of money into these companies.

Nav.it co-founders Erin Papworth and Maia Monell are featured in an image with text that says "Open Investments: How Anyone Can Invest in a Start-Up like Nav.it"
Listen to this episode of the podcast to hear the founders’ story and why they believe in open investing.

So, if you’re looking to invest in a high-growth company with the potential for high returns, then investing through crowdfunding may be right for you.

There are many crowdfunding sites to choose from, but do your research before investing. Some sites are better than others, and you don’t want to put your money into a site that isn’t reputable. You can try one of the following:

  1. WeFunder
  2. SeedInvest
  3. StartEngine
  4. Republic
  5. Microseed
  6. Nextseed

Happy unicorn hunting!

Related Reads:

Short -Term Investments

How to Invest

Risk, Return, and Diversification

How to Invest in a Startup for as Little as $100

Invest in Nav.it

Hear the Story of How Nav.it was Founded in this Episode of the Podcast


Get it on Google Play button links to Nav.it At Work on the Google store on android.
Get it on Apple Store button links to Nav.it At Work on the Apple Store.
More Stories
Tax Questions Answered: Do I have to Pay Taxes on the Stimulus or Unemployment Benefits?