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Private markets and pre-IPO investing · lesson 2 of 20

What a unicorn company is

A unicorn is a private company, meaning one that is not listed, valued at more than one billion dollars. The term was coined in venture capital in 2013, when companies of this kind were rare. Today there are many more.

Two other names are used for larger sizes: decacorn for private companies valued at more than 10 billion dollars, hectocorn for those above 100 billion.

A unicorn's valuation is not a market price. It is a number negotiated in a single transaction, on a precise date. For this reason it should always be read together with its date and source, and on its own it does not say how much each shareholder would receive in a sale.

Questions

1. When is a company called a unicorn?

When it is private and valued at more than one billion dollars

Both conditions are required: an unlisted company and a valuation above one billion.

2. What is a decacorn?

A private company valued at more than 10 billion dollars

Decacorn indicates a private valuation above 10 billion dollars.

3. How should the valuation of a private company be read?

As a number negotiated in a single transaction, to be read with its date and source

It reflects one transaction on one date, not a continuous market.

Next lesson: The life cycle of a startup

Continue from lesson 4

Private markets and pre-IPO investing: an online course in 20 short lessons with quizzes and a final certificate, on Unicorn Academy.

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