Among the tech buzzwords that have cycled through use, overuse, and cliché, Unicorn was high on the list in 2022. But does it still represent a legitimate milestone in the tech startup lifecycle? And could the term, or some untainted version of it, see a comeback in 2023?
This question was posed by Charles Laughlin during a recent episode recording for Localogy’s new podcast: This Week in Local (see episode archive & subscribe here). When looking back at the top themes of 2022, the fall of the unicorn… or at least its designation… stood out.
Special Again
This inspired some digging and speculation, as it often goes with podcasts, to determine the dynamics of unicorns and why the term experienced the arc of tech punditry that it did. Besides the normal cycle of terms that go in and out of style, what market forces are at play?
For one, unicorns flooded the market to the point that the designation became meaningless. Throughout the pre-2022 heyday, valuations got so out of control that unicorns – defined as any pre-IPO company achieving a billion-dollar valuation – were popping off left and right.
That prompted the next valuation milestone: the decacorn. This signified any company with a $10 billion post-money valuation. The distance between $1 billion and $10 billion was large enough to give this new categorization the scarcity once enjoyed by the overpopulated unicorn.
But going back to the core question, has the unicorn (and decacorn) population depleted to the point that a $1 billion valuation is special once again? This of course factors in the market correction that’s retracted and gutted valuations throughout software sector.
If so, “unicorn” is still passé, even if the milestone it signals is back in favor. For that reason, we may not see the term itself return but perhaps a synonym that doesn’t carry all the baggage. Among other things, once-minted decacorns aren’t going to like the downgrade back to unicorn.
The Market Has Spoken
Of course, this is all just semantics, but it’s tied to real market dynamics. The real question isn’t what we call these companies but what valuations will need to be established as real milestones. That sliding scale will obviously need a reset… just like the market itself had.
That means that the act of achieving a $1 billion valuation – or even half that amount – may return to coveted and hard-fought accomplishment it once was. And as it continues to fall back into a state of scarcity, what will we call it? Perhaps some other animal or endangered species.
Snow Leopard? Bald Eagle? Or Esquilax? Simpsons fans will recognize that last one as a mythical horse with the head of a rabbit… and the body of a rabbit. Or perhaps the two-headed hound, born with only one head. Now we’re just having fun…. as always, the market will decide.
