During my exploration of financial markets, I witnessed empires fall and companies built from scratch that surpassed the budgets of entire countries. Imagine a simple app on your mobile phone, with no factories or oil wells, valued at a billion dollars! In the modern economic world, this is not a fantasy; it is what we refer to in the language of finance and business as a "unicorn".

So, what is this mythical creature? And how is it created?

What is a "unicorn"?

In economic terms, a unicorn is a term used for any startup that has not yet gone public and has successfully broken the one billion dollar mark in market valuation. These are companies that start with a simple idea to solve a daily problem and grow at a terrifying speed like wildfire.

Where did this term come from?

Behind every great term, there is a great woman - a joke. In 2013, an American investor named Aileen Lee sat observing the sea of startups in Silicon Valley. Aileen decided to calculate precisely: how many tech companies were founded in the last decade and succeeded in reaching a valuation of one billion dollars?

The shock was in the numbers! Aileen found that the success rate of these companies does not exceed 0.07%. To express this terrifying rarity, she wrote a famous article in which she referred to these very rare companies as "unicorns" (the mythical one-horned horse); because finding a company that reaches this billion-dollar size in its early stages was considered closer to finding a mythical creature in a forest! Since that day, her term has become the gold standard for investors around the world.

The Valley of Death: Where Investors' Money Disappears?

The journey does not start with billions. It starts with a young man or woman who has an idea. They establish a small company, and here begins the real battle that we call in the investment world the "Valley of Death".

In this valley, the company does not earn a single penny; instead, it "burns" money to attract you as a customer. It offers you free delivery and huge discounts. It is bleeding financially so that you get used to using it. The harsh golden rule here: most companies die in this valley and declare bankruptcy, and investors' money evaporates into thin air.

The big trick: valuation does not mean "cash"!

As someone interested in economic knowledge, let me reveal to you the trick that many are unaware of: when you hear in the news that a company has become a unicorn valued at one billion dollars, this does not mean at all that it has a billion dollars in its bank account!

The secret lies in the game of "valuation". Valuation is merely a "future expectation". An investor (a whale from the market) comes and tells the founder of the company: "I will give you 100 million dollars for just 10% of your company". With a simple calculation, if the 10% is sold for 100 million, this means that the total value of the company on paper has become one billion dollars. The company may be losing money today, but the investor bets that it will dominate the market tomorrow and be sold for real billions.

Why do "whales" play this deadly Russian game?

Why do top investors risk their money in companies that mostly will fail? The answer lies in the "power of the unicorn". A smart investor spreads their money across 10 startups. They know for sure that 9 of them will fail and they will lose their money in them. But they are looking for "the tenth company"; the company that will turn into a unicorn and multiply its value hundreds of times. This one "billion-dollar beast" will compensate for the losses of the nine companies and bring the investor immense wealth.

The financial lesson for us

The world of "unicorns" is not a rosy play for quick wealth; it is a battlefield that relies on very high risk (High Risk, High Return). As simple individuals, financial awareness requires us not to be dazzled by the glitter of the billions we read about, but to understand that behind every announcement of a new "unicorn", there are graves of thousands of companies that tried and failed, and investors who read the market with intelligence and patience.