What Exactly Is Unicorn Private Equity?

It is a common notion that making unicorn private equity a part of your investment portfolio means a higher return. However, that is only half of the truth. Investing in a unicorn startup is surely very profitable but it also comes with an equally high risk.

To get more clarity on this topic, read on -

What exactly is unicorn private equity?

Unicorn startups are essentially new private companies that have reached a market valuation of a billion dollars or more. This valuation is basically the amount an investor is willing to pay to be a part of the startup’s journey. To accept an investment, a company has to offer something of value in return. This is usually achieved by offering stakes in the organization to the investors in exchange for their money. As and when the company grows, the stakes offered to investors increase in value proportionally and become extremely valuable with the passage of time.

To give you a brief example, had you invested just a mere $10,000 in Apple during its initial years, you would have a massive $6.7 million dollars or more in the present day and age. That’s the power of a unicorn investment.

What are the benefits of acquiring unicorn equity?

1. Buyout by bigger companies - Established MNCs like Google, Apple, Microsoft, and their peers do not believe in expanding their business by starting a new venture in the desired direction. They rather buy out the control of the investee company’s management and merge the smaller business under their banner. This is highly rewarding to an investor as buyouts are generally above the average valuation of the unicorn startup.

2. Tend to stay private entities longer - Private companies have a freer hand in making bold business decisions while their public counterparts tend to be more restricted in the same domain. Unicorn startups tend to stay private entities for a longer period to avoid the additional hassles and growth lag.

I hope this answer helps you understand unicorn private equity.

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