July 17, 2024 - We all eventually learned that unicorns are just a myth — but, unicorns do still exist! All you have to do is pick up a newspaper and scan the business section to read about “unicorns.” This begs the question, “Why are business journalists talking about unicorns?” A “unicorn” is a term coined for venture-backed companies valued at $1 billion or more in the private market. These companies are typically attractive to investors for their high growth potential and are often technology companies. How is a $1 billion valuation actually achievable for a startup technology company?

Citrin Cooperman is skilled in working with diverse tech companies at all stages, from startups to fully mature enterprises. Here are a few ways you can help boost your company’s chances of becoming a unicorn:

• Know your market

  A startup’s value is largely based on market forces in the industry in which it operates. That includes both the market forces in play today and those forecasted for the future. Leveraging these forces to disrupt your respective industry can fuel the unicorn fire.

• Showcase management’s skills

  A startup’s management team is its lifeblood. Nothing can overcome poor management, no matter how great of an idea the company may possess. A smart and savvy management team can go a long way to provide a steady hand in a high growth environment.

• Don’t burn through cash

  Running out of money is a common pitfall for those on a unicorn trajectory. Unless you can fund operations from sustainable revenues, burn-out is always a real possibility. Startups that rely on the kindness of their investors to keep going will find that the investments eventually will dry up. Remember, adding investors is dilutive to existing shareholders. Ensure your product will be able to stand on its own after its first few rounds of funding.

• Keep clean records

  One of the hardest elements of valuing a unicorn is the lack of clean books and records. There may come a time when you are ready to sell your business. At that time, it will be extremely important that you have kept clean and concise accounting records from the beginning. While startups might think it is unnecessary to hire outside accountants from the get-go, it can save them a lot of money and create value when the time comes to sell.

Citrin Cooperman's Technology Industry Practice and Valuation Advisory Services Practice are skilled in helping technology startups achieve their strategic vision. Our dedicated professionals provide the customized services your startup needs to thrive. To learn more, please contact Jennifer Cohen or your Citrin Cooperman advisor.