It's not a secret that a lot of entrepreneurs, and the venture investors who support them, are striving to create billion-dollar companies. 

The right ideas and action plans can be a game-changer for any business. They open up new opportunities, provide the means to expand and often secure a billion-dollar exit.

The technology sector today is crowded with startups. Aileen Lee, Cowboy Ventures founder, coined the term unicorn in 2013, describing 39 "U.S.-based software companies started since 2003 and valued at over $1 billion by public or private market investors”. Ever since we have seen the rapidly expanding unicorn production reach an all-time high in 2021 - with the success of 537 private technology-enabled companies valued at $1 billion or more. 

However, 2022 has shown a drastic decline in growth and funding. Why is that and where does it leave the future of startups?

The Unicorn Myth

In the present venture capital investment landscape, the unicorn's rarity and allure appear to have diminished. So what are the smoke and mirrors around the mythical creature hiding?

When determining a company's true long-term value, its impressive valuations turn out to be a helpful, yet arbitrary milestone. In this market, being a unicorn does not guarantee a direct route to liquidity - when unprofitable, their billion-dollar status becomes merely theoretical. Unicorn investments do not guarantee unicorn status.

Furthermore, the influence and temptation surrounding unicorns has encouraged founders and VCs to take shortcuts and ignore regulations. The pursuit of quick, grand success stories has caused companies to disregard sustainable business models and fundamentals. This inevitably leaves them burning through money they don’t have, fighting for customers who don’t return their revenue. 

Now that the market has cooled, are we seeing a shift in valuation? Early-stage investors are redirecting their attention to another symbolic beast - the dragon.

The Dragon Club

Dragons are established companies committed to long-term success, powered by innovation, agility and adaptability. To be recognized as one, a company must be valued at $12 billion or more, net of venture funding. They are 4 times as rare as unicorns and raise capital at a remarkable pace. 

Dragon companies keep their funds under control, seeking out profitable avenues. They have sustainable goals with a clear vision for the future, supported by proven business models and discipline. 

When combined with appropriate valuations, they are currently a very appealing investment opportunity. Unlike unicorns, dragons can return the entire fund - making them the smarter choice. However, while you can buy into a unicorn at any time, dragons need to be discovered at an early state. Otherwise, the remaining upside is unlikely to return your initial investment.

Without question, dragons have formed an even more exclusive, ambitious club than Lee’s original concept. The days of unicorns are numbered, as startups are increasingly turning to dragons as a source of inspiration.

When you want to scale your business the smart way - you’re going to need dragons. So if you're looking for someone who can breathe fire into your business, look no further than Dragonlabz.

Contact us and let us empower your future.