5 Key Factors for building a Unicorn

McKinsey analysed hundreds of startups and asked many VCs what makes a startup with Unicorn 🦄 potential in a recent study (link)

Here is what they found:

1. Teams: Do they have sufficient experience and networks?

Most successful startups are founded by multiple people, mostly of diverse backgrounds. Although not essential for building a great business most of the successful founders had a university degree. Many of the great founders had a track record of entrepreneurship and some had already built ventures before.

2. Total addressable market: is it big enough to be worth it?

Tech, Media and telecommunications, industrials and healthcare had the biggest success rate as they address the biggest markets.

if a smaller market is chosen the business has to be very disruptive and thus claim a lot of the market share.

3. Timing: Too late, too early or just right?

Recognizing trends and acting on them before everyone else is extremely beneficial. being ahead of the rest by 2-3 Years was identified as the ideal timeframe.

4. Technology: does it work at scale?

Software-driven businesses have a higher potential to become unicorns as they have a low infrastructure overhead and can thus grow rapidly. A great technology sublayer with high levels of automation, algorithms and processes is highly valued, as it supports growth.

5. Traction: is there a clear path to profit?

Does the business solve a real need in a unique way? Product market fit is essential to becoming a profitable business. Revenues prove that a business is viable, and if there is a clear path to profit success is highly likely.

is your business the next unicorn?
what are you missing?

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