How To Identify Early-Stage Unicorn Founders
Unicorns are no longer just the realm of fantasy, although these days, they’re not shaped like horses with a horn on their heads. Corporate Finance Institute informs us that a unicorn is a private startup company that can boast a valuation of over $1 million. These businesses represent a brilliant startup idea, executed perfectly, with a dedicated team to support them. The true value in spotting a unicorn business is to catch them when they haven’t achieved unicorn status just yet. Unfortunately, this is easier said than done. There’s no fundamental guideline or checklist that defines is a startup will become a unicorn or not. The power of a business to leverage that sort of valuation comes from its people.
Identifying early-stage unicorns means seeing the promise within their founder and staff. Most of these companies aren’t made up of more than a handful of people. Republic notes three out of every five million businesses have a chance of becoming a unicorn startup. Finding a unicorn startup sounds like trying to locate a needle in a haystack when you weigh those odds. Yet, some telltale signs can point you in the right direction. Knowing what to look for is almost as important as knowing where to look.
The Team Knows That They Don’t Know Everything
One of the easiest ways to spot a potential unicorn is to examine how their team asks questions. When posed a question about their industry, such as a medical business offering primary care physician, they don’t leap to the fastest answer. Usually, when a company’s representatives do that, they have rehearsed the answers beforehand. Unicorn companies have dynamic teams that consider options before giving answers. They are also a tight-knit group, usually comprising no more than three to five members, each a critical hire.
Critically examining the company’s weaknesses allows them to find the right people for the job. They can spot the points in their business structure that needs work and hire the right person for the job almost every time. Most importantly, they are curious, especially in areas that are not within their industry. This natural curiosity is a crucial component, as it helps them find solutions that others within the field wouldn’t even consider.
Adapting To Different Levels of Functioning
Most business owners are well aware that running a business at a high level and dealing with everyday tasks require different mindsets. In larger companies and those with varying levels of hierarchy, it’s easy to delegate these matters. However, in startups, the paper-thin margins and small staff mean that each person on the team would need to switch between high-level function and day-to-day management on the fly. The switch between strategic thinking and an operational mindset happens seamlessly in the team members of a potential unicorn startup. However, since this switch occurs behind the scenes, it can be challenging to spot the signs.
The founder of such a company usually aligns all of the early business decisions to their final goal. Having direction like this in the early part of the company’s life helps to keep it on track over the long term. Interaction among team members and other staff shows off the confidence the team has in their idea. Startup leaders encourage their team but also demonstrate clear communication, transparency, clarity, and integrity. The history of the founder and the rest of the group show an eager mentality and a go-getter-type attitude that is necessary if a company wants to make a big splash on the world stage.
Passion Over Knowledge
Too much passion might be a red flag for some investors. A company run by people who don’t know what an industry is like or how it operates seems like a doomed investment. When looking at a business’s unicorn potential, this trait can shine a spotlight on the right companies. Industry knowledge helps a business understand what’s going on around them. Competing with others requires a company to have its finger on the pulse of the industry. However, unicorns don’t compete; they surpass. Passion is more important than knowledge in these cases, but only to a certain extent. Knowledge still needs to come into play, or else the company is just selling dreams.
Having passionate team members helps when those team members utilize their knowledge to forward the company’s goals. Passion can help the startup spot things that industry specialists would miss because they’re too close to the action. Critical hires that understand the nitty-gritty of the industry’s processes can turn that passion into reality.
Stellar at Fundraising
No startup can run without income. Fundraising is such a crucial part of the startup process that founders and the management team in most startups spend a significant amount of time worrying about their next round of investment. You can spot this when the founder is comfortable pitching investors even when they don’t need to. This ability to break down their ideas for anyone to understand them comes from their extreme confidence in their product. They actually believe in what they’re doing, and it shows. They can also break down the details of their project into the simplest terms. The “explain it to a five-year-old” test can help you spot whether a company is unicorn material or not. These two traits make a company able to source proper funding for their undertakings, enough to get the best talent so that their ideas can become a reality.
Spotting The Promising Ones Early
Early-stage unicorns are challenging to spot but not impossible. It’s a lot more complex than adapting an existing franchise like Dermani Medspa franchising. Spotting the nuances that let you know that you’re looking at future greatness is the modern equivalent of prospecting for gold. Even so, at least there are clear signs of whether gold exists in a location. Because the startup world is so competitive, there are thousands of teams out there, each one knocking on the door to potential greatness. Determining which ones have the suitable characteristics to succeed is a challenge, but one that’s worth the time. Finding the next unicorn startup could mean getting in on the ground floor of a society-changing movement.