Unicorn

A unicorn is a privately held start-up with a valuation of more than one billion dollars. The term reflects the rarity and exceptional success of such companies. It is often used as a symbol for particularly valuable young companies. It was coined by investor Aileen Lee at a time when companies of that size genuinely were rare. Their number worldwide has multiplied since, which has considerably reduced the term's original significance.

An important methodological caveat applies: the valuation comes not from continuous stock exchange trading but from the price of the last financing round applied to all shares. Because investors in such rounds regularly receive preferred shares with liquidation preference, anti-dilution protection and other rights, their shares are worth more per unit than common shares. The simple extrapolation therefore systematically overstates the company's actual value. Founders may also be willing to accept harsher terms in order to reach a headline valuation threshold. In practice it follows that the number alone says little and must always be read together with the capital structure, the preferential rights and the underlying metrics. On a later sale, the waterfall determines how much actually remains for common shareholders. At an IPO, the agreed conversion of preferred shares is particularly relevant. Several German companies have crossed the threshold, among them businesses in financial technology, software and logistics.