---
title: "Unicorn"
url: "https://mahouse.world/glossary/unicorn"
type: "glossary term"
topic: "Venture funding"
author: "Ihor Vlasov"
reviewed: "2026-09-20"
published: "2026-09-09"
---

# Unicorn

A unicorn is a privately held, venture-backed company valued at $1 billion or more at its most recent funding round. The term was coined in 2013, when such companies were rare; there are now well over a thousand, fintech is the largest sector among them, and the valuation the word refers to is the price of the last round's preferred shares, not what the whole company would fetch.

**Also known as:** Unicorn status, Unicorn company, Billion-dollar startup, Decacorn

## Key facts

- **Used at:** venture and growth investing, press coverage, and the pricing of secondary sales of employee and early-investor shares
- **Binding:** no — a label; the number behind it is a post-money valuation, itself the last round's price per share multiplied by all shares
- **Typical count:** more than 1,200 worldwide in 2024–2025, roughly a third of them created in 2021 alone; fintech accounts for about a fifth — Stripe (valued at $91.5bn in a February 2025 tender offer) and Revolut ($45bn in an August 2024 secondary sale) among the largest
- **Typical caveat:** the last round's preferred shares carry a liquidation preference, so common shares — founders', employees' — are worth less than the headline price per share implies
- **Parties:** the company, its investors, its employees holding options, and the secondary buyers who price what the label is worth today

## How the unicorn label works in practice

A post-money valuation is arithmetic: a round that buys 10% of a company for $120m values it at $1.2bn. But the shares bought are preferred, with a 1× (or more) liquidation preference and sometimes a ratchet that protects the investor if the company lists below the round's price. The investor was buying a downside-protected instrument, and priced it accordingly — so the $1.2bn is what the whole company would be worth if every share were as good as the ones just sold, which they are not. Studies of unicorn cap tables have found headline valuations overstate the fair value of the average company by around half.

The label still matters for what it unlocks: recruitment on the strength of the story, press, and the secondary market in which employees and early investors sell shares to funds that want exposure before a listing. The secondary price — often at a discount to the last round, sometimes at a premium — is a better guide to what the market thinks than the round itself. Stripe's and Revolut's valuations in 2024–2025 were set by tender offers, in which the company arranged a buyer for employee shares at a price its board approved.

The 2022 rate rise was the test. Companies that had raised at 2021 prices either raised down rounds — Klarna from $45.6bn to $6.7bn — cut costs to avoid raising, or were sold for less than their last round, at which point the liquidation preferences decided who was paid: investors first, employees' options often nothing.

## Example

A fintech raises a $150m Series D for 12% of the company: a $1.25bn post-money valuation, and the label. Its preferred stack now totals $420m of invested capital with 1× preferences, and the D has a 1.5× preference. An employee holds options over 0.1% of the company, which at the headline price is worth $1.25m. Two years later the company is sold for $700m. The D takes $225m, the earlier preferred $270m, and the remaining $205m is shared among common holders and converted preferred by shareholding: the employee's 0.1% of $205m is $205,000, a sixth of the headline figure. Had the sale been at $2bn, the preferred would have converted and the 0.1% would have been worth $2m — the label was never a price, only a scenario.

## Common mistakes

- Reading a post-money valuation as what the company is worth.
- Employees valuing options at the last round's price per share without the preference stack.
- Raising at a valuation the next round cannot clear, so the label costs a down round.
- Treating the number of unicorns in a sector as a measure of its health rather than of its 2021 fundraising.
- For an acquirer, anchoring on the target's last round rather than on the price at which its board will sell.

## Related terms

- [Series D](https://mahouse.world/glossary/series-d.md)
- [Post-Money Valuation](https://mahouse.world/glossary/post-money-valuation.md)
- [Liquidation Preference](https://mahouse.world/glossary/liquidation-preference.md)
- [Secondary Market](https://mahouse.world/glossary/secondary-market.md)
- [Down Round](https://mahouse.world/glossary/down-round.md)
- [Venture Capital](https://mahouse.world/glossary/venture-capital.md)

— Ihor Vlasov, M&A FinTech Expert. Last reviewed 2026-09-20. https://mahouse.world/authors/ihor-vlasov