Unicorn Hunting: The Search For The Next Big Thing

Yesterday as I was working on this article, I had no time to prepare some food and thought I should order something so I quickly thought about Glovo and UberEats. I installed Glovo and as I was scrolling through, it hit me that that would have been MealTime app, an app that my co-founder and I worked on to solve this very same problem way before Glovo or UberEats hit the Kenyan market. That’s the first startup we worked on and that made revenue; we had a small office space and a team of dedicated employees working either in engineering or customer support and sales. For a while we did well until the funds ran dry, the revenue wasn't yet enough to cater for the expenses like expansion, onboarding of hotels, salaries, office rent. It eventually dawned on us that we were facing an unavoidable death not because we could not execute but because we needed to buy more time till break-even but that wasn’t possible with a restrained access to funding. Then came UberEats, backed by Masayoshi Son’s SoftBank, with their bottomless pit of funds and later on Glovo, also expat founded and full of millions of dollars. To cut the long story short, the two currently dominate the meal-delivery space in Kenya and MealTime is a long forgotten story.

There are lots of talks comparing bootstraping to fundraising but I think the comparisons are unfair because the jungle eventually determines which path you should take. Where the jungle consists of formidable hunters whose aim is to kill all animals of a given species except one within a given forest, the aim of all animals then changes not to be the fastest but the one that can endear itself to the hunter and remain its darling. Normal hunting, like we did back in the day, involved chasing one animal and killing it for meal; the hunting I’m talking about here involves capturing one animal, feeding it the best meals, caring for it the best you can, killing all the other animals to reduce competition to our captured animal with the hope that the proceeds from milking this one animal will far outweigh the cost of having it within our care. What does this mean for the hunter? It simply means the hunter isn’t going for any animal; he is going for a unicorn — a rare animal of its kind, a source of luck and good fortune, a darling of all.

In this jungle of unicorn hunting, all startups therefore, have only a simple decision to make: be the unicorn or die. It is said that as Masayoshi Son was negotiating with Uber, he said he could as well just take his money to Lyft. By saying so, he was basically telling Uber to be the unicorn or die and Uber had no option but to accept it. The same story is said of how WeWork, backed by SoftBank, killed its competition. The VCs have changed the game; they look for the best in an industry within a region, pump all the resources to it and the rest have little to no survival chance. So do you want to bootstrap for 5 years only for a unicorn hunter to capture your 1-year old competitor and take you out of business or do you want to be the unicorn?

As we were applying for YC, the biggest question was: how big can this get? Loosely put, are you able to be a billion-dollar company (unicorn)? During the YC live interview, the biggest question was: how scalable is this business? Loosely put, yes, we now know you can be a billion-dollar company but how fast?

After capturing unicorns in the US market, the top hunters moved to Asia as the new hunting ground and this will form the remainder of the article. If you go to India, you will see that SoftBank, which backed Uber in the US, also backed Ola (Uber’s competitor in India) with $210M at $1B valuation back in 2015. Ola cabs is now worth $6.7B 6 years later. SoftBank isn’t the only unicorn hunter, I did an analysis of Indian unicorns which I present in the following sections and as you’ll see, the top hunters are the very same with most of them strategically joining the startups not at inception but to push them into unicorn status or after they’ve become a unicorn and probably preparing for an IPO — well, that’s what late-stage VCs do anyway.

Total Unicorns in India over the years

The first thing we can't fail to notice is how fast India has grown to 60 unicorns since 2011 and may reach 100 before the year ends. Between 2011 and 2014, India only had one unicorn a year. With the success of these early players like FlipKart, now valued at $37.6B, it makes sense why the numbers have only got better. India added 8 new unicorns in 2018 and 9 each in 2019 and 2020. This year, with the pandemic proving a boom in tech, 24 new unicorns have been hunted by the same suspects.

VCs which led unicorn-pushing funding rounds

SoftBank alone is responsible for minting 15 unicorns in India by leading unicorn-minting funding rounds totalling to ~$4.9B, the single largest probably being when they led the $1B round for Oyo Rooms in 2018 that pushed it to $5B valuation from $900M. Below, you can see the numbers for each of the other top VCs like Tiger Global (9), Sequoia Capital (6) and Accel minting 4 unicorns.

The above may portray a different picture because it only looks at the VC(s) that led the rounds. In the next section, we look at all their portfolio unicorn companies where, once again, we see the same players but with Tiger Global leading with 21 unicorns in their portfolio followed by Sequoia Capital with 19.

The usual suspects: SoftBank, Sequoia Capital, Tiger Global and Accep Partners

Perhaps the most interesting of everything here is the returns to these hunters which show how effective this strategy is. For instance, at entry point, SoftBank’s newly hunted unicorns were worth $25.7B (post-money valuation) and as at now, they are all worth a combined $82.6B. For Sequoia, it’s a change from $11.1B to $65.2B with tiger global realizing a massive change from $13.85B to $95.1B.

Total valuation of unicorns backed by each VC

With 60 unicorns backed by 96 unicorn hunters in 10 years, the numbers above, the new IPOs we’ve seen from the likes of Zomato and upcoming ones from PayTM and the rest, it is a no brainer why unicorn hunting is the preferred model for these VCs. The unicorns span different unique sectors with SaaS, Fintech & E-Commerce each having 10 and cumulatively having 50% of all the unicorns while Edtech, Marketplaces, B2B E-commerce and Logistics follow closely after .

Unicorns in India by Sector

Why do I find this an important topic to write about? Like I said, the jungle determines the path that an animal can take. We saw this (unicorn hunting) happen in the US, we are seeing it in Asia and I very well know that it is coming to Africa in no time. As an African founder, it’s important to not only work on your startup but to be aware of how the jungle operates. Get to know the opportunities that exist out there and most importantly, the hunters to keep an eye on so that when they come knocking in your region and sector, you will be their preferred candidate to push to the unicorn club for if they pick your competitor, then your goose is most certainly gonna be cooked. You have to make that choice now.

“To be a Jedi is to face the truth, and choose. Give off light, or darkness, Padawan. Be a candle, or the night.” — Yoda

As we believe within our company, we don’t build for VCs, we build for our customers and fully focus on them but the VCs, just like a car fuel, form an important opportunity to push us to the next level so we will always have our doors open to them. That is the new game that we choose to play and I believe you too should.



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Phelix Juma

Phelix Juma


Founder, Techpreneur, Engineer and Data Scientist