Did you know that drinking from the horn of a unicorn might protect you from stomach trouble, epilepsy, or poison? This mythological horned horse/goat would fetch you quite the hefty price on the market.
Equally rare, a unicorn company is hunted by many investors to take them to a magical land of riches and royalty by striking the right mix of market resonance, talent, timing, and funding to achieve an over-the-rainbow valuation.
The term “unicorn,” as applied to businesses, was popularized around 2013 by Aileen Lee. It’s attributed to startups that achieve a valuation of at least $1 billion. The end. Investor insight over.
Since less than 1% of startups achieve this beastly feat, you might say the fleet-of-foot title is àpropos. Achieving such a remarkable valuation certainly makes for an exciting pursuit, but as a founder or an investor, understand that the chances are slimmer than slim.
That is why I’d like to contrast the unicorn with what we’ll call a “workhorse”. These are businesses that are strong, steady, and highly productive. While aspiring unicorns see dollar signs in their distant future, workhorses are producing dollars every day. Workhorses generate steady cash flow but are unlikely to have a windfall of profit from an exit. On the other side, unicorns may not turn a profit for years. And years. And yea… looking at you Uber. But the potential reward for 1 or 2 sky high valuations in a portfolio drives many investors to continue to bet on this vision. While the workhorses approach generating value in a more predictable way, it’s a 50 cent approach for unicorns: Get rich or die tryin’.
It’s easy for each side to point fingers: “Reckless” throw to one side and “Boring” thrown to the other. But both have their place, not only on a global scale but within our own communities. Our local economies thrive on the backs of the workhorses providing quality goods and that sweet, sassy, southern hospitality version of customer service. The unicorns remind us to dream big. To innovate. To not stay content with the status quo. Meanwhile our workhorses create the economic impact of reliable job creation, healthy profits, and satisfied customers.
So which is the right choice for you as an investor? The beauty of Vicinity is that no one says you have to pick. While a balanced and diversified portfolio is always a good move, we aim to bring opportunities from all types of industries and with all types of visions. You can back the innovator along with the artisan. The craftswoman and the pioneer. Be proud not just of where you’re from but of what you own.