Question

According to the venture capital industry, what is a unicorn?

• A. Any start-up that reaches to employ 1000 people
• B. Any start-up that makes its owner a billionaire
• C. Any start-up that reaches the valuation of $1 billion
• D. Any start-up that raises $1 billion in venture capital
• E. Any start-up that gives a dividend of $1 billion to its shareholders

Answer 1

The Correct Option is C

To understand what a unicorn is in the venture capital industry, let's explore the options one by one:

• Option 1: Any start-up that reaches to employ 1000 people
  The term unicorn does not relate to the number of employees a start-up has. Therefore, this option is incorrect.
• Option 2: Any start-up that makes its owner a billionaire
  Unicorn status is not defined by the personal wealth of the start-up's owner. Thus, this option is incorrect.
• Option 3: Any start-up that reaches the valuation of $1 billion
  This is the correct definition of a unicorn. In the venture capital industry, a unicorn is a start-up that reaches a valuation of $1 billion or more.
• Option 4: Any start-up that raises $1 billion in venture capital
  While a substantial amount of venture capital is significant, unicorn status is specifically about the valuation of the company, not the funds raised.
• Option 5: Any start-up that gives a dividend of $1 billion to its shareholders
  Unicorn status is unrelated to dividends provided to shareholders. As such, this option is incorrect.

Conclusion: The correct answer is that a unicorn is any start-up that reaches a valuation of $1 billion, which corresponds to Option 3. This term was popularized by venture capitalist Aileen Lee to describe rare, highly valued start-ups.

Answer 2

In the venture capital industry, the term "unicorn" refers to any start-up that reaches a valuation of $1 billion. The correct answer among the given options is: Any start-up that reaches the valuation of $1 billion. Here is a detailed explanation:

1. Valuation: A unicorn is a privately held startup company with a valuation of over $1 billion. This valuation is determined before the company goes public or gets acquired.

2. Origin of the Term: The term was coined by venture capitalist Aileen Lee to represent the statistical rarity of such successful ventures.

3. Significance: Achieving a unicorn status indicates not just financial success, but also market optimism and potential for growth.

Therefore, while the option "Any start-up that raises $1 billion in venture capital" seems related, "Any start-up that reaches the valuation of $1 billion" accurately describes a unicorn in the context of venture capital.