These days, the unicorn — a privately held startup valued at more than $1 billion — is becoming more plentiful, with annual sightings increasing at an unprecedented pace.
In 2021, the United States welcomed 355 new unicorns, more than the previous five years combined. The rate has only slightly slowed. Through November of 2022, at least 309 more unicorns joined the herd, making it quite clear that achieving that status is becoming more fact than fiction.
5 Tips for Reaching Unicorn Status
Go niche. Find a problem and commit to solving it well.
Put the customer first. Make sure they fall in love with your solution and want to use it more and more.
Think simple. Make your expertise more efficient and your product easier to use.
Know your market. Study the incumbents and your competitors.
Ask for help. Network with key opinion leaders or former executives.
How do you launch a startup that has the potential to become a unicorn? As the managing partner of Revere Partners, a venture capital fund focused on the oral-health sector, I’m accustomed to both identifying opportunities for investors and providing capital for cutting-edge startups hoping to achieve unicorn status. I’ve been a practicing dentist and am now primarily an angel investor/venture capitalist. My career has included multiple startup exits, as well as the founding of the Barchester Bay Group, a portfolio consisting of more than 40 separate ventures.
When the startups I work with ask for advice on the best ways to get on the path to unicorn status, here are some of the tips I offer.
Going Niche? Be Specific.
Find your problem and stick to it. Relentlessly commit to solving that problem and solving it well. Distractions will be numerous and relentless, so it’s vital to resist the temptation to stray from your original path.
Here’s an example: Sleep disorders. Estimates suggest that up to 30 million Americans have sleep apnea, although only six million have been formally diagnosed. These people are confused as to whom to see and where to go for treatment, meaning there’s a wide-open opportunity for the dental field to take ownership of the issue.
Even though dentists are educated about sleep apnea in dental school, most don’t have reliable devices or sleep centers to refer patients to, and many don’t know how to handle the medical billing aspect. A startup we’re working with has created the first 360-degree platform for dentists to bring sleep medicine into their practices. Rather than dive too deep into a service or devices area, which would have led them astray from the goal — the 360-degree platform — the company remained focused and effectively delivered a potential industry-shifting solution.
Put the Customer First
From the start, identify your target end user within the niche and stick to that persona. Make sure they fall in love with your solution and want to use it more and more. After all, product proliferation, financial gain and everything else does not happen unless dictated by customer demand.
I used to work with a very successful oral-health product and professional services company that did not invent the oral-care product that was its specialty. Instead, its differentiation was improving the product based on customer input, which led to a new and improved product that customers loved. Customers even informed the iterative design/redesign of the product, its content and creative direction, product messaging and more.
Initially, the consumer target skewed toward Millennial women. Continuous redesigns, specifically in the early phases of the business, built a highly engaged, recurring, low-churn subscription base. As the company mastered this segment, it was able to test into and consider other demographics, with added focus on trying different media platforms and sales channels. It resulted in a successful, continually growing company that is the envy of many competitors in the dental industry.
Keep It Simple
Sometimes, the most effective innovations happen by removing unnecessary features or gimmicks. The goal should always be to make your expertise more efficient and your product simpler to use. It’s easy to overbuild your platform, which could result in feature development proverbially running things off the rails.
I’ve worked with several AI companies deeply involved in highly sophisticated technology and have seen what can happen when it’s challenging to move other initiatives along, such as fundraising, GTM, etc. Sometimes, founders (specifically those with a product background) will naturally default to building more onto the product, when the best course of action is to innovate by removing features. By giving the customer something simple that works well, new products can gain quick adoption, usually at a more affordable price, while building brand value with the customer.
Know Your Market
Study the incumbents and the competition. A niche is a niche for a reason. Devote time observing to find the gaps. Conduct surveys and interviews and dive into what’s being said in reviews and on forums.
An example of this is fintech startups targeting small and medium-size businesses (SMBs) particularly as it applies to payments, consumer financing, insurance verification, claims processing and sometimes other methods of delayed payment. If you speak with brick and mortar owners, you will surely uncover that their ability to both adequately collect on and respond to missed revenue opportunities is hampered by visibility.
Furthermore, you’ll discover the incredible amounts of stress they incur at tax time as individual consumer payments could be coming from three different sources (insurance, out of pocket and financing) per transaction.
These owners often also struggle with how to strategically improve matters, for instance limiting their in-network insurance selection or switching to payments or financing providers that offer more equitable rates, because they miss the granular limitations of each as well as how they interact.
The result is an inefficient, obscured, fragmented and expensive approach to revenue cycle management (RCM). There is also the risk of dissatisfied consumers because they have to wrangle payment methods from multiple sources, often at variable and high rates, with fluctuating approval rates and criteria that often leaves them unexpectedly responsible for balances with unknown amounts.
Therefore, the market is now seeing new, multi-functional RCM platform approaches that introduce sweeping changes capable of straightening out how SMBs deal with payments, consumer financing and insurance billing. It has led to the ability to work directly with multiple channel partners, resulting in more affordable access to retail products and services, better overall experiences for the SMBs and consumers and a more analytical approach to overall RCM.
Ask for Help
Nobody is an expert when starting out at something. Those who have been in a niche for a while usually know it best, so you may need to put in the time to get to know them and build relationships. Don’t be afraid to meet new people, network to high places and ask for what you want. Key opinion leaders or former executives can be key for entryway introductions.
There’s no instruction manual for becoming a unicorn. The direction forward isn’t always clear and the trail can be winding and difficult. The one thing that nearly all unicorns have in common is a continuous culture of rolling up their sleeves and working hard.
Why? Because their thing is brand new, or at least a sizable improvement over what previously existed. And remember, anything good is worth fighting for. Earning unicorn status requires tenacity, grit and a willingness to do the hard, unglamorous work. When it all comes together, however, the results can be nothing short of magical.
