A tech ‘unicorn’ is a start-up tech company with a $1 billion valuation. It’s the ‘holy grail’ for a start-up. Actually, it’s a huge deal for any company. Its proof they have been able to achieve a high level of success.
Of course there’s more to success that just a valuation. But it’s a start.
To achieve unicorn status isn’t easy. One billion dollars is the kind of money most people will never get near.
It’s an astronomical amount of money, really. To reach that threshold is a huge milestone. And it often can lead to even bigger and higher valuations.
Uber was once a ‘unicorn’. It now carries a valuation of around $68 billion. Airbnb was also an early stage ‘unicorn’. It’s now worth around $31 billion.
There’s a whole list of other ‘unicorn’ start-ups that are now household names.
- WeWork: $21 billion
- SpaceX: $21 billion
- Pinterest: $12.3 billion
- Dropbox: $10 billion
- Lyft: $7.5 billion
At some point these all crossed the $1 billion threshold.
But there’s one more that just joined the ‘unicorn’ club. Its venture to this lofty status is a historic moment.
It’s not the first tech company to be worth $1 billion.
But it is the first bitcoin company to achieve that status. Bitcoin exchange, Coinbase just became a ‘unicorn’.
A signal of something bigger
In early May 2013 Coinbase was just 11 months old. They had a handful of employees, and not much else. Their aim was to build an exchange to buy and sell bitcoin.
Back in 2013 bitcoin was still unknown to the masses. It had been around for a few years. But the mainstream really had no idea about it.
Yet in 2013 Coinbase received the largest funding round to date for any bitcoin company in existence. Back then famous venture capital funds, Union Square Ventures invested $5 million into the emerging company.
That was a smart deal.
Today Coinbase is getting another funding round. This time, Institutional Venture Partners, Spark Capital, Greylock Partners, Battery Ventures, Section 32 and Draper Associates are chipping in $100 million.
According to Fortune that gives Coinbase a valuation of $1.6 billion.
This is a huge for Coinbase. But it’s also a huge deal for the whole crypto-economy. Coinbase is just one company to cross the ‘unicorn’ threshold. In our view there will be many more to come.
It’s easy to get swept away with the price of crypto. Just look at the price of bitcoin over the last year and you can see why.
But you have to understand there’s far more going on. Yes, the price of bitcoin is eye catching. It’s exciting. It’s proof that if you wait too long you can miss out on huge returns.
But when you look at Coinbase you see they’re not a cryptocurrency. They’re a business. And maybe one day they might be a publicly listed business. One day you might be able to buy stock in Coinbase.
However the fact they’ve grown so much so fast is a huge sign. A sign that this opportunity is just starting. Some people are worried that it’s forming a bubble, or that it’s too late to get in.
We don’t think so. We’re of the view this is just getting going. It’s so early, so new and still so misunderstood. Right now is the start of a revolution in finance, and you’ve got a chance to be a part of it.
The birth of a whole new financial system
Coinbase is taking the more traditional route for growth. They’re using good old fiat money from the traditional financial system.
But there are other businesses on the march. They’re following a similar path, but in a more non-traditional way. There are companies building their business on top of cryptoplatforms.
Take for example, Stox. Stox is a prediction-market business, backed by invest.com. You might have seen Stox in the media because Floyd Mayweather Junior put his celebrity endorsement behind it a few weeks ago.
Stox is building a business where people can trade cryptocurrency (the Stox crypto, STX) on the outcome of events.
For example, let’s say there’s a 75% chance Floyd Mayweather Jnr will beat Conor McGregor on 26 August after 12 rounds, on points.
This 75% — or 0.75 — becomes the price of the event. And the more likely this outcome, the more people buy ‘shares’ in it. With more people, the price pushes higher — closer to 100%. Thereby the value of the initial 75% ‘price’ goes up, creating a profit. You can take your profit at any point you like.
But if McGregor dominates the first seven rounds, the chances of the outcome will be less likely. And the ‘price’ will fall. Maybe to 50%. Maybe lower to 20%. This decreases the initial ‘price’, thereby creating a loss. Again, you can cut your losses at any point.
It’s like share trading, but on the outcome of events.
It might sound tricky, but it’s not. And Stox believes there’s a huge, growing market for these ‘prediction markets’. Thanks to the funding mechanisms of cryptocurrency, they’re building their business in this new financial system.
Stox raised $33 million in a day and a half via an initial coin offering (ICO). That meant thousands of people contributed their cryptocurrency to get an allocation of the STX ‘token’.
It’s not quite a $100 million from a currency exchange like Coinbase. But it’s still money (crypto) flowing into a start-up business from people willing to invest.
Stox isn’t alone in raising money through ICOs.
In June and July of this year over $1 billion has been raised in crypto start-ups via ICOs. This is serious money flowing into an emerging new asset class.
The key takeaway is this. When we talk about crypto it’s not all about bitcoin and its price.
You’re witnessing the birth of a whole new alternative financial system.
It’s like the rebuilding of the traditional financial system, but better. And the new system is designed in a way that gives people like you a chance to build a fortune. It’s not rigged to the 1%. It’s a chance for all — if you’re open and ready for the opportunity.
So, are you ready for it?
Editor, Australian Small-Cap Investigator