A tech unicorn is a company that has been valued by investors at more than one billion dollars. Venture capitalist Aileen Lee first made use of the term in 2013, and this term has now become part of the lexicon for public and private investors, entrepreneurs, and anyone working in the technology industry. Azim Premji, a billionaire from India, has helped set up India’s latest tech unicorn, a software start-up. Tech companies are now being valued higher and faster than any other company before. Tech unicorns are not that rare anymore.
According to Play Bigger, a consultancy, the average time for a company to reach a $1bn valuation between 2000–03 was 8.5. Between 2009–13, this had dropped to 2.9. Slack, the enterprise communication software company, reached unicorn status in just eight months in 2016.
In the past, top venture funds have driven returns from their ownership in just a few companies in a given fund of many companies. Plus, traditional venture funds have grown in size, requiring larger ‘exits’ to deliver acceptable returns. For instance, to return just the initial capital of a $400 million venture fund, might mean needing to own 20 per cent of two different $1 billion companies, or 20 per cent of a $2 billion company when the company is acquired or goes public.
Icertis
Icertis has raised $115 million, thus gaining tech unicorn status as investors flock to enterprise software makers. Icertis has helped businesses manage contracts in the cloud compacting with SAPSE and Oracle Corp.
The advanced-stage funding round was in Bellevue, Washington, and Pune, India-based Icertis was co-led by Greycroft Partners LLC and PremjiInvest, the fund managed by the family office of Azim Premji. Existing investors, including B Capital Group and Cross Creek Advisors participated. With this, Icertis has raised over $211 million.
The enterprise software segment is heating up as investors from Tiger Global Management to Sequoia and Accet scout the industry for India’s next start-up giants. Many are expected to be business—rather than consumer-focused, as the country’s talent pool shifts from IT outsourcing services for global clients to designing and providing online software.
Icertis helps customers worldwide manage over 5.7 million contracts, from supply chain and procurement deals to employee agreements and non-disclosure pacts, that have a total value of $1 trillion. It may utilise the additional funding to expand its business, such as by expanding sales and marketing. Global compliance demands involving Brexit, tariffs, European data privacy regulations as well as rapid digitisation has proved of use to Icertis, even while technologies such as artificial intelligence have helped enhance the sophistry of its services.
Icertis works on a subscription model, charging customers based on the number of contracts drawn up and tracked using its software. MGI Research forecasts that the total spending by companies for such contract management is at over $20 billion from 2018 to 2022, with services on the cloud growing at around 37 per cent annually over the same period.
UPSC Exam Preparation eBooks
Decacorns, Super-unicorns, and blessings
‘Tech Unicorn’ term has brought with it a range of subsequent phrases.
* The collective noun, a herd or blessing of unicorns, refers to companies normally grouped around an industry, a specific fund, or geography, such as those recently emerging from the silicon slopes of Utah (Domo, InsideSales.com, Pluralsight, and Qualtrics).
* The decacorn refers for companies valued above $10 billion. Uber ($62bn), Airbnb ($25bn), and Dropbox ($10bn).
* There is the super-unicorn (<$100bn), such as Facebook before it went public in 2012.
* ‘Dead unicorns’ refers to a graveyard of billion-dollar valued companies that have stalled on the fast-track to an initial public offering (IPO) due to softening investor confidence or stalling user numbers. These companies are growing in number.
Quant Funds-Importance and Drawbacks