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Unicorns vs Dragons –  Why breed Dragons in 2023?

Dragons are about to take over the world! Yes, you have read it right the Dragons are back and they are here to stay. Lo and Behold, this is not about the ancient Dragons but the mythical creatures of the startup world. 

The startup world is a fast-paced, ever-evolving landscape. What used to be revolutionary just a few years ago could already be obsolete today. According to experts, the age of unicorn startups is starting to dwindle, making way for the age of dragon companies. 

Dragons may not be the fire-breathing monsters from legend, but they are quickly roaring their way to dominance. Emerging from the startup world, these modern-day dragons have been making a name for themselves as meteoric successes in today’s markets. Lead by great risk-taking and outstanding leadership, these new dragon companies have focused on specific niches where they were sure to excel.

Having been empowered through technology and innovation, they are now ready to take on global markets and dominate, shaking up existing structures and paving the way for a new order of successful businesses. Dragon companies are having tremendous success in their respective markets and inspiring other entrepreneurs with their accomplishments. With each passing day, the startup world continues to shape itself into something bigger, better, and a lot more profitable than ever before.

The smartest investors and venture capitalists are now watching out for dragons. But why is it important to breed Dragons in 2023? Here is all that you must know…

What is a Unicorn Startup?

Becoming a unicorn company is an envious achievement in the venture capital industry. This term describes a privately held startup valued at over $1 billion, an accomplishment that must not be taken lightly. To have such notoriety in the investment world, these companies must possess some crucial elements. These include a great idea to put into practice, reliable plans for growth and advancement, and a way of showcasing all of this to the right people. Reaching unicorn status is no easy feat but the reward outweighs the risks for those brave enough to pursue it.

Many founders attribute the success of unicorn startups to their teams having the right mix of skills; executives familiar with both venture capital and technology, strong marketing teams, and capable coders are key. In addition, these businesses are often well-timed products or services that tap into an existing trend or need. Finally, they often have a unique spin on what others offer: solving problems or providing experiences that competing startups can’t quite match.

Occasionally, there is even that element of ‘secret sauce’ in the form of innovative approaches allowing them to stand out in crowded fields. All these factors come together to allow unicorn startups to stand out from the competition and reach their potential. The first company to achieve the status of a Unicron was known to be Alphabet now turned into Google. Today, the world has over a thousand innovative Unicorn startups running successfully.

Canva, Discord, Grammarly, and Bolt are some of the recently emerged unicorn companies with a valuation of more than $1 Billion.

What is a Dragon Startup?

Dragons are now the new kings of the corporate jungle, soaring far out of reach with their unprecedented valuation of $12 billion or more. Unlike their predecessor Unicorns, Dragons have taken it a step further. Not only do they boast higher capital worth but these companies also make well-deserved profits by virtue of their entrepreneurial spirit and innovative business strategies.

By skilfully avoiding the traditional IPO process, Dragons are able to prioritize long-term growth and stability. Their profitability allows them to scale faster than other businesses. It also enables them to take on far greater risks due to their increased capacity for absorbing sudden losses. This enables these organizations to build strong foundations and expand into global entities. Indeed, Dragons have not only greater valuations but also higher profit margins and thus they can present higher dividends to their shareholders.

Dragons represent the pinnacle of success for many businesses and entrepreneurs. Thus there are many reasons why venture capitalists must breed Dragons in 2023!

Why is it important for VCs to breed Dragons?

Venture capitalist firms offer a unique opportunity to those investors willing to take a risk on new and emerging startups. Funded solely by private investments, the individuals comprise a select group with money invested at their own discretion. The investors have the singular goal of investing in promising startups in order to unlock potentially lucrative returns for all involved.

Ventures that have been backed by these firms have often gone on to become massively successful companies with expansive economic contributions around the world. As such, venture capitalist firms are truly an attractive option for any investor looking to leverage the potential rewards that can come along with investing in new technologies and small businesses.

Venture Capitalists have been investing heavily in “unicorn” startups, and as a result, they prioritize business ideas that appear to be on track for reaching the ever-elusive $1 Billion valuation. What many of these VCs don’t necessarily realize is that achieving such a high valuation isn’t what renders a startup truly successful. Return on investment and having an active impact on the world are perhaps the two most important pillars for success; metrics that even $1 billion in valuation cannot necessarily guarantee. Evernote is one great example from history. This task management company failed despite raising a significant round in 2004.

We see many such examples, thus, this makes it even more important for VCs to understand that a company’s valuation is just an estimation of its worth. This value does not determine its future success or guarantee it to become a Unicorn.

Venture Capitalists surely have their eyes on the prize too. Many firms are growing increasingly keen to ‘place bets’ on multiple companies at once and hope for one or two to become successful ‘Unicorns’. By doing this, not only does the investor reduce the risk of losses due to the failure of any one particular startup, but also gains insight into different industries and market sectors.

This means that the investor is introduced to fresh ideas in multiple disciplines while having a better chance at avoiding complete financial disaster should one of their investments fail. It’s become a common practice these days among venture capitalists, so much so that it’s almost expected to see an investor pour resources into multiple startups rather than one. Although this is never the safest most profitable option for them.

Unfortunately, only a tiny fraction of all statistically-calculated success stories actually make it to being designated as true market leaders, or ‘Dragons’. It’s these firms that generate spectacular returns for investors…and it’s no wonder investments in these potential Dragons is one of the hottest trends right now.

VCs growing interest in Dragon Startups

Venture Capitalist’s interest in finding Dragon startups is on the rise, and rightly so. Dragon startups are an attractive option due to their capability of bringing substantial returns, steady growth, and a higher success rate than traditional unicorn companies. The potential for exponential profits makes a wise investment in Dragon companies an opportunity that many VCs cannot pass up.

Additionally, long-term investment stability can provide Venture Capitalists with significant success over time compared to those choosing to invest solely in the whims of the unicorn market which can fluctuate greatly given their typical short-term gains. Therefore, recognizing the value that Dragons offer has become a priority amongst venture capitalists when searching for worthwhile startups.

As of stats, there are now 24 dragons in the world, 11 of which are based in the U.S. The list includes Stripe, SpaceX, Instacart, Epic Games, Databricks, Chime, Fanatics, and more.

Amidst a market downturn, investing in dragon startups with fair valuations—which remain realistic for seed-level companies uninfluenced by the exuberance of late-stage growth—is now an alluring option for investors. Dragon companies are more stable, independent, and smartly playing their way around in the market.

It is undeniable that Dragons are becoming a major factor in the startup world. As venture capitalists and entrepreneurs work tirelessly to build technology-driven opportunities, they must understand and be aware of the full potential of these majestic creatures. Dragons have been around for centuries, however, their recent resurgence as symbols of success and growth has enabled them to become the standard that many startups strive to reach. 

Thus, venture capitalists need to invest in startups that can bring greater value than merely expanding their profile – such as revolutionary technologies and improved products or services. Undoubtedly, with the right investments made in the right startups, dragons are here to take over the world!

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