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How to Catch a Unicorn: An exploration of the universe of tech companies with high market capitalisation

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  • Jean Paul Simon

Abstract

Technology companies with high market capitalisation (often called unicorns) have been receiving a lot of attention and media coverage recently. In general, unicorns are IT-centric (software mostly, but also hardware). They are often rather young global companies that match unsatisfied demand with supply through the production (which can easily be scaled up) of innovative and usually affordable services and products. These are usually part of the mobile internet wave, and rely on connectivity (high speed networks, mobile and fixed), new devices (smartphones, tablets, phablets…) and the opportunities these bring. They are grounded in network effects, and demand-side economies of scale and scope. They depend on a strong favourable business environment, developing organically and building on fast expanding markets (emerging economies, middle classes). They are Venture Capital-dependent and the competition for funding can generate impressive (i.e. inflated) valuations. These companies can be disruptive for other sectors and firms. This report aims to document the phenomenon by investigating a qualitative sample of 30 companies that have recently been valued above the one billion dollar threshold. It identifies some of their characteristics and the lessons to be learnt. The report has two parts: Part I contains the overall findings of the investigation and some suggestions for policy makers. Part II contains a detailed account of the case studies on which the investigation is based. They are published as separate documents

Suggested Citation

  • Jean Paul Simon, 2016. "How to Catch a Unicorn: An exploration of the universe of tech companies with high market capitalisation," JRC Research Reports JRC100719, Joint Research Centre.
    • Handle: RePEc:ipt:iptwpa:jrc100719
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    File URL: https://publications.jrc.ec.europa.eu/repository/handle/JRC100719
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    References listed on IDEAS

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    1. Gawer, Annabelle, 2014. "Bridging differing perspectives on technological platforms: Toward an integrative framework," Research Policy, Elsevier, vol. 43(7), pages 1239-1249.
    2. repec:ipt:iptwpa:jrc66110 is not listed on IDEAS
    3. Jean-Charles Rochet & Jean Tirole, 2003. "Platform Competition in Two-Sided Markets," Journal of the European Economic Association, MIT Press, vol. 1(4), pages 990-1029, June.
    4. Gomez-Herrera, Estrella & Martens, Bertin & Turlea, Geomina, 2014. "The drivers and impediments for cross-border e-commerce in the EU," Information Economics and Policy, Elsevier, vol. 28(C), pages 83-96.
    5. Daniel Nepelski & Giuditta Prato, 2014. "European ICT Poles of Excellence," Intereconomics: Review of European Economic Policy, Springer;ZBW - Leibniz Information Centre for Economics;Centre for European Policy Studies (CEPS), vol. 49(6), pages 324-331, November.
    6. Daniel Nepelski & Giuditta de Prato, 2014. "Analysing the European ICT Poles of Excellence: Case Studies of Inner London East, Paris, Kreisfreie Stadt Darmstadt, Dublin and Byen Kobenhavn," JRC Research Reports JRC85354, Joint Research Centre.
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    Citations

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    Cited by:

    1. Qing Li & Yan Li & Tianlongyi Yuan & Dawei Chen, 2023. "Analysis of Security Threats in the Supply Chain of ICT Products Based on Evolutionary Game Theory," Group Decision and Negotiation, Springer, vol. 32(5), pages 1183-1209, October.
    2. Andrea Renda, 2016. "Selecting and Designing European ICT Innovation Policies," JRC Research Reports JRC103661, Joint Research Centre.
    3. Vincent Van Roy & Daniel Nepelski, 2017. "Determinants of high-tech entrepreneurship in Europe," JRC Research Reports JRC104865, Joint Research Centre.
    4. Carolin Bock & Christian Hackober, 2020. "Unicorns—what drives multibillion-dollar valuations?," Business Research, Springer;German Academic Association for Business Research, vol. 13(3), pages 949-984, November.
    5. Daniel Nepelski & Marc Bogdanowicz & Federico Biagi & Paul Desruelle & Giuditta De Prato & Garry Gabison & Giuseppe Piroli & Annarosa Pesole & Nikolaus Thumm & Vincent Van Roy, 2017. "7 ways to boost digital innovation and entrepreneurship in Europe. Key messages from the European innovation policies for the digital shift project," JRC Research Reports JRC104899, Joint Research Centre.
    6. Fiammetta Rossetti, 2017. "The Business Demography of the ICT Sector in Europe," JRC Research Reports JRC106589, Joint Research Centre.
    7. Marco Guerzoni & Consuelo R. Nava & Massimiliano Nuccio, 2019. "The survival of start-ups in time of crisis. A machine learning approach to measure innovation," Papers 1911.01073, arXiv.org.
    8. Evgeniy Kutsenko & Kirill Tyurchev & Tatyana Ostashchenko, 2022. "Relocation as a Driver of Innovative Activity: A Global Study of Unicorn Founders’ Migration," Foresight and STI Governance (Foresight-Russia till No. 3/2015), National Research University Higher School of Economics, vol. 16(4), pages 6-23.

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    More about this item

    Keywords

    IT industry; technology; innovation; market capitalisation;
    All these keywords.

    JEL classification:

    • L00 - Industrial Organization - - General - - - General
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior
    • L8 - Industrial Organization - - Industry Studies: Services
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

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