What Is a Unicorn Company?

By Jason Hall – Updated Dec 8, 2025 at 12:02 AM EST

Key Points

Unicorn companies reach billion-dollar valuations, propelled by VC and angel investments.
Investing in unicorns is risky but can yield high returns, as few start-ups achieve this status.
Unicorns that go public may still offer strong investment opportunities if they show profitability.

While the tales of unicorns are as varied as the cultures that produce them, the mythical animals are rare, unique creatures. In the world of venture capital (VC) or start-up investing, businesses that manage to reach a valuation of $1 billion are similarly rare. It’s because of that rarity that a venture-capital-backed private company -- or start-up, in VC lingo -- that manages to reach a valuation of $1 billion is referred to as a unicorn.

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Cartoon businessperson wearing a black suit and clutching a briefcase while riding a white unicorn standing on upward-pointing white and red arrows. — Source: Getty Images

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About the Author

Jason Hall is a contributing Motley Fool stock market analyst with more than a decade of experience writing about dividend stocks and long-term investing. He has been with the company since 2012 and previously spent over 10 years in technical sales in the printing and information services industry. Jason also founded and operated a small food manufacturing business.

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Jason Hall has the following options: short March 2026 $90 calls on PayPal. The Motley Fool has positions in and recommends Meta Platforms and PayPal. The Motley Fool recommends the following options: long January 2027 $42.50 calls on PayPal and short December 2025 $75 calls on PayPal. The Motley Fool has a disclosure policy.