tech companies also valued startups creatures first
A brief guide to the fantastic, wondrous creatures of tech industry jargonFirst came the unicorns. Then came the decacorns. Now people are talking aboutdragons, centaurs, and even ponies.The world’s tech startups, the people who finance them, and the journalistswho write about them, appear in thrall to some sort of collective massdelusion in which startups must be classified according to an increasinglycomplex taxonomy based on their funding prowess that’s apparently derived froma Dungeons & Dragons rulebook. For the benefit of those readers who come intocontact with this increasingly obtuse jargon, here is a brief guide:## UnicornThe original metaphor. Tech startups valued at $1 billion or more were once sorare—all the way back in late 2013—that they were named for a mythical hornedcreature. For venture capitalists, investing in a company that was latervalued with nine zeros after the first number was considered an amazing feat,akin to catching a creature of whose existence no physical evidence exists. Asa metaphor, it is not perfect but it gets the point across. Until, of course,unicorns became as commonplace as horses on a ranch, which led to theinvention of the…## DecacornWhat happens when you cross a unicorn with the metric system? You get a“decacorn,” a term first revealed to the world in March this year byBloomberg, which described it as “a made-up word based on a creature thatdoesn’t exist.” A decacorn in Silicon Valley, however, is a startup that isvalued at $10 billion or more, invented to set companies like Uber, Airbnb,Dropbox, Snapchat and their ilk apart from the common one-horned beasts wortha piddling $1 billion.## DragonThe other way of addressing “corn” inflation is to change the game. InvestorsJohn Backus and Hemant Bhardwaj suggest that their peers should “look beyondthe unicorn and find the dragon” because “unicorns are for show. Dragons arefor dough.” What is a dragon? The pair did the fantasy-mythology math andconcluded that dragons are much rarer than unicorns. More literally, a dragonis ”a company that returns an entire fund,” which in plain English means asingle investment that pays off as much as a diversified portfolio ofinvestments normally would. Outside the tech world, this is also known as”winning the lottery.”## CentaurNo one can blame venture capitalists for only thinking big. They also dealcompanies worth less than $1 billion sometimes, and need other mythicalmonsters to describe them. Dave McClure, founding partner of investor 500Startups, calls companies valued at over $100 million (but presumably no morethan $999,999,999) “centaurs“, which are creatures with the torso and head ofa human and the body and legs of a horse. The equine theme remains.McClure does not say what makes centaurs so much less rare than unicorns, nordoes he explain why they aren’t called “decicorn,” in keeping with the metric-system theme.## PonyAlso a McClure coinage. These are companies worth less than $100 million andare therefore, in Silicon Valley finance circles, entirely believablecreatures. This may also derive from the American phrase “pony up”, whichmeans to have to pay back a debt, often under some pressure.Here’s a handy chart to keep track:Put all these fantasy creatures (and ponies) together, and you get quite apetting zoo. It kind of makes sense if you think about it: The tech industryis fond of building mythology around its biggest firms. And as many havenoted, the valuations for which these startups are thus named are oftenfantasy too.