It's time for the unicorns to make way for the cockroaches. Confused? No, we haven't gone bananas. The trend we're referring here to is the Unicorn Startups being dethroned of their glory by their cockroach counterparts. Still confused? Let's break it down for you.
The year 2015 belonged to the Unicorn startups- privately owned technology-driven startups that have reached a valuation mounting to $1 billion or more. But, fortunately or unfortunately in the startup world nothing stays permanent. According to industry experts, cockroach startups could be the term defining the year 2016 for the International Startup Industry.
A cockroach startup can be typically defined as a business which treads on a slow and steady path from the beginning, keeping a close check on its profit and revenue. A cockroach startup also keeps a tight control over its spending habits in order to keep itself safe and secure in case of any unexpected funding storm.
On the other hand, a unicorn startup climbs the growth ladder fast, all thanks to the fund money. Mostly, they're not that profitable but the main plan here is to first to set the business at a particular "scale" and then start focusing on making profits after it has successfully acquired a decent market share.
Startups right now basking in the Unicorn glory include Oscar, Uber, TransferWise, Prosper etc. Closer home, we have Flipkart, Snapdeal and Olacabs etc. in the Unicorn Club.
The main reason for the shift and unicorns being replaced by cockroaches is the investors concern over funding.
2015 saw startups getting free and easy funding, all because of record low-interest rates attracting more and more funds into venture capital. But, the year 2016 hasn't been off to a great start as compared to last year. As a result of a wobbly Global Economy, venture capital funding in startups has taken a major hit.
The recent trends have also revealed a fundamental problem in the business models of various Unicorn Startups and that is their reliance on easy Venture Capital money to fund the company's growth.
According to Dan Primack of Fortune, both private equity and venture capital performance have declined in the first quarter of the year 2016 for the very first time in years.
The term "cockroach startups" was first coined by Flickr founder Caterina Fake in a blogpost he wrote on idea in September last year.
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