[Viewpoint] Unicorns Must Not Overlook Either Quantitative Expansion or Qualitative Growth

Jae-Seung Park, CEO of VisualCamp and Adjunct Professor at Soongsil University

Last year, the number of domestic unicorn companies (unlisted companies valued at over 1 trillion KRW) reached a record high of 15 as of the first half of the year. With 4 new companies added in the second half, the total number of domestic unicorns increased to 18 as of February (one company was excluded due to listing). Despite this growth, the global ranking remains around the top 10, unchanged from last year.

According to recent data released by the U.S. market research firm CB Insights, the United States maintained its undisputed first place with a total of 489 unicorns last year, followed by China, India, the United Kingdom, and Germany. South Korea, with 11 companies, ranked 11th behind Israel, France, Canada, Brazil, and Singapore. Although the ranking is considered upper-tier, the number of companies held is significantly small.

Although domestic startups have been growing rapidly recently, much support is still needed to stand shoulder to shoulder with major powers. The introduction of multiple voting rights to guarantee startup founders' decision-making is a representative example. This is to resolve the risk of management control being threatened or equity dilution when startups attract investments from large corporations. It is expected that the next government will also recognize this situation and prepare various K-Startup support policies.

While government policy support is important, it is obvious that startups themselves must develop their technological and commercialization competitiveness. The rapid increase in dynamic domestic unicorns in a short period is a welcome development, but it is regrettable to conclude the evaluation of Korean unicorns from the perspective of overseas investors in this way. "How many of Korea’s unicorns truly aim for the global market? Only limited unicorns targeting e-commerce or purely domestic markets are visible." This is an honest critique.

Furthermore, many startups scaling up toward the unicorn dream must not forget one thing: being recognized as a unicorn is not the end. Before soaring as an Exicorn, they could suddenly become a ‘Unicorpse’?a dead unicorn. In Korea, Yellow Mobile is an example of this. While expanding the company size chasing scale, it became embroiled in dozens of lawsuits due to reckless investments, and despite poor business performance, controversies over management ethics arose, distancing the company from exit opportunities. The main reason for its downfall into a Unicorpse can be seen as focusing solely on increasing corporate value through additional investment attraction rather than achieving meaningful business growth.

Even if a startup crosses the death valley and joins the unicorn ranks, it does not mean a smooth path ahead. Crises can arise anytime before completing an exit. Especially, if it repeats the evils of large corporations such as power harassment toward contract workers or partner companies and labor exploitation, it can lead to corporate image deterioration and consumer attrition, potentially reducing corporate value at any time.

Another core of startups is sustainable innovation. This applies not only to the business itself but also implies that corporate culture must be continuously innovated. If, driven by complacency from success, a company forgets its initial commitment to customers, breaks teamwork culture among members, or loses ethics, further growth will be difficult to guarantee. It is time for the next generation of unicorns to be born in greater numbers, creating more value chains through sustainable innovation without being intoxicated by the unicorn name.