A “Unicorn”, a fictional horse-like creature with one horn which appears in fairy tales and in stories (the Hebrew Milog Dictionary).

The hi-tech field borrowed the imaginary mythological horse, and in 2013, Ilene Lyn, the investor of venture capital, imprinted the concept of the unicorn and characterized it in a definition for private (non-produced) startup companies whose valuation exceeds US$ 1 billion.  The name “Unicorn” was derived from the characteristics of these companies which is apparently rare like the unicorn itself (again, you are reminded that we are dealing with an imaginary invention, an animal of fantasy, the uncle of Pegasus, the flying horse …).

In recent years, Israel became the leading production and export line in the world for growing unicorns.

Hold tight on the horse’s horn so that you will not fly.  Here are some amazing facts:

In 2019, there were four start-up companies in Israel which complied with the definition of “Unicorn”.  Today there are 60 such companies in Israel (!!!).   For the sake of comparison, in the great USA, the leader of the world (temporarily, in my opinion), there are only 78 unicorn companies.  Thus, today Israel is also about to overtake USA in the unicorn race with absolute numbers.  For people who do not believe or think that these data have also originated in fiction, I attach a link to an article that was published in Globes and studies every company in the list of the Israeli unicorns.

Out of all these data, the important datum is that datum of which we are not aware of yet. It takes between seven and eight years since the establishment of an average startup company until it reaches a point in which it can “exit” (for the purpose of this matter, we will roughly define exit as a sale to an investor or an issue).  It must be of course clarified that only a few startup companies reach an honorable finish line as approximately 95 percent of the startup companies dissolve by themselves.  They liquidate or return to the worlds of fantasy and fairy tales.  Nevertheless, a simple calculation will disclose to us that the number of the Israeli unicorn companies increased from 4 to 60 within approximately two years.  Therefore, in two years, according to this graph, there may be hundreds of unicorn companies in Israel as the maturation process, as mentioned above, lasts 7-8 years.  Thus, there is an extremely large number of unicorns in the barrel of the cannon of the Israeli Hi-Tech.

If all of this is not enough, here is an additional datum:  In January 2020, the percentage of the Israeli Hi-Tech employees crossed the threshold of the 10 percent of the work power in Israel.  Today, the estimated datum exceeds 11 percent.  These employees are responsible for 25 percent of the income tax payments in Israel (due to the extremely high salaries) and the percentage of the employees in the field increases every year. The aforementioned is added to an inexhaustible reserve which this market supplies with respect to the veterans of the technological units of the Center of Computing and Information Systems in the Israel Defense Forces, the Israeli Intelligence Corps and the teleprocessing units.  All the aforementioned data jointly compose an extremely large percentage on which unicorns grow.

Wait a minute.  We are not finished yet

During the days in which the Corona Pandemic strikes the world and the economies trample, the economic forecasts are depressing, and the world in general is ashamed and frightened.  Precisely then, the Israeli Hi-Tech celebrates.  The startup is in fact an improvisation, and it offers solutions for varying situations, and who knows how to better adapt and reinvent itself than the Israeli startups?  Thus, the global crisis is a type of a golden opportunity for the unicorns.  Work from home? Great, the world needs an over-use of new applications, technologies and solutions and who will introduce them to the world? – You guessed right – our friend, the horse with the horn.

Punchline

At this stage, we lean back in the patient’s armchair and admit: OK, OK, the abundance of the data show that the Israeli startup has indeed a great future which is probably expected to increase in the near future.  Thus, out of all of this information, how do we detect an optional unicorn which is still at the stage of a humble colt whose horn has not yet hatched and its price for the consumer is reasonable?

The secret lies in the follow-up of startup companies since the beginning of their journey and in creating a quality follow-up system within the hi-tech industry while examining the character of the leading partners, as in a marathon of several years while working under pressure, the character and the abilities of the organs to withstand the pressure and the conditions in which the young geniuses will work a number of years – conditions which are significantly worse than in the classic hi-tech companies – is not less important than the technological brilliance.

The writer is an expert attorney in supporting startups since the day of their establishment, including financial support and recruitment of investors.