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Does Wales Have the Potential to Create a Business Unicorn?


Last month, the third annual Wales Start-Up awards took place at The Depot in Cardiff to not only celebrate the achievements of new businesses across our nation but to help identify those entrepreneurs that could make it big in the future.

Every year, the finalists show that within three years of taking the plunge into starting a new venture, they are not only growing quickly and making a real difference to the economy but could, potentially, have a major impact on their sectors over the next few years.

Of course, the ultimate aim for many of those Welsh entrepreneurs is to become a unicorn (which is a private company with a valuation of over $1 billion)

Such firms are named after this mythical creature because they are a rarity. Indeed, in 2011, there were only four start-ups (including AirBNB) that had reached this status although if we fast forward to August 2018,  their numbers have grown to 282 firms globally and they are now collectively valued at £685 billion.

The most valuable remains Uber, the online taxi company which in only four years, has reached a valuation of nearly £56 billion despite recent controversies about sexual harassment and drivers’ employment’s rights.

Given that the world’s largest equity and venture capital industry is located there, it is not surprising that nearly half of all unicorns are located in the USA although China is quickly catching up with over 80 billion dollar valuation businesses.

In Europe, there are only 28 unicorns and whilst there have been some activity in countries such as France, Germany, Switzerland (and even Estonia and Malta) the UK remains the primary EU location for these billion dollar firms. The question is whether, after Brexit, this country will continue to be the magnet it has for both investors and technology companies that make up the vast majority of unicorn firms.

So what is behind this growth? An article in Forbes Magazine suggested that investors, with nowhere to put their money during an era of near zero interest rates, are fuelling the growth in unicorns as they look for better returns.

Not only are venture capitalists investing into such firms but larger mutual funds, which tend in put their money into safer stock, are buying into start-ups. There is also the fact that multinationals across the World have been sitting on massive cash mountains which they are beginning to use to buy up companies, giving investors an expectation that their company could be the next WhatsApp, which Facebook bought for £15 billion or that Google – whose parent company Alphabet has now acquired over 200 firms – could come knocking.

So could we achieve a unicorn here in Wales?

Certainly much more needs to be done to ensure that those start-ups that may have the potential to grow and scale-up considerably are given the right support to do so, especially in terms of finance for different stages of growth and access to talent especially in digital and technological skills.

As we all know, getting more potential entrepreneurs to take the plunge into creating a business is critical for the development of any nation given that various studies have shown that new businesses are responsible for the majority of new jobs in an economy.

As the Wales Start-Up Awards have shown for the last three years, there are some fantastic ventures based within our entrepreneurial community although more could, and should, be done to help these firms to realise their potential, grow further, and become real disruptors within their sectors.

Whether some tipped to become unicorns – such as Cardiff-based Amplifi or DevOps Group – will achieve that goal remains uncertain but if they do, they will certainly put Wales on the global entrepreneurial map in a way that we have never seen before.