unicorn hunting

Definition

The venture capital strategy of seeking only investments with potential to return the entire fund, requiring massive exits. A portfolio approach that ignores solid doubles and triples in favor of swinging for nonexistent fences.

Example Usage

Their unicorn hunting strategy meant passing on profitable SaaS companies with modest exit potential in favor of moonshot consumer social plays.

Origin

Emerged alongside 'unicorn' terminology in the 2010s, describing the power law investment approach

Fun Fact

Unicorn hunting is mathematically justified by venture capital's power law returns, where a tiny percentage of investments generate most returns, but it also leads to massive amounts of deployed capital returning nothing.

Source: Venture capital investment strategy terminology

Related Terms

Intermediate

churn

The startup world's euphemism for customers abandoning ship, measured as the rate at which subscribers cancel or stop using your service. It's the metric that keeps SaaS founders up at night, because acquiring new customers is expensive but losing existing ones is devastating. High churn is basically your business slowly bleeding out, but with spreadsheets.

🚀 Startup / VC

Intermediate

observer rights

The privilege to attend board meetings without voting power, typically granted to smaller investors or advisors. All the tedious meetings with none of the actual authority—basically a corporate internship.

🚀 Startup / VC

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micro-VC

A venture fund typically under $50M that invests small checks in very early-stage startups. They offer founder-friendly terms and actual attention, mainly because they can't afford fancy offices or ignore their investments.

🚀 Startup / VC

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vesting acceleration

Speeding up the vesting schedule of stock options, typically triggered by acquisition or termination. It's the consolation prize when your startup gets acquired and you're suddenly unemployed.

🚀 Startup / VC

Beginner

spray and pray

An investment strategy of making many small bets across countless startups, hoping a few will hit big enough to compensate for the inevitable carnage. The venture capital equivalent of buying lottery tickets in bulk.

🚀 Startup / VC

Advanced

recycle provision

A fund agreement clause that allows GPs to reinvest early returns back into new deals rather than distributing them to LPs, extending the fund's effective deployment capacity. A controversial provision that LPs love to scrutinize because it delays their returns.

🚀 Startup / VC

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