In 2013, the founder of Cowboy Ventures, Aileen Lee, penned the article “Welcome to the Unicorn Club: Learning from Billion-Dollar Startups”. In this piece, she coined the term “unicorn” to describe privately held startup companies valued at over $1 billion. A valuation of this magnitude is extremely rare – and even more uncommon when she introduced this phrase – hence the mythical moniker. Since then, the startup and venture capital worlds have adopted “unicorn” and expanded it to encompass other qualifiers like “decacorns”, meaning startups valued at $10 billion or more.
The key to a unicorn’s power is that they can scale commercially at pace, and while this makes them attractive to investors, it’s often a red flag for the people and the planet. The financial and social value they create only benefits a certain section of society, namely the (usually) wealthy founders and investors. With growth and profitability the only measures of success, unicorns often operate at the expense of the environment and individuals. On the other end of the startup continuum are social enterprises – given the complexity of building companies with dual social and financial goals, these companies generally have longer runways to profitability and narrow-margin operations and are, therefore, seen as riskier investments by venture capitalists.
But there’s another model in the innovation landscape. Social unicorns have emerged as impact-led enterprises with the potential to scale into the millions or billions – although not necessarily in a financial sense.
These businesses are redefining corporate success, replacing mere market dominance with more holistic measures. Metrics may include things like positively impacting millions of lives, or creating billions of dollars in economic impact in emerging markets. Take d.light for example, which has empowered over 150 million people worldwide by providing affordable solar energy while saving $4.7 billion in energy-related expenses in underserved communities. Or, Frontier Markets, which enables rural women to sell essential goods and services in their communities while earning additional income. So far, they have trained over 35,000 women across 5,000 villages in three states and generated over INR 2 billion in cumulative additional income for micro entrepreneurs. Another example is Indra Water, which has treated over 2.5 billion litres of industrial wastewater.
Businesses can be unicorns with an impact arm, or partial focus on social change, but to be a social unicorn, impact must be the core mission. For instance, circular fashion app Depop, reports that the secondhand purchases on its platform have resulted in more than 300,000 metric tonnes of GHG emissions being avoided, an estimated 9.2 billion litres of water saved through the purchase of pre-owned items, and has facilitated the resale of 25 million items, extending their lifecycle and reducing the demand for new production. Despite this, it is considered a unicorn because, while it has environmental impact, its primary focus is on profit and scaling as a business, having been acquired in June 2021 for $1.625 billion.
Social unicorns clearly have the power to effect great change, but there are multiple perspectives through which we can examine this model to grasp its breadth, limitations and potential. This includes how they scale impact, balance financial growth with social purpose, and navigate the complexities of creating lasting change.
How Social Unicorns Are Scaling Profit and Purpose
Given the twofold mission of social unicorns, securing funding presents a unique set of challenges. As mentioned earlier, standard funding models like traditional venture capital and private equity may be ill-fitting, as companies with social change at their core can be viewed as risky or unpredictable. However, impact-aligned funding models can allow social businesses to grow without compromising their core values.
Blended finance and patient capital are two of the potential avenues. The latter describes long-term investment, where sustainable growth is prioritised alongside financial returns. Building coalitions with governments, NGOs, and other businesses can allow increased access to new markets, enhance brand legitimacy, and provide resources critical for growth. Ecosystem-level thinking like policy advocacy, participation in sectoral collaboration, and open innovation drives systemic change and enables best practice.
Without losing their core mission while trying to attract capital, social unicorns build sophisticated structures for measuring and reporting their impact, often using B Corp certification or GIIRS ratings to establish reputation. They also pursue commercially viable options through social investment, impact bonds, and other diversified funding streams including philanthropy and government grants to lower fiscal risk. As always, investing in mission-aligned leadership and diverse talent ensures sustainable decision-making. Most importantly, these solutions tailored to specific contexts guarantee enduring and widespread impact. In short, prioritising sustainable growth over short-term gains helps protect mission integrity.
The Risks of Scaling Impact
Even with all the power and potential of social unicorns, certain risks come with scaling impact. One of the most difficult challenges is “mission drift”, which occurs when a company strays from its core focus in favour of a broader appeal to users or investors. When return on investment becomes the goal, elements like branding and storytelling can start to take precedence over impact. Even with patient capital and supportive investors, pressure from funders can cause tension between scaling quickly and scaling ethically. The risk arises when prioritising more commercial goals leads to the application of broader solutions to complex social problems, which can negatively impact outcomes and compromise the company’s mission.
What about Zebras?
You might have heard of another type of business – the zebra. As the name suggests, they are less rare and mythical than a unicorn, but are still an important part of the startup ecosystem. They are resilient and community-minded, and the black and white stripes of their namesake animal symbolise their ability to balance profit and purpose. This twofold aim creates long-term value through sustainable and mission-driven business models. They take a slower, steadier approach to scaling and resist the “grow at all costs” mentality.
Where they differ from social unicorns is that they are less concerned with achieving a unicorn-like valuation, whether this is in financial terms or impact metrics. Also, while many zebras do have a social mission, the defining trait is more about responsible, ethical business practices, but not necessarily having social change as their core mission. A zebra is often a values-driven business aiming for measured, community-oriented growth, even if it doesn’t tackle an overt social issue. An often-cited example is Patagonia — in its startup stage, it was profitable, purpose-led, and committed to environmental stewardship over unchecked growth, although its core function was still to sell outdoor apparel.
The Role of the 100X Impact Accelerator in the UK
With the right investment, the UK could be a powerful hub for budding social unicorns, and a vital catalyst in the future of these businesses is the 100X Impact Accelerator. With Kieron Boyle at its helm, this programme run by the London School of Economics (LSE) aims to support and scale social enterprises that have a vision to create substantial and lasting social impact. It helps identify, mentor, and partner with high-potential impact-driven organisations.
When we spoke with Kieron last year for our article The Rise of Impact Investing: Identifying Leaders at the Nexus of Finance and Social Change, he told us, “Impact investing has grown incredibly fast over the past few years. Whereas a little while ago we were talking about a market in the billions, it’s now in the trillions. And so the role of the impact investing leader has changed significantly. How do we harness that growth to address the world’s biggest challenges? And how do we make sure that actual impact is at the heart of this movement so that it doesn’t fall into the traps that other approaches have in the past?”
Through the 100X Impact Accelerator, Kieron continues to explore these questions, finding and nurturing organisations that have the potential to positively impact millions of lives. The accelerator supports cross-sector ventures in areas such as health, education, and financial inclusion, particularly those that are working in areas where markets and states often fail to address systemic issues. The support offered includes strategic guidance and providing access to industry experts and networks. It also aims to bridge gaps in funding and capital by connecting ventures with the right funding sources, so that they can create a more organised capital structure for social innovations.
Social unicorns are reimagining what it means to scale with impact, and demonstrating that financial sustainability and social progress don’t have to be mutually exclusive. Alongside other vehicles like philanthropy, charity, grassroots movements, advocacy and public policy, businesses are uniquely positioned to help solve complex global challenges. These high-potential ventures offer a compelling model – one where purpose drives profit, and growth doesn’t come at the expense of people or the planet.
