The term “unicorn” was coined by Aileen Lee of Cowboy Ventures to describe private companies that have achieved a post-money valuation of $1 billion or more. Originally, these companies were scarce, magical and elusive. As of August 31, 2016, according the CrunchBase Unicorn Leaderboards, there are now 191 unicorns.
In my impact investing practice at ImpactAssets and in the graduate class I teach at USC’s Marshall School of Business, I have adapted the phrase. I describe an “impact unicorn” as a company that is positioned to achieve a market rate of financial return AND high levels of impact. Population growth, income inequality, climate change and other social and environmental factors are shaping our world. The private sector has a major role to play (and returns to make) in ameliorating these intractable challenges by investing in ventures that are consistent with our values. Indeed, impact unicorns achieve strong financial returns because of, not in spite of, their impact theses.