How to Spot a Potential Unicorn Business – Insights from Venture Capitalist Experts

At Redfern Legal, we help our clients navigate the challenges of securing VC funding and negotiating the terms of their fundraising. We also advise VC investment firms, VC trusts and investment funds generally on the nuances of funding high-growth companies in the UK and abroad. Through Redfern Legal, you’ll automatically become part of and gain informal access to our ecosystem of founders, executive talent with domain expertise, angels and VC firms free of charge.

With this in mind, we decided it may be helpful for VC investors and targets alike to read about the investment approaches of some experts in the field.

We recently spoke to two experts in the field of investing, John Frankel, Founding Partner at ff Venture Capital (ffVC) and Tom Britton, Co-Founder at SyndicateRoom, an Access EIS Fund.

John Frankel founded ff Venture Capital in 2008 and has been a seed and early-stage investor since late 1999. Specialising in providing funding to companies in the technology sector, ffVC is one of the best performing seed and early-stage venture capital firms in New York.

Tom Britton co-founded SindicateRoom in 2013, a UK venture capital firm that provides a uniquely data-driven approach to investing in startups that co-invests with the business angels they’ve identified as the top performing in the UK to gain access to the most promising investment opportunities.

We asked our experts a range of questions to help our readers get a better understanding of what it is that these experts look for when seeking a potential unicorn investment.

So, if you are an entrepreneur aspiring to achieve unicorn status or an investor searching for your next unicorn investment then you’re in the right place, keep reading!


But first, before we get down to the nitty-gritty, let’s get clear on one thing – what actually is a unicorn business?

In the Venture Capital industry, the term ‘unicorn’ refers to a startup company that is valued at over $1 billion. The term was first coined by Venture Capitalist, Aileen Lee, in an article in 2013 where she referred to 39 startups as ‘unicorns’.

The word unicorn symbolises the rarity and remarkability of such a business, an almost mythical beast. Since 2013 the number of unicorn businesses has increased, according to CB Insights ‘as of October 2022, there are over 1,200 unicorns around the world’. However, it is still rare for startups to reach this status and it is often the dream of many entrepreneurs, particularly tech startups to achieve this, as well as the dream of many investors to spot such a business before it reaches this status.

Other variations of this status include ‘futurecorn’ which refers to businesses that are valued at between $250 million and $1 billion and are on their way to becoming a unicorn business, or the even more prestigious ‘decacorn’ (valued at over $10B billion) and ‘hectocorn’ (valued at over $100 billion). Popular examples of such businesses include Airbnb, Uber, Snapchat and Pinterest. While it may appear as though these businesses came out of nowhere and became an overnight success, they all simply started with an idea that required significant investment and many years of dedication and hard work in order to achieve the unicorn status they have today.



Let’s get down to business, here’s what our experts had to say when it comes to spotting a potential unicorn business…


What does a potential unicorn business look like to you and what are the key characteristics of such a business?

John Frankel:

It has to have a massive total addressable market, though not necessarily today, but 5+ years out.  A growing market is also very helpful as the opportunity becomes more obvious over time.  We like there to be an actual business model and not just hopium of such, and, of course, a team with domain knowledge and the skill to execute the idea.  We also like their vision and our vision of their vision to align.

Key characteristics are firstly, that it can be a business, and one that can be profitable. For that it needs to be defensible over time though economies of scale, branding, or other ways of fending off potential competition.

Tom Britton:

A potential unicorn is a funny beast. It doesn’t look like something you’ve seen before though it shares many of the characteristics that, at first, appear at war with each other.

Incredibly focused to the point of stubbornness and hellbent on making an idea work while supremely receptive to feedback and flexible enough to pivot should the better path/product make itself known.

The market, or potential market size is crucial. You can’t have a unicorn if the market isn’t big enough for several unicorns to play, though you hope that doesn’t turn out to be the case.


Do you have a specific sector and/or geographic focus where you look for one?

John Frankel:

We like sectors with secular drivers, and so see a lot of opportunity to the application of AL in enterprise SaaS solutions, drones, robotics and fintech.

We have offices in NY and Warsaw, so CEE and the US are clear focuses.

Tom Britton:

Not really though I do believe the biggest growth in the next 5 – 10 years will come from investments into life sciences (health, longevity, care) and the green economy (renewables, decarbonization, sustainability).

Our fund is focused on the UK but there are opportunities everywhere, particularly in emerging markets.


What are the key elements you look for when choosing which businesses to fund?

John Frankel:

Can we help the business? 10% of our companies get to $100,000,000 in annual revenues and 50% survive to series B, and we believe that is in part due to what we do to help them.

Tom Britton:

Our fund is a pure co-investment fund, so we are looking for the strength and track record of those we’d be co-investing with. For my own angel investments, I’m most interested in the team and trying to suss if they have the ability to deliver and adapt as needed. I tend to invest in sectors I understand so the product has to resonate with me and my understanding of the market it will serve.


They say that “your network, is your net worth” is especially true for VCs. Could you expand a bit more on how your network helps you find your unicorn business?

John Frankel:

We network well, with approaching 20 people across two continents and almost 15 years in business, but we really believe the value is post the investment, and so we have a highly tuned and developed Platform to help our founders network.

Tom Britton:

Our fund co-invests with the angels we’ve identified as being market beating. Our analysis was thorough, we built an index of the entire UK private market going back to 2011 and analysed it to bits. We back the angels who continually invest in companies that have performed, they are our key to finding the next unicorns.


Are cold calls/emails from entrepreneurs ever successful? If so, what would differentiate one call/email from the next?

John Frankel:

Rarely, but we take them.  We like to see a deck, a 15 page “story” of the company’s proposition.  From there it is personal interaction that differentiates.  We look at over 5,000 companies a year, so the deck is the first hurdle to get the meeting.

Tom Britton:

Rarely. However, I will look / listen to someone who has spent the time understanding how we do what we do and identify how they meet our criteria. Too often entrepreneurs don’t spend the time understanding a fund’s criteria and their pitch becomes a waste of time for them and us.


What type of characteristics do you look for in the founding team of a startup?

John Frankel:

Domain expertise, drive, being unreasonably optimistic and a sales charisma.

Tom Britton:

A deep understanding of the customer and wider market. As a product manager turned VC, I need to know that they’ve spent time understanding the customers core problem and have built a product/service that addresses it in the simplest way.


If an entrepreneur believes they have a unicorn business, what should they do next in order to reach full potential?

John Frankel:

Reach out through the network, find me on Twitter (@John_Frankel), or LinkedIn cold if needed.

Tom Britton:

Start again. You won’t know you have a unicorn business until several years in. If you think you’ve got it before you’ve really started, you’re unlikely to be open to a pivot when it’s needed. You have to be fully in tune to the market, and the market changes over time so you’ll have to change.


How do you secure deals with businesses? And what does the process entail?

John Frankel:

We see if we are on the same wavelength, and if we like them, we have them deeply reference us to see if they agree.

Tom Britton:

Spending time to understand the business and its potential problems before you pitch. Then when you pitch you need to listen just as much, if not more than you speak. You won’t win the business on day one but if you truly listen you might get it right in the second -> eleventh conversation that it takes to build trust and eventually win the business.


Besides the obvious financial gain for entrepreneurs, what else is it for them when partnering with a VC?

John Frankel:

Mentorship, advice, someone to call when things feel like they are falling apart, access to our network of 89 companies, help with fundraising, etc. etc.

Tom Britton:

Feedback and network. Investors are great sounding boards, though not always right, and come with their own networks.


Are there any red flags that would deter you from choosing to fund a particular business?

John Frankel:

Many: that is why we run deep diligence.

Tom Britton:

Too many. Mostly, lack of founder authenticity and lack of founder product fit


If there was one piece of advice you could give to a business looking for funding, what would it be?

John Frankel:

Reference your VC: before, during and after you meet. Especially before.

Tom Britton:

Do as much homework on the investor as they are likely to do on you.


We hope you found these insights from our experts helpful when it comes to looking for your next big investment or building your startup.

If you think VC funding is the way forward for your business then the next step is to get in touch with a lawyer who can assist you with the process.

The Corporate law team at Redfern Legal is especially focused on VC series and other equity/convertible finance involving high-growth companies both in the UK and abroad and is keen to advise on all aspects of the VC journey for all stakeholders, including preparing for, negotiating, and structuring investment deals, corporate governance, employee incentivisation, management/shareholder issues, mergers, acquisitions, disposals and exits.

We are also continually looking to expand our network of VC connections so whether you are a VC firm looking for guidance on new investment opportunities or a business looking for capital, we want to hear from you.

If you would like to arrange an informal chat to see how we may be able to help you achieve your goals then email us at and one of the team will be in touch.





The information in this article has been issued in the United Kingdom and is provided solely for informational purposes. Accordingly, whilst this article will be helpful to you when considering the subject matter herein, it does not constitute legal or any other form of advice and must not be relied on as such. It does not provide all the information you may need for effective decision making concerning your business. It is your responsibility to review and conduct your own due diligence on the relevant legislation and rules. You may wish to appoint your own professional advisors to assist you with this. All information in this document is subject to change without notice.
We shall not in any circumstances be liable, whether in contract, tort, breach of statutory duty or otherwise for any losses or damages that may be suffered as a result of any inaccuracies, errors or omissions contained herein nor the use of or reliance on the contents hereof. Such losses or damages include (a) any loss of profit or revenue, damage to reputation or loss of any contract or other business opportunity or goodwill and (b) any indirect loss or consequential loss. No responsibility or liability is accepted for any differences of interpretation of legislative provisions and related guidance on which it is based. This paragraph does not extend to an exclusion of liability for, or remedy in respect of, fraudulent misrepresentation.