02/07/2014 13:22 BST | Updated 31/08/2014 06:59 BST

Unicorn Hunting

So what's the deal with Unicorns? Do they exist or not? Defined today as "software companies started since 2003 and valued at over $1 billion by public or private market investors', the Cowboy Ventures Team argues that they do. However, while successful start-ups seem to be popping up everywhere and for all kinds of niche needs, some startling facts lie in these cold hard statistics: In the past decade some 60,000 software and internet companies have been founded. Of those 60,000 companies only 0.7% (or 1 in every 1,538) have gone on to become Unicorns. The reality that lies behind those glitzy dreams is that start-ups, given the statistics, often don't go on to become billion pound enterprises. The odds of becoming a Unicorn, simply, are not in ones favour.

Of the 39 start-ups that belong to the 'Unicorn Club', 27 have come from San Francisco's Bay Area. While the list that came from Cowboy Ventures Team only included American companies, Britain is still lagging behind in start-up culture, with 11 Unicorns (still quite good, comparatively to the rest of the world) founded since 2000 according to GP Bullhound. Statistics such as these however do beg the question, what is lacking in Britain's start-up culture compared to the United States? Why don't we have the big ideas that the U.S. seems to capitalise upon so instantly? I argue that Britain's hesitant risk-taking culture, lack of venture capitalist funding availability, and lack of established mentors in the high tech area are what put Britain at a distinct entrepreneurial tech disadvantage.

The Bay area embraces and utilises their establishment of successful leaders. Start-ups learn from each other. Experienced employees of start-ups learn the ropes and break off into new ideas to form new start-ups. These companies become better by bouncing ideas off one another and learning from the mistakes and mishaps of peer and older companies. In fact, it doesn't matter if the ambition of a business is to go to the moon, or if it fails - once you've started a business, you learn from any kind of experience, so that if failure does occur, you move on to the next thing. This establishment doesn't exist anywhere else in the world like it does in San Francisco.

Risk taking culture is a phrase said a lot these days as it accompanies the successful start-up vision that so many cities and cultures have begun to worship. One essential key to Silicon Valley's success lies in the risk-taking culture and lack of fear in failure. Indeed, nearly 80% of Unicorn founders had tried their hand at previous start-ups or have been managers within larger organisations, before founding their Unicorn. Europe's conservative culture, on the other hand, driven on a large part by fear of failure, doesn't seem to allow for the same growth and development of ideas as the States.

Access to venture capital funding is the lifeblood of a successful tech scene. Unicorns tend to raise a lot of capital over time, but since it takes a Unicorn approximately 8 years for a liquidity event, you need money and funding and people on the outside who believe in the idea and will finance it through. Making it big takes ambition, patience, and most importantly, financial risk. The emphasis on the short term profitability and our tendency to sell-out too soon on the success of a company might be our greatest barrier to the emergence of Unicorns in the UK.

With all that being said, there's a big light at the end of the tunnel. The United States has one of the highest corporate income tax rates in the world. Super-Unicorns based in the U.S. are constantly looking to invest their accumulated overseas capital rather than having to repatriate it back to the US tax rates. Often companies are no longer looking to be the next Google, or Facebook; companies are looking to be bought by Google or Facebook. In the UK, having your business plan being bought by a Unicorn company certainly does not deem it a failure; in fact, maybe this is an inevitable business approach considering the UKs stage in the development cycle.

The implications of this are that piles of cash from US unicorn's offshore earnings are available to be invested into potential European Unicorns. Planning to capitalise upon this opportunity, London's recent rise in tech incubators (centres which provide resources, space, and an environment for entrepreneurs to grow their businesses) has been extremely helpful in creating and facilitating a platform for tech entrepreneurs to learn and share ideas, just like the Silicon Valley. Britain may be on the right path, but it takes many years for Unicorns to emerge, and during that time the necessary funding and mentorship will be crucial in ensuring their success globally.