For the better part of a decade, the unicorn has been the most popular icon in the startup world. It has become synonymous with market disruption and hyper-growth. For a startup, hitting the $1 billion valuation is vital because if you miss it you’re just another startup.
But a growing number of founders, investors and academics are asking whether that’s the right goal. Welcome to the anti-unicorn movement, where the mascot is a rather more down-to-earth animal: the zebra.
Where Did The Name Unicorn Come From?
The term ‘unicorn’ emerged from a 2013 article by venture capitalist Aileen Lee and was quickly adopted into the global start-up lexicon. The name was chosen because companies worth over a billion dollars were so rare, almost mythical. The model behind them is simple. Investors expect one or two breakout successes to deliver the massive returns that make up for the many startups that fail. It’s a high-stakes bet and the odds are long. A 2023 PitchBook analysis found that only 1.3% of venture-backed startups ever achieve unicorn status.
How Did Zebra Enter The Startup World?
The idea of an alternative took shape in 2017. Four women, Astrid Scholz, Mara Zepeda, Jennifer Brandel and Aniyia Williams, started what became known as the Zebra movement, encouraging founders to build zebras rather than unicorns. Their manifesto, ‘Zebras Fix What Unicorns Break’, took aim at unicorn companies looking for a massive, outsized return that benefits a small number of investors.
So, What is a Zebra?
The main point is that, unlike a unicorn, a zebra actually exists. A zebra is also black and white. The movement uses black and white to represent companies that are both profitable and have a positive impact on society, without compromising one for the other. Furthermore, zebras live in herds, meaning that instead of competing, zebra companies ideally work to help one another.
Unicorn vs Zebra: What’s the Difference?
In the startup world, the unicorn has traditionally been held up as the ultimate success story: a privately held startup valued at more than $1 billion. The term, as mentioned above, was popularised by venture capitalist Aileen Lee in 2013, reflecting just how rare these companies were.
The zebra, by contrast, represents a different philosophy. The term emerged,a s mentioned above, from the 2017 ‘Zebras Fix What Unicorns Break’ movement, founded by entrepreneurs Jennifer Brandel, Mara Zepeda, Astrid Scholz and Aniyia Williams. Zebra companies aim to balance profitability with purpose, focusing on sustainable growth, resilience and positive social impact rather than pursuing valuation and scale at any cost.
What Does a Zebra Look Like?
Zebra companies place an emphasis on stable, sustained revenue growth over rapid expansion. These companies often bootstrap and, in turn, build deep ties in the local communities they serve, unlike other startups that tend to change locations frequently. In an academic paper published by Rod McNaughton from the University of Auckland, it is noted that unlike unicorns, several zebras create the same level of economic activity. However, the impact is more sustainable and more of the benefit stays within the local community.
What are Some Examples of Zebra Companies?
Some familiar names fit the mould. Basecamp, which profiles other bootstrapped companies in a ‘Bootstrapped, Profitable and Proud’ series, is regularly cited, as is Buffer, which bought out its VC investors in 2018.
Email marketing firm Mailchimp is another popular example. It grew without outside venture funding before Intuit bought it in 2021 for a reported $12 billion, proof that you can build something very valuable without taking the unicorn route.
Why The Zebra Movement Now?
High-profile wobbles. Being labeled a unicorn doesn’t necessarily mean future success. The Quibi mobile video app collapsed less than a year after its launch. In 2019, WeWork’s IPO saw it slash its valuation by roughly $20 billion. WeWork ultimately needed to pull its IPO. Cases like these have caused many to interrogate what valuations actually measure.
Alternative Financing
This movement is part of a broader initiative to build alternative funding structures to the high-risk, equity-based venture capital which typically funds unicorns. Revenue-based financing and similar structures have provided founders with more financial options.
Changing Perspective
The proponents of the Zebra movement say that the current, more aware consumer is helping the movement gain traction.
The Other Side of the Story
While the Zebra movement is gaining rapid and significant popularity, it would be oversimplifying things to say that Unicorns are out and Zebras are in. There are businesses, such as those that require heavy upfront investment in infrastructure, research or hardware, that simply can’t be built on a shoestring. Bootstrapping has its trade-offs too, such as slower growth, slower hiring, less marketing and more established competition.
