The Rise of the Zebra
By Adithya Sanjay, Michigan PEVC Analyst
2019 has been a year where investors have been going gaga over the unicorn companies, as many of the most highly valued startups prepare to go public this upcoming year. While these companies are definitely exciting — especially as they have been posting record-breaking valuations — there has been a different trend as of recent towards a new type of company called a “zebra” that has been underscored in the current state of venture capital.
The industry as of recent has pushed the top startups to grow on an accelerated timeline, forcing the companies to raise as much capital as possible in as quick a period as possible. At the same time, this ends up resulting in huge losses for the companies as a new trend of companies going public without any forecast of profitability in the near future emerges afront the struggle for a competitive edge.
A zebra differs from the standard VC unicorn in that they work towards positive business and solving societal issues all while “doing real business” and pushing for profitability even in the early stages of development. This is elaborated on by Mara Zepeda, founder of Switchboard (a technical data analysis company) who alleged that zebra companies “are both black and white: they are profitable and for a cause.”
This movement has blossomed in the face of scrutiny of the success of many prolific companies in truly reaching the goals they set out to reach in their business model. With increased consumer sentiment supporting business accountability and positive practices, it is more and more important in this day and age to provide along with a company’s financials proof of social good — or at the very least, proof of no social wrong.
For example, the very recent incident with Adidas’ decision to release a white shoe named “Uncaged” as part of their Black History Month line. Or on a parallel note, the happening a couple of years past when Apple was brought under fire for doing business with a supplier that was violating human rights laws in China. While these are perhaps cases somewhat disjoint from the startup scene, we can, for example, consider Facebook a company that has found itself in the middle of the Russian bots controversy. Given that Facebook had not been so money obsessed and had taken it slower from the start, could it be possible that the company could have avoided this unnecessary drama? This is exactly the argument used by this new wave of entrepreneurs — including Mara — who believe that it is more effective to slow down during a company’s development and ensure the company is clean before and throughout the scaling process.
The zebra movement was founded by four women entrepreneurs who expressed concern over the shortcomings of venture capital in areas such as diversity and inclusion. Aniyia Williams, one of these aforementioned women — expressed concerns over the lack of accessibility of funding for women and minorities in a venture capital model that has perhaps become oversaturated with men.
Especially as society continues to move towards these ideas of sustainability and social good, it is important to ask oneself as an entrepreneur whether the goal is to create a company that can grow big, fast, or grow steadily and last. This is the dilemma that exists in venture capital today, and this is what has become the source of the dichotomy and dissent that has pushed people away from the traditional unicorn model and toward a new tech animal: the zebra.
