Why camel, zebra and caramel mutt are stealing the show from unicorns
The universe of startups is gaining more and more analogies with the animal world to classify management models. If before everyone wanted to be a unicorn — a skill given to companies that reach a valuation of US$ 1 billion — it is now clear that accelerated growth has its cost. In the scenario of low liquidity, startups that prefer to define themselves as camel, zebra or even cockroach, with more sustainable growth and greater resilience, have drawn the market’s attention. There are those who defend a more Brazilian stamp, pointing out the performance of the caramel mutt startups.
Created by a Brazilian and a German, PagBrasil, a means of payment, is part of the group that prefers to become a reference for sustainable rather than accelerated growth. Founded in 2010, when competitors such as PagSeguro were still entering the segment, fintech has grown year after year and became profitable in its first year of operation. With B2B and B2C solutions, it solves cross border payment processing serving clients such as Samsung, Samsonite, illy Café and Badoo. Today, the company has 70 employees distributed between its headquarters in Porto Alegre, the Barcelona office and a hub in Singapore. The plan is to keep hiring.
“At the beginning of the pandemic, companies with venture capital had to fire a lot of people, put 10%, 20% of employees out. We were also scared, we were attentive to the reaction of the banks and, after a few months, we saw that everything was fine with our operation’, said Ralf Germer, co-CEO of PagBrasil alongside founding partner Alex Hoffmann. “We continue to employ and invest. Our operation is independent and profitable, so it is resilient to the market. Even if e-commerce stops growing, as it did this last year, we still see growth potential for the company.”
At Shopper, a scheduled purchase market startup that operates in 100 cities in São Paulo, the air conditioning is only one for every two rooms and the tables are made of doors that CEO and founder Fabio Rodas found on the street. For many years, the only whiteboard on the CD was one rescued from the trash by co-founder Bruna Vaz. The culture of scarcity has paid off in crossing the so-called valley of death.
“It’s not because it’s comfortable, we didn’t have much choice”, says the CEO. “Our model involves inventory, warehouse, logistics, it is not purely technology. This scares investors away. It was something that forced us to have a culture of austerity and it was extremely positive, even more so in our sector. In food retail, 0.5% or 1% more cost is the difference between profit and loss”, amends Rodas.
Founded in 2014, the startup raised a lean pre-seed of R$120,000 the following year. In 2019 alone, the platform raised more funding, of R$10 million, in its A series. The contribution was led by Quartz, a fund owned by José Galló. At that time, Shopper already had a team of 60 people and thousands of consumers, in addition to having achieved a positive contribution margin. Last year, R$ 290 million were raised to accelerate growth. “We could see that there was a bubble forming in the private market and, in the end, our decision to anticipate our C series and raise funds while there was still liquidity proved to be the right one,” says Rodas.
Dock, which was already a unicorn, has recently preferred to stick to the image of the camel – the startup that goes through a long journey in an uninhabited environment with extreme temperatures. In 2017, in the United States, entrepreneurs Mara Zepeda, Aniyia Williams, Astrid Scholz and Jennifer Brandel, aware of the problems caused by bloated valuations and astronomical fundraising without purpose, created an organization to declare themselves “zebras”. The American CEOs released a manifesto assuring that “the zebras will fix what the unicorns have broken”. The Zebras Unite group also defends flags such as inclusion and ethics in the corporate environment.
With the typical wit of Brazilian entrepreneurship, Tupiniquin startups may not fit the camel or zebra label or the other analogies that keep popping up out there. Transported here, the concept got a witty update from entrepreneur Christopher Toya. In a post on Linkedin, the founder of the accelerator TechFounders came out in defense of “caramel mutt” startups.
“Unicorn, Camel, Zebra. The startups winter announcement by Y Combinator brought to light the entire collection of gringo animals. What do all these critters have in common? Not Brazilians,” he wrote. “The Brazilian innovation environment is a world apart and there is no point in smuggling theses and foreign animals and trying to apply them here without any adaptation.”
In a good-natured tone, the investor explains that, like the stray dog found in any neighborhood in the country, caramel mutt startups are already born without investment — and they need to make do with what they can. Second, they need to learn from the mistakes of those who came before, just as a dog learns to cross the street after seeing his friend being run over. They also don’t come from a noble lineage, but they know how to make do with what they have in adverse situations. “The startup winter has arrived all over the world, and in Brazil it won’t make any difference, after all, we are already used to surviving”, evaluates Toya.
Source: Value Pipeline