They are trumpeted by the media and dreamed up by venture capital fund investors. But entrepreneurs and experts say it’s time to talk about more than just unicorns. According to them, more attention should be paid to camels.
Contrasts between unicorn and camel
The fact that unicorns should not be the only hero of the startup world is increasingly being discussed not only in the foreign media, but also in the ranks of entrepreneurs.
Cathy Tie, CEO of Lockie Bio, a Canadian-based digital health system, says in one of her articles: “Unicorns are often built on a foundation of big ideas and lofty promises. But unfortunately, sometimes it’s just fairy dust that they can’t always deliver (such as the infamous case of Theranos). Camels, on the other hand, deliver returns even in pessimistic environments based on the fundamentals that make companies successful.”
In Lithuania, there is also more and more talk about saddling a camel, which leads to the creation of a successful start-up. This means not aiming for a fatal lightning surge. Instead, it aims for more even, more balanced growth, which consists of several key elements: sustainability, measured development, a strong team, focus on customer needs, diversification, long-term vision and efficiency.
Rytis Laurinavičius, co-founder and manager of one of the most successful Lithuanian startups, Omnisend, says that although they initially had the ambition to follow the path of the unicorn, circumstances led to the fact that in the end they turned elsewhere.
“We went to investors, but at that time it seemed to many that everything was already resolved in the market where Omnisend operates, so there was not much interest in us. I had to turn the other way. The camel strategy was partly a conscious decision, and partly determined by circumstances”, recalls R. Laurinavičius.
Such a decision seems to have worked. Omnisend, which has been operating for 10 years, will be closed in 2023. grew another 26 percent, and its income exceeded 38 million. euros. It is true that the path to satisfactory results was not easy and for the first couple of years it was necessary to pull ourselves by the ears.
“It took us two years from the start to start generating revenue. In the third year of operation, we realized that, in principle, we can operate sustainably and profitably. And in the fifth or sixth year of operation, we were flooded by various capital funds that already wanted to invest in us”, R. Laurinavičius mentioned the stages of Omnisend’s growth.
There are also new projects that are going the way of the camels. LupaSearch, a startup from Kaunas, which develops sophisticated e. AI search system for commerce, according to manager Rasa Šiškutė-Bagdonienė, it was clear from the very beginning that becoming a unicorn is not their path. Looking at the long-term goals, it was decided that it is more important to demonstrate stability than to demonstrate an astonishing pace.
“A camel may turn into a unicorn at some stage, but a unicorn will never become a camel. The camel can move fast, but this is much less common and much more dependent on the team and their decisions. The saying that you are the smith of your own destiny applies here. Starting from scratch, it’s easy to say “we’re growing three times every year.” But when it succeeds for the fourth year in a row, it’s already a pretty fast camel,” R. Šiškutė-Bagdonienė emphasizes the impressive qualities of the camel.
The co-founder and manager of Omnisend R.Laurinavičius also supports it. The venture capital route favored by unicorns is, in principle, almost always open to the camel as long as the startup can demonstrate some growth, he said.
“I advise everyone – go as far as you can without external funding. Later, raise only the minimum amount of funds needed. This philosophy has worked for us, and I see many other companies that have done just as well. That’s why I recommend doing exactly that,” emphasized the businessman.
Camel Challenges
However, according to R. Šiškutė-Bagdonienė, it is still quite difficult to consciously choose the camel’s path. Especially since the heavy media attention on unicorns instills in the public a false or at least incomplete perception of startup success or the ways to achieve it.
Company photo/Rasa Šiškutė-Bagdonienė
“In the Lithuanian media, we usually see success stories presented, but rarely do we talk about burnouts, conflicts, miscommunications, burnt investments and ruined relationships caused by the enormous pace and responsibility of unicorns. Therefore, the image is distorted, everyone dreams of quick success and does not consider that there may be negative consequences or an alternative”, says the manager of LupaSearch.
Speaking about the biggest challenges faced by camel startups, R. Šiškutė-Bagdonienė first emphasizes the aspects of limited funding and market accessibility.
“When you’re smaller and with a thinner wallet, it can be harder to reach a wider market, especially internationally. This is due to a limited marketing budget, lower brand awareness and logistical challenges,” explains the head of LupaSearch.
She believes that limited resources can complicate the implementation of new technologies and the development of innovations.
“You can’t go into the multi-billion verticals, because there the big businesses will suppress you. In addition, it is impossible to create impressive innovations for a very long time, which may be useful in the future, because in the long run we will simply run out of water while walking through the financial desert”, R. Šiškutė-Bagdonienė taught.
The fact that being a camel requires perseverance and causes certain challenges is also recognized by Omnisend manager R.Laurinavičius. According to him, withstanding the money pressure from rich and big competitors is the most difficult thing at the beginning of the business.
“They can overpay everywhere and you can’t, so you need to find creative and effective ways to show that you’re not inferior to them,” says Omnisend’s co-founder.
Lithuania – a camel reserve?
Speaking about the difficulties of raising unicorns, R. Laurinavičius claims that dreaming about the status of a unicorn is not bad, but you need to know that there are other ways to create a successful business.
Company photo/Romualda Stragienė
“You need to understand what the business is aiming for. Some startups aspire to become unicorns and chase this label, although it is sometimes only on paper, others choose an alternative. There is no single recipe for creating a successful business,” emphasizes the manager of Omnisend.
R. Šiškutė-Bagdonienė, head of LupaSearch, thinks similarly. According to her, the path of the unicorn is not unattractive. There are many great global examples of venture capital funds and startups working together to create amazing results.
“If you generate a turnover of 10 million euros and are preparing for a big step into a new market, for example the USA, you need a strong back, knowledge of your industry, a lot of finance and preparation of the whole team. In such a case, the investment can work perfectly, because you know what risks and what rewards are waiting for you”, emphasized R. Šiškutė-Bagdonienė and added that in their case, for the time being, more moderate growth is more suitable.
“Venture capital funds are often looking for rapid scaling, taking a lot more risks, sometimes even with customers and their reputations.” This is very risky in the long run. We understand that you need to grow, but finding your position in the market can take time, which is often not attractive to venture capital. Our product cannot grow super-fast because of the limitations of complex integration with the systems used by customers and a long sales cycle, so a slower but sustainable pace of development is more acceptable for us at this stage,” explained the head of LupaSearch.
For her part, Romualda Stragienė, head of the Lithuanian Innovation Agency, points out that there have been business organizations that grow quickly and often explode due to their own ambitions, or that move slowly but surely, but without labels.
“We like beautiful names like good stories, it inspires and fascinates us. You want to be a unicorn because it sounds good,” says R.Stragienė.
According to her, although unicorns are very happy and dreamed of in Lithuania, culturally our country has more opportunities to be a reserve of wonderful camels.
“Lithuanians are not willing to take risks (let’s look at the amounts of deposits in banks) and rarely think globally from the first step. We like to grow more slowly and try to do it on our own,” asserts the head of the Innovation Agency.
According to her, the camel analogy is very apt and suitable for describing a considerable part of the Lithuanian business world.
“These animals are known for their resilience and ability to survive in difficult conditions. Not only can they stay without water for a long time, but they also use resources efficiently. This perfectly describes many Lithuanian businesses, which, although they do not reach the status of unicorns, are able to operate sustainably and grow even with limited resources or changing conditions, – says R. Stragienė and adds – this is very relevant in today’s dynamic market and often even more important than astonishing jumps .”
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2024-08-10 16:28:30
