Is becoming a unicorn the ultimate goal for a startup? The cooperative Zebras Unite answers that question with a resounding ‘no’. Growth comes in many shapes and sizes, and sometimes startups should aim to become not a unicorn, but a more sensible, real creature. A zebra, as you will.
The dazzling zebras of Amsterdam
Zebras Unite is a cooperative aiming to make companies think about their growth in a more sustainable way. They can do so by keeping an eye on the four Ps: people, purpose, planet and profit. The organisation just opened its Amsterdam chapter, to shine a light on the many zebras in the Dutch capital.
Here’s a wildlife fact for you: a group of zebras is called a ‘dazzle’. And Amsterdam is a dazzling city. It is estimated that 50 per cent of the startups fit the description of zebra. “But no one is paying attention to them”, says Veronica Guguian. “They are contributing to society, but we only celebrate companies that get big funding.”
Raise enough funding, and you can call yourself a unicorn. However, Guguian likes to make the case for more sensible metrics of growth. Together with Lana Jelenjev, she is co-lead of the Amsterdam chapter of Zebras Unite.
Focus on growth as a whole
“Everybody is focusing on unicorns”, says Jelenjev. “This limits the attention for a large part of the existing companies. We want to see how we can encourage them to keep doing what they are doing.” Guguian continues: “To become a unicorn, companies need to fit the requirements to get funding from VCs. We try not to focus on one element of growth, but on growth as a whole. We think if you strive for deeper values, there’s a bigger chance to succeed.”
Growing a company still requires money, so if necessary Guguian and Jelenjec encourage startups to look for alternative means of funding, without giving away parts of their company. In the USA, Zebras Unite turned into a foundation, offering funding options for the community. Something the Amsterdam chapter is also looking into. They also encourage to work towards another form of exit; exit to community, in which the community of stakeholders ends up with ownership.
It all starts, however, with building a community of the many zebras in Amsterdam and getting them on the radar. “Showcase your company!”, says Guguian. “Connect with like-minded people and show what you are doing. If you run a business, you simply can’t do everything by yourself. It’s great to have a network to turn to.”
Smartkas: zebra in agritech
Zebras often fly under the radar of the general public. In the case of one zebra, that is somewhat of an advantage. Smartkas is an agritech company based in Amsterdam. It is designing, building and managing fully automated vertical farms supplying local, sustainable food anywhere it can. Smartkas has a very deliberate growth path and hasn’t turned to VCs to fund that growth. A zebra if there ever was one, though Smartkas’ COO Wim Roosens was unaware of the term until now.
“You often see people celebrating when they’ve closed a funding round with an investor”, Roosens says. “I’m always wondering if that’s something to celebrate. What do you have to give back? For me the question is always ‘did you go for a large cheque by giving away a substantial part of the company? Or could you have done it for less?’ What matters to me is what happens with the money you raise. What are you going to do with it?”
Alternative means of financing
No VC money for Smartkas, but they are not strapped for cash. “We’ve chosen to issue green bonds”, Roosens explains. “They are somewhat hip and trending right now. We’ve been focusing on the sustainability aspect of our story and that hit a note. I do like that we’ve been flying under the radar somewhat with regards to our funding numbers. We’ve raised quite some money last year for new projects and we are looking to scale our existing projects.”
Those existing projects involve a vertical farm in London, where Smartkas grows strawberries and is about to sell them to the supplier of all the large supermarkets in the country. Another one is closer to home. A 6000 square metre warehouse at Fokker Park at Schiphol Airport is turned into a vertical lettuce farm. According to Roosens, it’s the largest smart plant factory in the world.
Expanding to Brazil and beyond
“These farms are fully operational in March or April”, says Roosens. “We’re also working on a project in Brazil, where we got 70 hectares of land for the growing of tomatoes, cucumbers and lettuce. Brazil has an excellent climate to grow produce, but they import the majority of it.” According to Roosens, they also have projects in the works in Hungary, the homeland of Smartkas-founder and CEO David Meszaros.
Accelerating their growth by raising a big bag of VC money was never a serious option, says Roosens. “For us, that was not the right choice. We work project-based and are instantly profitable. Once a farm is up-and-running, we have clients ready, we have off-take. We can quickly pay off our loans.”
‘Consider our growth’
“We don’t want to give away equity for that. We do want to work with local organisations to get a vertical farm up. And we can offer them equity in that project. For now, we are choosing our projects carefully. We want to consider what our company can handle, what our partners can handle. In the end, growth is still a financial matter, but there’s nothing wrong with that. For us, it allows us to take the next steps with some very big names as partners.”
That patience is key for a sustainable growth path, says Roosens. “VCs can be interesting for certain types of companies. But I think people are sometimes impatient. They want to go for a quick cheque. This often costs them quite a bit of equity.”
‘What is growth exactly?’
Zebras Unite echoes similar advice for startups looking for funding. “Be selective”, says Guguian. “Don’t give away your company. Don’t lose the vision you have. For some, the ideal is having a million customers. For others, fulfilment comes from having dozens of really happy customers. Having a VC on board means they’ll treat your business like they are the boss. But it should be equal, they need you as well. You can grow slower and it might be better.”
Jelenjev adds: “You can ask yourself: ‘Why do I need to grow in the first place’? This is something we need to be more reflective on. If raising funding means getting other people involved in the decision-making process, it can influence everything in your business, including financial health. So what is growth exactly? That’s personal for everyone.”