In his article for Soaked by Slush, Christian Owens, co-founder and CEO of the scaleup
Paddle raises the concern that the metrics currently used to quantify European tech
success are due for a change. The overemphasis on unicorns leads to a tunnel vision in
which only the gigantic exits are valued, and the numerous smaller ones neglected.
The author argues that the overall health of the European startup ecosystem rests on the
hundreds and thousands of small businesses becoming successful and scaling up only
when solid foundations are built, instead of seeking aggressive growth via big funding
rounds.
Our team at Gorilla Capital fully endorses this view. In our opinion, start-ups often try to
jump the growth curve, and end up trying to scale a product which hasn’t yet had time to
morph into its final version. This behaviour is often due to the phenomenon mentioned
above. If a billion-euro valuation is seen as the holy grail, many companies adopt a
mindset of aggressive early-stage growth without taking the time to ponder whether their
product is ready to be scaled.
That is why we actually seek “camels” instead of unicorns. These are the companies that
are capital efficient, have solid unit economics, and focus on building sustainable growth.
Admittedly, the initial growth rate may be slower than that of an aspiring unicorn, but these
companies are more robust and resilient than their peers.
In good times, the camels thrive, but even under uncertainty, they survive, unlike the
aspiring unicorns that jumped the growth curve with high valuations and wind up with
downs rounds when the overall economic climate worsens and the bubble bursts.
Stop talking about unicorns: The way we measure European tech success needs to
change:
Stop talking about unicorns: The way we measure European tech success needs to
change: https://www.slush.org/article/stop-talking-about-unicorns-european-techsuccess-needs-change/