Munich Startup: Zebras instead of unicorns — could you briefly explain what is meant by the term “zebra” in the startup world?
Heba Aguib: Our economic system rewards profit and neglects sustainability and social added value even though social, economic and environmental challenges in all their complexity are growing faster than ever before. Startups that could be called “zebras” don’t function in “either/or mode”: either rapid growth and maximized profit — or just added value for society. Just like a real zebra, they are both black and white, meaning they want to be both profitable and make a positive impact. And like real zebras, they often form groups, which means they’re good at networking. “Zebra startups” maintain a healthy balance between competition and cooperation.
Top-or-flop culture
The zebra term for this kind of company was formulated back in 2017 by the four founders Astrid Scholz, Mara Zepeda, Jennifer Brandel and Aniyia Williams. In an article in the online magazine Medium, they accused the startup scene of having a top-or-flop culture. They wrote that the current technology and venture capital structure is broken. It rewards quantity over quality, consumption over creation, quick exits over sustainable growth and shareholder profit over shared prosperity. Their call for a new “zebra culture” resonated greatly among founders, investors and consultants and turned into its own movement, Zebras Unite, which is being joined by a growing number of startups.
Munich Startup: “Impact” has become quite a buzzword in the startup scene — what do you think makes a “real difference” or “real added value”?
Heba Aguib: For me, a startup creates real added value when the core of their business model aims to solve one of the global challenges — be it poverty, climate change, hunger or war. And it’s not enough for part of their profit to go towards a good cause. That impact as a kind of charity always depends on management decisions and can quickly be stopped in times of economic difficultly. Reliable and sustainable added value, in contrast, is created by startups whose core business and end product serve the common good. A startup that can offer its product or innovative approach to fight COVID-19 would certainly be the most telling example right now for a startup that can make a real impact.
Guided by the United Nations sustainable development goals
The areas in which startups can make this kind of difference are presented in the United Nations’ 2030 Agenda with its comprehensive list of 17 sustainable development goals. At Accelerator Respond, we are also guided by the 2030 Agenda and have put the focus on three goals for the first year: goal 8, decent work and economic growth; goal 9, industry, innovation and infrastructure and goal 11, sustainable cities and communities.
Munich Startup: What obstacles do zebra founders often face?
Heba Aguib: What zebras need in the startup scene now is attention! Right now, it’s still always about looking for the next unicorn and the next billion euro exit. Sustainability related subjects are also starting to boom, but still don’t play the leading role when it comes to big rounds of financing. Moreover, the media profile of climate and environmental protection puts the public focus predominantly on startups in greentech. While they can make an important contribution to fighting climate change — a unilateral focus in public discussion brings with it the risk of less attention being paid to other areas where a great number of zebras are also active. That ultimately all comes together to make it difficult for zebras to attract attention and find financing or suitable accelerators as a result.
Munich Startup: What approaches do zebra startups take to be both profitable and sustainable?
Heba Aguib: In their commitment to the sustainable development goals, zebras have already developed diverse and creative approaches — that might be the sale of fairly produced products that support responsible consumption or new farming methods to better feed the growing world population or tackling sanitary or water supply problems with innovative technologies. The list could go on forever.
Munich Startup: What do investors make of startups that don’t necessarily want to become unicorns?
Heba Aguib: Many investors now respond favorably to sustainability. Just recently, a group of twenty well-known venture capitalists committed themselves to investing exclusively in companies that measure, reduce and compensate for their CO2 emissions. The extent to which the trend will significantly change the investor scene, however, remains to be seen.
“Before the zebra culture can break up the reign of unicorns, we probably have a long way to go”
But I think zebras will soon be part of having a “presentable” portfolio. And here too, the corona crisis could cause investors to switch from unicorns to zebras. And to be honest, comparing the two makes it obvious: Zebras actually exist in the real world, whereas unicorns do not. But before the zebra culture can break up the reign of unicorns, we probably have a long way to go.
Munich Startup: What challenges do zebras face in terms of financing options and programs for their business model?
Heba Aguib: With respect to that, I clearly point to the definition of key performance indicators (KPIs) and the measurability of impact. Quantifying impact is difficult and needs to be valuated separately from profit. That is important for the startups so they can estimate the value of their contribution and also for getting investors on board. Programs that offer and communicate a balance of impact and profit are rare. That is the need we acknowledged at the BMW Foundation by creating Respond in collaboration with UnternehmerTUM. We bring both ecosystems together and are driving transformation.
Munich Startup: Which zebras have particularly impressed you recently?
Heba Aguib: I constantly encounter new companies that impress me with their ideas. But if I had to choose a few, I would say: The search engine Ecosia, which plants trees for free for its users, impresses me in particular. It’s a great idea that combines everyday online searches with environmental protection. Lemonaid, which are soft drinks made from fair trade products, or Folkdays, a brand for fair trade products and design, also impress me because they make it easier for consumers to make better and more sustainable purchasing decisions.