In the world of startups, there's been a relentless pursuit of unicorns—companies valued at over $1 billion. Unicorns, once rare, now number around 1,200 worldwide. But with recent challenges, including the impact of COVID-19 and a market reset in Africa that has stripped some startups of their unicorn status, the debate resurfaces: should African startups aim for unicorn status, or should they adopt a more sustainable approach akin to camels?
Unicorns, known for their rapid rise to billion-dollar valuations, captivate attention and are well-hailed in this ecosystem. Camels, on the other hand, prioritize steady and resilient growth. As the African venture market undergoes a transformation, the question arises: Which path—unicorn or camel—will guide startups toward survival in this challenging landscape?
Unicorns, with their mythical allure, have been the poster children of the startup world. These companies achieve billion-dollar valuations, often propelled by massive funding rounds and exponential growth. The Unicorn path appears tantalizing, promising vast riches and market domination. In the past, many African startups sought to emulate this trajectory, chasing hefty valuations through rapid scaling.
"Growth at all costs is luxury and only doable if you can raise with ease and in Africa, that has never been the case," says Peter Oriaifo, principal at Oui Capital to Bendada. "Our ecosystem requires a strong focus on unit economics. Growth at all cost to unicorn was never a thing in Africa, rather it was something folks saw in the US and convinced themselves that it can be replicated in Africa."
On the other hand, Camels are the unsung heroes of the ecosystem. These companies prioritize sustainability and resilience over rapid expansion. They aren't driven by sky-high valuations but focus on staying profitable and maintaining steady growth which is the approach many believed Jumia should have taken rather than trying to be the "Amazon of Africa". Camels are known for their ability to endure harsh conditions, much like the African startups navigating challenging funding landscapes.