We live in an era where rapid change can make any business tumble in hours. Consequently, when volatility is the norm, businesses need to be as stable and firmly based as possible, to survive hardships and thrive through challenging circumstances
External conditions can change from time to time, so businesses, especially startups, must be able to survive the most demanding challenges. Thus, these organizations need to be like camels, able to adapt themselves to periods of scarcity.
In business and entrepreneurship, the term camel startup appoints those growing businesses created to withstand adversity and thrive on limited resources. Companies with these characteristics are long-lasting and capable of sustaining themselves in difficult circumstances.
In this article, we will examine the nature of camel startups and how they differ from famous unicorn startups.
In this rapidly changing economic landscape, companies must be able to adapt and change to survive. Consequently, businesses, especially startups, should be agile in facing a volatile financial environment that demands great attention and ability.
Undeniably, we are facing challenging times where agility and flexibility need to be the core of any organization. Therefore, now is a moment when developing a new business approach becomes more than necessary, especially in the startup environment, where the rise of camel startups is turning out to be a good bet for stability and safety.
Just like camels that adapt to different climates and survive without food and water for months, startups need to be equally adaptable and agile to sustain themselves even in times of crisis, this is why camel startups have acquired a relevant position in the venture capital system.
But what does camel startup mean? Alex Lazarov of Cathay Investment coined the term to portray those startups that can cross the desert with little or no water. In other words, they do not require a steady supply of investment, which is why, after the pandemic and the consequent decrease in investment, they acquired a market presence in 2020.
So, what are the characteristics of a camel startup?:
- Customer-Oriented: These companies prioritize their customer base, as they generally follow a business model and orientation that puts the customer at the center of their equation. Also, to serve their customers, they value feedback and respond accordingly to the needs of their clients, which allows them to increase their growth while building a good brand image and customer loyalty.
- Slow and sustainable growth: A camel grows differently than a traditional unicorn. Rather than developing as quickly as possible, frequently through funding, the camel takes a lower-risk path. And, although camels may still raise a few minor rounds for strategic growth surges, they never deviate too far from profitability, frequently diversifying their business models to strengthen their foundations.
- Resilience: These organizations plan and ensure controlled growth through every decision. Every action they endure aims to ensure its future. Camels grow in measured spurts, only accelerating and investing in expansion when the opportunity arises.
- Long-term view: A longer-term approach reduces the trade-off between growth and risk and allows for more resilience. This perspective provides time to enhance the business model, develop a desirable product, and build a system that can operate at scale.
- Diversification of business models: Adapting the products and services to changing market demands is critical. This diversification is a core value of camel startups as they aim to spread risk by building diversification into their product mix and business model.
In this ecosystem, we also find the famous unicorn startups, which are private businesses valued at up to one billion USD. Naturally, achieving unicorn status is a difficult task that demands that a company has an innovative idea, a roadmap for development, a strong business strategy, and a feasible means to connect with venture capitalists and private investors.
Unicorns’ worth is often determined by how investors and venture capitalists anticipate companies will grow and develop over time, at last, it all comes down to long-term forecasting, which indicates that their prices are unrelated to their financial success. Many of these businesses seldom make no money when they initially start.
On the other hand, camel startups have a different nature that makes them more capable of surviving an unfavorable environment, since they have developed a resilient structure designed for the long term. Zoom is an excellent example of a camel, as it began its journey with sustainable expansion and only sought equity when necessary.
Currently, given the scarcity of venture capital funding, startups must be able to cross the desert and live for extended periods without food or water, much like a camel. So, it’s time to be a camel, not a unicorn.
Speed should not be the priority for businesses that want to become a camel, instead, stable growth that can sustain for the long run will help businesses become more efficient and sustainable over time.
Startups need to change their focus from growth to sustainability. Camel businesses prioritize revenue growth over venture funding alone, and when they raise funds, they always have a growth strategy. Camel startups always take careful steps, which enables them to have controlled growth.
Camels are resilient creatures that can withstand protracted droughts and consume up to 100 liters of water when available. But when it comes to business, building a camel start-up means assembling a company underpinned by resilience and adaptability.
On the other hand, to build a resilient company hiring a great team is as important as developing a solid business model. Hiring the best talent for a company is mandatory, and this implies not only hiring the most talented professionals but also having on-board individuals who share the same vision and values.
Becoming a camel startup has several advantages, especially now that companies must be able to adapt and change to survive the current economic environment. But the first step in this path is, without any doubt, acknowledging that designing a successful business begins by establishing a solid and long-lasting foundation.