The First Unicorn Is the Hardest

Below is an excerpt from a feature article Endeavor President Adrian Garcia-Aranyos wrote for the Realistic Optimist, a weekly publication that makes sense of the recently-globalized startup scene. You can read the rest of the piece via the link below.

Over the past two decades, Endeavor has supported founders from more than 30 countries. We’ve seen new startup ecosystems rise and flourish around the globe. I’ve learned that an ecosystem’s takeoff often begins with a couple of brave souls. (I’ll explain more about this later when discussing our “Multiplier Effect” theory.)

An ecosystem’s first unicorn, such as Rappi in Colombia, or its first major exit, like Paystack in Nigeria, is almost always the most difficult. Without an exit to show off, a newborn or early entrepreneurial ecosystems struggle to attract local and international investors.

This is akin to a cold-start problem. Without examples, potential investors don’t feel they have enough data to work with, and promising entrepreneurs often leave the market to achieve their goals. It requires truly exceptional entrepreneurs to break the cycle and resist the siren call of launching their company in a more developed ecosystem. In my experience, this type of founder, the ecosystem’s first generation, is often truly inhabited by their company’s mission. When funding and support are absent, conviction and grit take their place. These founders aren’t in it for the money: the odds of success are simply too low.

As new capital sources gain interest in startups (DFIs, private equity, governments), these founders master the craft of mixing funding sources from the get-go. Grants, angel investors, loans, public money, private money… In a nascent ecosystem, funding sources are so scarce that anything goes.

Kavak (Mexico), Careem (UAE), Insider (Turkey), Go1 (South Africa), Grab (Singapore), MercadoLibre (Argentina) … We’ve put together a global interactive map of all of those momentous companies.

The companies that have managed such a feat are rare. But their rarity exacerbates both how hard it is as well as the downstream impact they have had on their ecosystem.

Read the rest of the article at the Realistic Optimist.