In a world where startup headlines are dominated by billion-dollar valuations and flashy unicorn initial public offerings (IPOs), a quieter but more sustainable movement has been gaining traction: zebra startups. These companies, built on principles of ethical growth, profit with purpose, and long-term resilience, are drawing attention from private market investors who are rethinking what success could look like in the startup ecosystem. This blog will discuss unicorn vs zebra companies and whether or not the interest in zebra startups have faded or are coming back.

Unicorns vs Zebras

What is a Zebra Startup?

A term created by Zebra Unite[1] in 2017, zebra startups are the founder-driven alternative to growing a unicorn. Being both ‘black and white’, these companies are characterized by alleviating social, environmental, or medical challenges while also tending to their own profitability; they are for profit and for a cause. [2]

Rather than chasing breakneck scaling and billion-dollar exits, zebras are grounded with the goal to build sustainable businesses that solve real problems for real people. Zebras typically do well in ecosystems where long-term value creation is prioritized over short-term gains, offering a different approach to innovation and entrepreneurship.

Key Traits

Zebra startups aren’t just a feel-good alternative—they are strategically built for durability, alignment with stakeholder values, and sustainable growth. Here’s a deeper look at what defines them:

Sustainability over Hypergrowth

Zebra startups aim for steady, long-term growth that doesn’t sacrifice operational health or social responsibility for short-term metrics. Rather than seeking market domination, zebra businesses usually prioritize partnerships and community-building. [3]

Profit and Purpose Together

These businesses believe that financial viability and social impact can be mutually reinforcing, not mutually exclusive, which could make them an opportunity for impact-oriented investors.

Inclusive Leadership

Many zebra startups are led by underrepresented founders and prioritize broad stakeholder input, with the goal of creating more inclusive and diverse company cultures from the ground up.

Ethical Supply Chains

Zebras emphasize transparency in how they source, hire, and operate, offering a competitive edge as consumers and regulators demand higher ethical standards.

Bootstrapping or Community Funding

Instead of chasing venture capital rounds at the expense of independence, zebras commonly leverage alternative funding models like revenue-based financing or community equity, to help reduce dilution and preserve mission integrity.

Examples of Popular Zebras

Patagonia

A pioneer in sustainable business, Patagonia has long championed environmental responsibility, donating 1% of sales to conservation efforts and ensuring fair labor practices in its supply chain. The company aims to show that profitability and purpose can coexist.

Kickstarter

Unlike many tech unicorns, Kickstarter operates as a Public Benefit Corporation (PBC), central to its business model is its mission to help bring creative projects to life. The company has rejected the traditional venture capital route, instead focusing on sustainable, long-term growth.

TOMS Shoes

TOMS is a company that blends retail with social responsibility, making money by selling fashionable and functional footwear while simultaneously supporting global health causes. This dual focus on profit and philanthropy sets TOMS apart in the competitive retail market.[4] Today, TOMS donates one-third of its profits for grassroots good, supporting the people who are working to build equity at the local level.

Cruz Foam

Cruz Foam aims to revolutionize the packaging industry by introducing circular materials that can replace the unsustainable conventional packaging products in the global supply chain. The company is focusing on making an impact on the environment and reducing waste with its innovative products. Cruz Foam has received investments from Leonardo DiCaprio and Ashton Kutcher, and they both serve as advisors to the company.[5]

Warby Parker

Warby Parker is a direct-to-consumer eyewear company that aims to revolutionize the eyewear industry by offering stylish, high-quality prescription glasses and sunglasses at an affordable price. The company primarily serves cost-conscious consumers who seek both fashion and function in their eyewear.[6] The company works with a handful of partners worldwide to make sure that for every pair of glasses sold, another pair is distributed to someone in need. Warby Parker also provides free eye exams to those in low income communities.

Unicorn Startups

To better understand zebra startups, it can be important to contrast them with their more famous counterparts: unicorns. Unicorn companies are startups that are valued at $1 billion or more in the private market. Learn more about how to spot a potential unicorn company.

Key Traits

Growth At All Costs

Unicorns are designed to scale as quickly as possible, often prioritizing user acquisition and market dominance over sustainable business fundamentals.

Venture-Driven Capital Stacks

They typically rely heavily on successive venture capital rounds, which can dilute ownership and push founders toward aggressive, exit-focused strategies to satisfy investor timelines.

Valuation as a Success Proxy

For unicorns, achieving a $1B+ valuation becomes the goal, even if profitability remains elusive or product-market fit is incomplete.

Winner-Takes-All Mindset

Unicorns typically aim to dominate their category, often leading to zero-sum competitive strategies that can burn through capital and erode market goodwill.

Media-Driven Momentum

Many unicorns thrive on hype, whether that be from tech press coverage, X (formerly Twitter) buzz, and lofty expectations can inflate perception beyond substance, sometimes with unfavorable results at IPO or acquisition.

Investors Are Paying Attention

A few years ago, the idea of a zebra startup may have not been a big deal, but today, more private market investors are taking notice due to the over-concentration of unicorns that are solely focused on tech and exponential growth.[7] This is driven by a few key trends:

Unicorn Fatigue

With recent company failures like WeWork, Theranos, and others, there seems to be growing skepticism around inflated valuations and the opportunities these companies can deliver. Investors are becoming increasingly wary of overpriced and underperforming unicorns.

Rise of ESG and Impact Investing

Limited partners are putting pressure on funds to align portfolios with environmental, social, and governance (ESG) standards. Some zebra startups are naturally aligned with these priorities, offering mission-aligned opportunities.

Resilience in Volatile Markets

Zebras, often lean and revenue-positive, and may have the ability to better weather market downturns more effectively than unicorns dependent on burn-and-raise cycles because zebras tend to focus on long-term solutions, company purpose, and profit, rather than just profit. This can present an opportunity for hedges in uncertain economic conditions.[8]

Has the Zebra Fad Worn Off?

The zebra movement peaked in visibility between 2017 and 2021, driven by thought leaders and networks like Zebras Unite. Since then, the buzz has cooled. There are a few reasons for this:

• Slow exits: Zebra startups aren’t built to exit quickly, which can frustrate traditional VC timelines.
• Limited scalability: Some skeptics argue that impact-oriented businesses may not reach the scale of their unicorn counterparts.
• Media disinterest: The press typically prefers dramatic valuations over patient growth.

Could It Be Picking Back Up?

However, this fading buzz might actually work in zebra startups’ favor. Without the media spotlight, they can build quietly, avoiding the pitfalls of overexposure and inflated expectations. And as more investors shift from FOMO to fundamentals, zebras may become increasingly attractive as companies who are looking at long-term growth and sustainability.

Socially Conscious

One reason why zebras could be gaining traction is that some consumers are becoming more socially conscious. They want to support businesses that align with their values and positively impact the world. Zebras can be well-positioned to meet this demand.[9]

Traditional Startups Can Have Flaws

Another reason why zebras may be gaining traction is that many startups that prioritize growth above all else can end up burning out, failing to achieve their goals, or sacrificing their values in the pursuit of success. Zebras offer an alternative approach that prioritizes sustainability, community, and profit.[10]

Final Thoughts

While unicorns may still offer high-reward opportunities, their high-risk, high-burn model isn’t suited for everyone. Zebra startups can potentially offer an alternative, rooted in ethical entrepreneurship, resilient economics, and alignment with the future of stakeholder capitalism. It doesn’t have to be either/or, there can be room for both unicorns and zebras in a private market portfolio.

Want to learn more about investing in private companies? Check out the following blogs to learn more:

• What Institutional Investors Look for in Private Market Opportunities
• How to Spot a Potential Unicorn Company
• How to Start Investing in Startups
• New Frontiers: Investing in Emerging Markets
• Primary vs Secondary Investing

Are you looking to invest in startups? Sign up for a MicroVentures account to start investing!

 

[1] https://www.zebrasunite.org/

[2] https://storm4.com/resources/industry-insights/green-zebra-startups-noticed-investors/

[3] https://www.linkedin.com/pulse/zebra-businesses-future-purpose-driven-kingston-university-alumni-tzqve/

[4] https://www.toms.com/en-us/about-toms?srsltid=AfmBOooIWHo-WHLB7SDaYGVCk-uKmlfyZIdA5VC-VZr6gmIskcy07X0z

[5] https://news.ucsc.edu/2022/04/cruzfoam-star-investors/

[6] https://www.warbyparker.com/history

[7] https://mishevski.medium.com/why-do-we-need-more-zebra-companies-instead-of-unicorn-companies-f9c853282325

[8] https://www.pioneerspost.com/news-views/20230927/resilient-purpose-driven-zebras-are-the-future-how-can-investors-help-them

[9] https://unfolded.venturra.com/unicorns-vs-zebras-why-startups-should-consider-a-different-approach/

[10] https://unfolded.venturra.com/unicorns-vs-zebras-why-startups-should-consider-a-different-approach/

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The information presented here is for general informational purposes only and is not intended to be, nor should it be construed or used as, comprehensive offering documentation for any security, investment, tax or legal advice, a recommendation, or an offer to sell, or a solicitation of an offer to buy, an interest, directly or indirectly, in any company. Investing in both early-stage and later-stage companies carries a high degree of risk. A loss of an investor’s entire investment is possible, and no profit may be realized. Investors should be aware that these types of investments are illiquid and should anticipate holding until an exit occurs.