Avihai Michaeli
Business Executive & Startups Mentor (M&A/Fundraising)

How did Israeli “Camel Startups” turn into Unicorns, Outnumbering the EU ones?!


A recent global Unicorns list places Israel #7 in numbers of Unicorns in the world (Along with Brazil). A more pin-pointed study of companies who became Unicorns in the recent 12 months, places Israel as #1 in Europe, with almost double the Unicorn number from UK, in the second place (11 companies vs 6).

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Key Points:

  • Israel is playing a more important role than ever with 20 Unicorn companies in the ranks and 11 added in just the past year 
  • Israeli Unicorns (A Billion USD Company) are mainly B2B focused, which enabled them a steady growth of incomes, and profitability in many cases- Turning them into “Camel Startups”
  • Many American Unicorns lost significant sums in the recent year, even before Covid-19  (Uber lost a total of $8.5 Billion in 2019) getting its investors to add hundreds of millions as “recovery aid”, while reconsider its “only Unicorns” attitude.

A new book by veteran investment director Alex Lazarow called Out-Innovate: How Global Entrepreneurs–from Delhi to Detroit–Are Rewriting the Rules of Silicon Valley, in which he confronts the Silicon Valley approach of “Unicons only/first,” has made waves in recent months. The book may not have anticipated the Covid-19 crisis (Coronavirus, but it was raising the question how different companies cope in times of crises, a question which is extremely relevant nowadays.

Lazarow found that there is a segment of startups with significant income, some of which are even profitable that for some reason, have been overlooked by major investors. He named such companies “Camel Startups.”

While Covid-19 saw Unicorn companies lose even more money than expected, their CEOs’ go-to move in dealing with the crisis, was mainly to return to their Silicon Valley investors, asking for more money. However, the CEO’s of “Camel Startups” had various tools to take, before looking for more funds.

Most, if not all startups, wishes to become a Unicorn at one stage, but the way to get there could reflect of the future of the company.

Did Israeli Unicorns evolved from Camel Startups?

A recent chart compiled by Crunchbase gathered all the global Unicorns. In the list, Israel was placed seventh, along with Brazil. However, almost 10 of the companies, which are marked in the chart as being U.S. unicorns, were actually founded by Israeli entrepreneurs who moved to the U.S. at their investors’ request.

A later pin-pointed study published on July 12, found that counting the number of companies who turned into Unicorns in the past 12 months, landed Israel in the first place in Europe.

Several facts seem to make the Israeli, or Israeli-led startups stand out:

  1. Many of them were, in fact, “Camel” startups, with significant incomes, prior to becoming a Unicorn.
  2.  All of the Israeli Unicorns are B2B focused startups with significant incomes, and their unicorn valuation stood to reason in alignment with their incomes.
  3.  Bottom up vs Up Bottom- While many global unicorns investors marked the “need” to become unicorns, regardless of their business models (“Up Bottom” approach) many Israeli Unicorns took steady and solid steps up (“Bottom Up” approach). Of course there are few exceptions in both sides.

Camel startups seems to cope well in times of crisis, and some of them even grow to be unicorns.

Solid foundations can create Unicorns, but it doesn’t really go the other way around. Just because leading VCs wish for their portfolio companies to be named “Unicorns”, does not (in most cases) turn their foundations into solid ones, for future growth.

While many Unicorn companies lose hundreds of millions of dollars, if not several billion (Uber for example lost a total of $8.5 billion in 2019) a crisis like Covid-19 calls for a different way of thinking. The current coronavirus pandemic will reveal who can cope in times of crises, and who can’t.

Israeli Unicorns seemed to understand that building a solid company, based on steady incomes (ARR) is essential. It could be that as they started the fundraising process, they found it was very hard get B2C company funded in Israel, while B2B companies get funded more easily . Using its fundraisings to grow rather than to “survive”, could be the difference if as unicorns, they will “bleed” losses or keep on growing.

Being a Camel has its advantages in crises times: While a horse (and a Unicorn is a kind of a horse) must drink 50-70 liters a day to survive, a Camel can do with 100 liters every 7-10 days.

Go Camels!


About the Author
Mr. Avihai (Avi) Michaeli has served in Business Executive positions in the Israeli business ecosystem, in the recent 25 years. Avihai held positions like VP Sales & Marketing, and few times as CEO. After managing a Startup for 6 years, on behalf of its investor, it got acquired. Ever since then he started mentoring various Startups on behalf of their investors, helping them get funded or M&A's. Avihai servers either as an advisory to the Companies management, or take an Interim active role. Mr. Michaeli is also doing innovation scouting for various international brands, introducing them to relevant Startups upon their needs. Avihai writes posts and articles about the Startups ecosystem and gets interviewed about the subject quite often
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