At Founder + Lightning, we like Horses not Unicorns... Sounds a bit off but, we can explain.

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The rise of startups, market hype and the abundance of venture capital created the perfect environment for Unicorns over the last decade– at one point it seemed as though a new one popped up every week. 

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Hundreds of millions (sometimes billions) of dollars poured into these companies, meaning they had to grow at a breakneck, growth-at-all-costs, speed. 

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Then post Covid, once interest rates went up funding dried up, the fragility of these fast-growing companies became apparent– 344 unicorn startups were built over that 10 years, by 2021, only 45 survived.

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At Founder + Lightning, we never sought out Unicorns. It’s not necessarily because we saw the crash coming, but that our model and thesis didn’t fit that mould. 

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We’ve always favoured more sustainable growth companies, what we call “proper businesses”. What we mean by this is: startups that choose to solve a problem for one audience, that grow steadily, not growth-at-all-costs. 

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When it comes to investment, we call these companies ‘‘Horses’: should their growth take off, within them is the possibility of becoming a Champion Racehorse. However, the downside protection is they plough the fields- bringing in solid returns.

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We aren’t searching for the next Uber or Airbnb or the next big trend in tech. 

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While these companies are very important to the economy and the startup world, they are incredibly difficult to build and have a very high likelihood of failure. 

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Our view is, there are hundreds or companies that are generating solid revenue, with small MVPs or even fully-fledged offline business, that could benefit even further with more tech behind their business. They likely aren’t going to be unicorns, but they have the potential to exit for tens of millions - which after all is where the vast majority of exits in the UK sit.

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We look for these businesses because they have a loyal customer base, they’ve found a problem that a smaller subset of people need solved, they’ve proven the idea works–  and it derisks the huge risk of building a business. 

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In contrast to the huge risks of building a unicorn, where growing quickly and pumping in constant VC funding is the only real way of building, we see this as a much more sustainable way to support the startup ecosystem. 

While Unicorn still remains the goal for many (why wouldn’t it? It’s a billion-dollar company), life-changing amounts of money can still be made from smaller, steadier growing companies where founders retain a large chunk of equity. 

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For us, Horses are the goal. It’s the possibility of becoming a champion racehorse, but still bringing in solid returns either way. 

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If you are building a Horse, or know someone who is, get in touch! We’d love to hear about what you are building. 

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