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Financing Global Gazelles

1. Definition of a Global Gazelle

Literature reviews, and input from industry experts and entrepreneurs in selected global gazelle companies, were helpful in defining global gazelles (although many respondents were unfamiliar with the term "global gazelle").

As a result of our research, the following definition is proposed:

A global gazelle is any company that operates outside of its domestic domicile, demonstrates a growth in sales of 100% by the end of a period of four consecutive years, and shows positive profit overall in that period. Sales in the first year should be over $100,000. The company is closely controlled, swift to respond to market change, takes risks in its stride, and is innovative in most aspects of its business approach.Footnote 1

Our research has indicated that additional attributes that can be used to define a global gazelle are:

Rapid
growth in
foreign
markets
  • They are high growth small to medium-sized enterprises (SMEs), or divisional enterprises within larger entrepreneurial firms, that are dependent on at least 50% of their revenues and/or goods purchased in a foreign market or markets.Footnote 2
Born
global
  • They are "born global" in that their mission from the start is to operate in foreign markets.Footnote 3
Sustained
growth
  • Their growth (in terms of sales, job creation, wealth creation and/or market capitalization) is at least 50% a year from the start, becoming a significant business usually within three to five years.Footnote 4
Thirst for
capital
  • Their pace of growth in the early years demands significant cash infusions to sustain the growth.Footnote 5
Lean
balance
sheets
  • High on intellectual capital, but low on tangible assets, their initial capital needs are met by angel investors and venture capitalists, rather than institutional lenders.Footnote 6
Prepared
to dilute
ownership
  • Owners are prepared to raise additional capital through equity issues, diluting their ownership interest.Footnote 7
Seek high
returns
  • To recover their relatively high costs of capital, they focus on industries that generate higher than normal returns, typically technology-related.Footnote 8
Bold and
innovative
  • They are bold and innovative in their ability to identify and rapidly adapt to the global environment, and to leverage their knowledge and capital through alliances and partnerships.Footnote 9
Highly
responsive
  • They are always fleet of foot. They go from concept to market very quickly. They react instantly their products or services mature, and are quick to withdraw if the business shows signs of failure.Footnote 10
Readily
accept
failure
  • They have multiple businesses and failure is readily accepted. Their dictum is that without experiencing failure, they are missing opportunities.Footnote 11

In a 2003 report (based on 2000 data), Industry CanadaFootnote 12 has listed the characteristics of high growth SMEs (not all of which are global gazelles):

  • Share of business: high growth SMEs represent 12% of the 1.4 million SMEs in Canada;

  • Total equity: average $254,500;

  • Demand for financing: of the 31% of high growth SMEs that applied for traditional debt financing, 80% were approved (implies that 75% of high growth SMEs sought alternative financing);

  • Business size: 22% were medium sized business (100-499 employees) (implies that 78% were small high growth SMEs);

  • Geographic presence: consistent geographic distribution across the regions of Canada;

  • Growth: ability to sustain above-average growth rates over long periods (35% to 40% annually); and

  • Economic contributions: created a significant proportion of new jobs, and a major contributor to innovation in Canada (mostly in the IT and life sciences sectors).

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Date Modified: 2011-12-12

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