Gazelle company – definition and meaning
A gazelle company or simply gazelle is a young, very fast-growing company. This type of company maintains consistent and rapid expansion of both employment and turnover (sales). Additionally, the company maintains a high rate of expansion for at least four consecutive years. Although 20% growth annually is the common definition, there is no single definition for a gazelle company’s growth rate.
Typical gazelle companies are publicly traded firms. In other words, we can buy and sell their shares in a stock market.
They have experienced sustained growth annually for the past four years. They also registered sales of $1 million or more in the first of those four years.
Video explanation:
Gazelle companies are not very common in most economies. They usually represent from five percent to ten percent of all new entrants.
However, investors, economists, and even politicians are aware of them because some are likely to become major employers. Some of them will also become important future creators of wealth.
However, according to FT Lexicon/com, most gazelle companies fail to sustain strong growth for more than five years.
The Law Dictionary says that a gazelle company is “a company with sales revenue growth of 20 percent or higher annually. Usually known for many new job opportunities.”
MIT researcher and inventor of business demography, David Birch, first used the term gazelle in the 1980s. He used it to refer to young, rapidly-growing companies.
Gazelle company – examples
Many gazelle companies over the past three decades have been either hi-tech or Internet businesses. For example, Apple, Dell, Yahoo, Cisco, Microsoft, Amazon, and Google were gazelle companies during their initial years.
Facebook was a gazelle company, and so was Twitter. The two social networking sites have grown their user bases amazingly fast. However, it took them longer to leverage their user-base growth into spectacular sales and profit growth.
Think-tank Foundation iFRAP defines gazelles as firms whose starting capital was at least €100,000 ($118,000).
According to iFRAP, the average French gazelle company started off with €800,000 ($943,000) of equity capital and 13 workers. The average British gazelle company, on the other hand, began with €1.6 million ($1.88 million) and 26 workers.
Video – What is a gazelle?
In this Performance Breakthrough video, Mike Goldman explains what a gazelle company is. He also talks about the four decisions that every growth business must make and get right to succeed.