Thriving in a new economic world order: part 2
Which industries are ripe with opportunity? Which sectors will outperform in the new economic world order? Where should we focus our venture-building efforts?
Covid has happened and the world will never be the same. Embracing an entrepreneurial mindset helps us to view this not as something terrible or scary but rather as an opportunity for social and economic benefit.
In the first part of Thriving in a New Economic World Order, we discussed three key metrics of companies that will thrive in this new environment. These companies understand that cash is king, trade fixed costs for variable costs and evolve their product offer based on extensive customer discovery.
All early-stage ventures should refocus on these three areas. If they find themselves lost then I have one recommendation: get out of the building! As Lean Startup guru Steve Blank says, “There are no facts in the building so get the h*ll out of the building.” Talk to customers. Companies that transform to meet the changing landscape of customer needs will end up with a unique competitive advantage and many earned insights.
In this article, we will take an even broader view focused on the macro environment. Which industries are ripe with opportunity? Where should we focus our venture-building efforts? I’ve spent much of the last six years helping build two clean energy companies focused on serving off-grid customers across Africa. Those ventures grew from tiny startups to Pan-African market leaders serving a combined four million people across 10 countries. Guess what? Neither had a market penetration of more than 1%.
No continent will grow faster than Africa over the next 50 years. We will account for 85% of global population growth and boast the world’s three largest cities: Lagos, Dar es Salaam and Kinshasa. Governments across the continent do not have the knowledge or capital to fund the energy demands of this growing population. Combine this with the fact that we must find a way for this growth to happen with clean, renewable energy and you have a huge private sector opportunity.
Now that we’ve adapted to a world where Covid will remain for some time, we need to shift focus back to climate change.
The next uniquely African opportunity is focused on biotechnology. The African continent has the world’s greatest diversity of human genomes. Homo sapiens originated on the African continent, so our understanding of their underlying molecular structure and practical applications of that information is a massive opportunity.
We are blessed with skilled technicians, world-class universities, low operating costs and world-shaping incubators. Pooling these resources will allow us to unlock insights that will positively impact the entire planet.
A recent IMF working paper states that crop yields are much lower in sub-Saharan Africa than the rest of the world and this has led the continent to import a large share of its food needs. These below-average crop yields are a persistent issue that negatively affects both small-scale farmers and large producers. New technology developed on the continent is allowing us to better understand and use efficient growing techniques, analyse soil components and monitor our growing progress. We have fertile land that is underproducing relative to its potential output. Using technology and innovative business models can decrease our dependence on foreign imports, increase job creation and grow GDP. Public-private partnerships will play a critical role in developing and deploying these new agriculture-focused technologies.
Africa is a large, diverse and resource-rich continent. It is experiencing massive population growth around a crumbling infrastructure that cannot be fixed by underfunded governments. Bringing these two macro challenges together demonstrates both the imperative need for innovation as well as the opportunity for companies dedicated to creating new, user-focused solutions.
By starting our venture-building analysis at a macro level with a focus on climate, health and agriculture we are effectively paddling into a tidal wave that is just taking shape. Focusing on building companies that put a premium on cash, use lean start-up methodology and embrace human-centred design gives us the highest probability of not only catching that wave but riding it to great social and economic success. We simply need to embrace an entrepreneurial mindset that sees only opportunity in this new economic world order.