A little bit of fat goes a long way in helping Africa’s tech start-ups
There is a whole lot more to success than a good idea that is born out of local knowledge
How can we help Africa’s tech startups? Last month in this column, I wrote: “How do you build a solution that has the reach and scale of something like M-Pesa ...? You have to know that [X] is a pressing issue ... and you have to have the cultural context of what ... alternatives would be.”
Here I was speaking about the need for tech diversity. I stand by this entirely, but we also know there is more to success than a good idea born out of local knowledge.
There are also not-so-simple matters of finances, market appetite, pricing strategy, packaging, marketing and customer service. Much of this boils down to a need for what I’m calling “fat”: funding, access and talent.
Fat in start-up-speak usually means the opposite of lean. Investors have backed lean and agile start-ups that can respond and realign to circumstances, while critically not costing terribly much. They want your wonderful idea, but they also want you unburdened by a heavyweight staff bill or rigid structure. Uber, and its policy of being the platform and not the employer, was arguably a study in lean start-ups, no matter how you feel about that policy.
In the past couple of years, fat in start-up circles shifted meaning to the big, bolder, costlier ambitions. In 2017 the New York Times held up real estate mover-and-shaker Opendoor as the poster child for a fat startup, writing “modern capital markets have since unlocked far grander opportunities for tech entrepreneurs. They are blessed with essentially unlimited access to money, and ideas that once seemed too expensive, too risky or just too crazy are now getting off the ground.
“These start-ups are fat with capital, with industry-altering ambition and, to their critics, often more than a little hubris.” Cool, but to gleefully flog a mixed metaphor to death those with the fat, financially and otherwise, to sustain themselves are usually not start-ups. Fat instinctively presents itself as the polar opposite to small and micro enterprises, to the twofounder-one-employee startups littered about the tech landscape. So I’m belligerently repurposing it here.
I feel justified in this too, having spent the past week hanging out in Lagos with 12 African tech companies that make up Launchpad Accelerator Africa’s fourth intake. This initiative, backed by Google for Startups UK, identifies some of the continent’s “high potential early-stage start-ups” and helps take them “to the next level”.
They do this through a mix of workshops, mentorship and practical methods, drawn from the sort of network that only a global giant like Google can tap into. And the words that came up time and time again in my free-ranging talks with these start-ups were “funding”, “access” and “talent”. Stone Atwine, founder of “neobank” Eversend, told me the programme helped it get in the door with the right connections in Nigeria, a key market for its multicurrency, digital financial tool.
Atwine was buzzing from another success, with Eversend just claiming the top title at Slush 100, a prestigious global pitching competition. He is Ugandan and his service is aimed squarely at the African market, but Atwine told me he and his co-founders are based in France, because of the reality of starting and sustaining the company.
“We see that the cheques are really small in Africa. There is little seed funding. Everyone wants to put their money in established businesses,” he said. “The valuations are low and [funders] want a bigger chunk of the business.”
The access challenge can be defined in many ways: access to the right people, as mentioned, but also market access. Every fintech player in the room brought up the issue of the fragmented African regulatory framework limiting growth in new markets. They’re all crossing fingers and toes that the African Continental Free Trade Agreement is the magic barrier eraser we all hope for. SA aggregator and purveyor of consumer data Brandbook said finding and retaining talent was a big concern at home. Great developers got snatched up by corporates that could compete better on pay for these in-demand skills in our limited pool.
“It is difficult to get access to really great talent, especially if you’re in the early stages of your business,” said Brandbook’s Rorisang Posholi. “The big guys don’t have this problem. Startups with lots of funding don’t have this problem.” And, heartbreakingly for SA, our African neighbours don’t seem to have this problem, judging from “the talent in this room” he said.
The Launchpad programme is Google’s answer to fat, to opening doors, and developing entrepreneurs. What’s yours?