In your opinion, what is the topmost barrier to building a startup in Africa?

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Hi Everyone,

I’m Yele Bademosi and I run User Growth & Community for a project called STARTA (thestarta.com). We are building a FREE business support platform specifically for startup founders in Africa.

Starting a business is hard, starting a business in Africa is harder and we want to try to make it simple. Most startups fail so the idea is to help founders by giving them the right tools that improve the odds of success.

Starta was conceived by Dotun Olowoporoku, who is the founder of meals.co.uk, a Venture Partner at Potential.VC as well as an angel investor focused on Africa.

Starta is a couple weeks from launching and we will be providing a curated mix of practical business advice and How-Tos, software tools, business networking and funding opportunities for African founders.

We would love to hear your questions, feedback, thoughts and answers to question raised in the topic of this thread.

Feel free to join 450+ founders & techies who have signed up in the last month alone.
The prelaunch website can be found here: thestarta.com

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Founders in africa are hustlers and most have bootstrapped their businesses from nothing. The basic problem they have is funding.

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The number one reason is making things the market doesn’t need.

We have a lot of folks building the Nigerian version of $western_startup without taking the time to even see if they could be addressing a real need, then complaining when there are no customers or investors.

Here’s an idea for a non-sexy but yet potentially huge startup: food processing and packaging. Oh sorry, startups must only involve computers, code, and network servers eh? We’ll take a picture of your garri, put it online, and voila you have a tech startup.*

*tongue-in-cheek answer but not entirely off the mark…

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@luciocorp we ran a survey with founders who had signed up for Starta and a lot of responders also identified lack of funding. Personally I’m hoping to see more programmes like TEEP (Tony Elumelu Entrepreneurship Programme) where startups are giving $5000 as seed capital. Some might argue that it’s a small amount but YCombinator started by giving founders $12000 as seed capital in 2005.

@nextstep I definitely agree, we can’t just take ideas from the west and think we can transplant them directly to the African market. People might have the same problems but the degree of pain caused by that problem might vary i.e. other things have priority or the execution has to be completely different to what the western founders are doing.

Thanks for the responses :blush:

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well, your right when you said that hackernews started at $12gees… but down here in africa we have to look at the capital, everything we pay is in usd which is far higher than any african currency… $50gees might be alot of money around 7 to 8 million in nigeria, but when you are to give back by paying for hosting, i mean solid hosting that has security we talk about money… i have personally invested in some startup here in africa which i never get anything in return and later short down…

secondly… management is the next key to look at…looking at every stage of the startup at hand or in plan…

thirdly… planning… if the found does have a good plan the platform can go down

fourthly… adversing… which words with planning, management and capital

fifthly… revamping the apps or platform… this days you will not get a cheap ui/ux designer or developer… all this will have to work with cash, management, planning,

we are still developing country and we are not to be measure with top already made country that we copying from… and if everything that i mention comes in place i think that $50 gees will go a long away, but not to much :radio:[quote=“yelebademosi, post:4, topic:3969”]
we ran a survey with founders who had signed up for Starta and a lot of responders also identified lack of funding. Personally I’m hoping to see more programmes like TEEP (Tony Elumelu Entrepreneurship Programme) where startups are giving $5000 as seed capital. Some might argue that it’s a small amount but YCombinator started by giving founders $12000 as seed capital in 2005.
[/quote]

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  1. That was 2005
  2. If YC had left the startups on their own and not mentored them for three months and then literally placed them in front of more investors afterwards, they wouldn’t have the successes we hear of today. Giving 5k and bailing only serves to increase philanthropic accolades and does nothing for the ecosystem.

Also, what @nextstep said.

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That’s a bit harsh. Some people could just use the money.

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Perhaps… but looking at the number of benefactors; how many attributable success stories do we have from those?

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EDUCATION!

This will get a loud nod, but not everyone who thinks they’ve gotten the necessary education nor institutions championing direct inclusion of financial and entrepreneurial training into the whole business growth process, gets it.

I speak of open, and honest mentoring! Or we could just start with open and honest sharing.

However, there is an innate cultural issue; ours isn’t an open society, nor culture. Almost everything must lay under some shroud of secrecy to remain valuable. Very honest and open sharing is first deemed suspicious, before it must gain credibility - we are not very used to it.

Truth to tell, if our successful business men and women shared their stories, like our pastors would cry their throats dry vouchsafing the Gospel with their tales of trials and temptation, and by sharing i don’t mean the grass to grace wash, i mean the real hardwork, the valuable help(s) they got (even if it calls their Invincibility to Question), the real trials, not the sexy ones that reads like a cheap Nollywood plot.

This is my foremost appeal for Jason of Iroko; he bared it all, and still continues to do so.

" I have failed in every business i’ve started before Iroko, borrowed from my mom to fly down to Lagos in pursuit of VOD gold, had to convince my Best friend, not for the first time, to invest in my business…" (Mind, not verbatim)

A more open business society would drive all the other barriers down.

So my Brethren, that is why the most important job after JESUS saved our necks from hell, was to lay up an institution with Blood and The Spirit to carry His testimonies, proclaiming it and Educating all of humanity from one generation to the next, not only on the sequence of events but the deep seethed meaning therein.

Our problem isn’t funding. We only think it is!

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I seriously despise this “funding is a problem” mindset.

  1. Companies with more money in the bank have failed.

  2. If the most critical part of your key to success is having money, your idea can be easily trounced by people with more money. There are always people with more money than you, so you will never have a real competitive advantage. No real advantage, no possible exit.

Basically if all you need is money, you really have no future.

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TEEP has not run long enough and a vast majority of the companies being funded are not “Tech Startups” but SMEs many of which are doing well as small businesses. It may not benefit the “Tech Ecosystem” but helps SME entrepreneurs. Definitely not the perfect or ideal solution but happy it still exists.

I definitely agree with this point of view. Most founders think money is the reason why their startup isn’t as successful as they believe it should be, most times this is not the case. Funding should be viewed as a fuel to accelerate a startup’s growth not as a necessity to get it off the ground

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I was directly giving a counter to this quote from you, and you know it. So if you are going to disagree, disagree in context. Also, Y Combinator funds businesses that aren’t “Tech Startups”. This condom company readily comes to mind. Basically, you could have passed your message across without making the parallel.

Good POV, but that just counters the previous one you tried making. 5k type funds do nothing to accelerate growth. They barely even get it off the ground while we are on that subject. So tell me, why are you hoping to see more of those?

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The biggest problem is that the local markets are typically small, and most of the ideas that scale internationally are quickly executed by foreign companies. That means that there are fewer scalable ideas for the common African to tackle, and if one happens to come up with such an idea, needs to be trusted with sh*t loads of capital to run like the wind before the foreigners gobble up the opportunity.

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@MistaMajani I am of the opinion that if there’s an African that will thrive at the helm, running an institution like Uber or Netflix for instance, his/her success would be determined as much by a proven global strategy as by funding. I dare say even more as a result of the former.

Dangote Cement does not enjoy half the dominance it has in Nigeria, in other African countries even with her bulging war chest, but it continues its African expansion aggressively; I wager for 2 reasons…

  • out sprint production (already going for 70 million tonnes), and be able to flood supply at will and ‘control’ prices by pushing them southwards, strangling any competition to beat a path into any market.

  • Or/and stock up impressive volumes via plants spanning the Continent - 18 countries in the pipeline, even Nepal in Asia- and be positioned to export overseas, into the West.

Examples of where a proven expansion strategy makes your big pocket look better.

They’ve been sitting on these for quite some time now it was never about the money, i believe a change in Management of recent times spurred this on.

A lot of the African narrative on open forums like this hides behind handicap of funding whenever the global picture is painted. While this is allowed it is obvious we don’t measure up, and hence may elicit ‘excuses’ for our shortcomings, whether this is founded or not, is topic for another day.

As abstract as it sounds people will tell you that TRUST is an integral part of business, how much more funding. Working out the kinks of financing your project is as much a part of that business as the product/idea itself.

Throwing in the towel, while mourning lack of fund as your death knell won’t redeem your failure, keep up the hardwork, do everything in your power to stay alive, in due time every true work is rewarded.

Almost every business man will tell you they were lucky at some critical point or the other, but the difference is that they were ready to hedge one luck into many streaks.

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Funding and infrastructure but funding is needed to build or get the infrastructure…

Funding is the top most barrier to building anything.

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That’s real by the book. But there is more to just saying! Sincerely, Finance is big deal for most startup. It’s not impossible to start using the ‘lean startup Principle’ but it’s tough to keep it going without having angel investors or startup funding.

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I can’t agree more especially infrastructure. I wonder how a full time blogger like me that have to post more than 12 original tech contents daily will cope without stable electricity. Power determines where i live.

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i personally belief that if startups:

  1. have an idea that is solid and has been validated through user surveys and interviews

  2. have a design made with the user at the center of the deigin and not the product

  3. founders have the skills and strategy to acquire, manage and retain customers

  4. can attract a pool of talents that can support growth

then the barriers can be reduced. …

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Love this response @DerrickTawah if you added skills to build the product or at least a prototype would have been perfect :blush:

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you are right and i think thats covered by the whole design aspect. By design, i meant translating the feedback from surveys/interviews into a user+customer journey and thereof producing a low fidelity wireframes (maybe clickable), doing some initial user testing and then producing high fidelity wireframes (prototypes) thereof;-)