With over 40 banks in Kenya, I believe we might have more bank consolidation and even failures to come – its important not to gamble your startup’s chances of success by not understanding the implications of working with any bank. I am particularly worried of startups that spend endless amounts of time in business development with banks who don’t really have the DNA, never mind systems and culture to innovate or move quickly and waste startups valuable time.
One good thing that came out of the Soludo CBN tenure was the bank consolidation, so hopefully the Kenyan Chase Bank episode is not likely to occur. But this is great advice for African startups from Mbwana. Banks are typically one of the biggest strategic partners in any value chain, we’re talking make or break relationships.
Full post is here on Savannah Fund’s blog.
http://savannah.vc/2016/04/11/what-should-startups-learn-from-africa-bank-failures/
This is very true. But therein lies the seductive danger of working on those partnerships. A startup can get easily distracted and burnt in the process.
So what usually happens is that startups work hard on a product (months or even years), hence they want to see a finish line at some point. Or some sort of pay day. They start day dreaming that a partnership (e.g with a bank or Telco) will guarantee them 100000’s of customers overnight.
Because it’s hard work to actually look for your first 100 customers, convince them to hand over their card and pay for the product. Whereas it’s easier to go for meetings to see the guys/gals in suits, tweak slides endlessly, visualise money in the account etc without actually signing anybody.
Africa is an interesting case study. What’s hidden in plain sight is that the critical mass of value happens when you sell to the general public. Hence why from Dangote to MTN to GTbank, it’s the same game, they sell to the public. That’s where there’s a better chance to really clean up.
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