Why do you think many startups in Africa don't seem to get very big?

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Take a look at the African startup scene. So many small-ish companies? Is there something in the water?

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As someone who used to run a “now failed” start-up, i can wager that it boils down to a some of these reasons

  1. Inadequate/Limited resources.
  2. Poor Marketing Strategy
  3. Running Costs
  4. The problem of getting lost in the Scale
  5. Analysis Paralysis

I’m not overly enthused about owning a start-up now or in the nearest future. Just want my experience to become to faded to remember before i try that again.

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Mostly due to lack of patience, experience coupled with not enough money. And if it is B2B, its usually more of a lack of relationship saga.

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It’s quite interesting that there’s large number of views on this thread but only 2 responses. Considering that most (if not all) of us currently using the radar run one start-up or the other and pray that our start-up grow, even though it’s just as big as Konga (let’s leave Facebook and Twitter out for now).

LOOOL!

What’s the problem my people?! Are you too scared that you would be the one who says the things that aren’t generally accepted and is side-lined and called-out because of it? Are you afraid of doing the hard thing of talking about the things that you think, might be our problems, despite the fact that you already hush them to your co “start-up CEO”?

LOOOOL.

It’s just all so funny to me, because y’all can’t tell me that y’all ain’t interested in growing into very big companies, across Africa and beyond! C’mon no one is calling y’all out here. Have you read the rules? this is the radar.

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My answer simply is Hunger. We don’t want it bad enough. I have been pondering the past few days on the audacity one needs to have in thinking of starting a billion dollar startup in the US. It is either naivete or just plain foolishness, but alas many succeed.

Aside from alot of “reasons” if we are honest deep down, we really don’t want the BHAG bad enough. The sad reality is that many “startup founders” will be content with 1 million dollars yearly revenue if it is assured for eternity, there is nothing Big, Hairy or Audacious about that.

It is time to slaughter the local champions!

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LOOL, I actually wrote my comment before reading yours, don’t leave Facebook and Twitter out oh.

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Dude, It’s a question for all including you :slight_smile:

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Lol at views but no responses.

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The fact is that Africa is not yet truly in the Internet age. We are one leg in, one leg out. I think the first thing is to note that there are success stories (although far and few in-between) e.g Jobberman, iRoko etc. So rapid growth is a possibility.

But there are a myriad of reasons why other startups might stay small. My 2 cents:

  • Consumer behavior: I believe Africans are trendy (euphemism for slow adopters). We tend to hop on things when they’re exploding or when they have hype.
  • Consumer demographics: Millennials tend to be the biggest adopters of technology. Majority of African youth still struggle to access smartphones and data, limiting a lot a products access to their key demography.
  • Purchasing power: Severely limited purchasing power on the continent. The university kid who just bought 200mb might not want to spend 10 of it on your gorgeous mobile game. Jumia and Konga’s numbers are also telling (compared to their performance in other regions).
  • Small market segmentation: tackling a problem in a small/niche market. In business school, they keep hammering this into you; find a solution for a large market that is growing fast.
  • Exposure: I believe the socially upward mobile demographic is not representative of the majority. Limited exposure leads to apathy to and sometimes straight up fear of technology. We end up making products for people like ourselves, who are the minority.
  • Solving real pressing needs: What are people’s most essential needs? A lot of ideas aren’t solving needs in huge markets.
  • The hustle is offline: Love that article. The truth is we still trust Brick & Mortar businesses over Internet businesses and until the Internet takes the preeminent place in the minds of people, we will keep fighting an uphill battle.

In the end, you just can’t fight the market. I believe that the major problem now is not necessarily the ideas but the market we are in. When the market is ready, startups will blossom. (When the market is ready, apps like Yo! will still take off regardless of its ridiculousness :D)

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Not large enough market and adoption. Making product that customers actually want.

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It boils down to three things in my opinion

  • Lack of technical/operational and management talent that can scale companies. Last few years have really opened my eyes to how much we don’t know in our ecosystem about building large companies but don’t. Many of us don’t even know how to do things as basic as goal setting, building scale, data based decision making. As more accomplished professionals with experience in big corp come to the startup game, this problem will fade away. But this is the biggest impediment.

  • Funding Landscape : Naturally, this ties to the above. There are simply very few proper investors in Nigeria. The ones that exist don’t really understand their role in growing companies to scale beyond dumping their money somewhere and commanding extraordinary returns. Also many of our investors are terribly behaved (but that’s a discussion for later)

  • Ideas : We kill a lot of the most innovative ideas built for our environment and force people to go to unmonopolisitc and frankly silly ideas which are easy to execute but don’t really solve big problems. Until we fund a new generation of young people who are fearless and believe global domination is possible , we won’t get companies that are built to scale.

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I think its 3 issues for me.

  1. Not tackling large enough problems. We need to create more awesome products that the current market needs and can easily adopt.
  2. Not having the managerial skill the company needs to scale big.
  3. Not having the ambition it takes to scale a company big.
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I totally agree with the lack of operational/management talent and the immature funding environment. I don’t really agree that there’s lack of innovative ideas. I just think that innovative ideas aren’t given the proper environment to evolve and adapt properly.

Let’s look at the pattern of a regular young technology entrepreneur:

  1. Start a start-up & push out an awesome project project via the tech blogs.
  2. Use limited funding to run v1 to the ground and because it’s not catching on enough, it’s tagged a failed project.
  3. Never iterates nor builds v2, nor any modified model to try adapt, instead they go take a job based off the start-up experience.

I believe it tells about the environment and the deep limitations in desire, vision, depth, funding and guidance. These are important factors to pay attention to and try groom, both at the entrepreneur side and the investor side.

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I believe we are saying the same thing. I didn’t say there was a lack of innovative ideas. I said we kill them.

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In addition to your points above, I think more than anything else, the desire to build big stuff and want it so bad is not there! To really experience first hand how an entrepreneur with enormous fire-power in terms of how bad they want to succeed and how much they are willing to drive everyone around them to work hard, you need to interact or work with Sim Shagaya, the guy epitomizes what a daring Africapitalist should look like.

“Champions are made from something they have deep inside them. A desire, a dream, a vision. They have to have last-minute stamina. They have to be faster. They have to have the skill and the will. But the will must be stronger than the skill.” - Ayrton Senna

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Marketing is one very serious problem I’ve faced. Reaching the right audience can be tricky and very difficult

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I think it’s largely due to the fact that most African startups are zombies of International startups that have been made successful. The “X” of Africa is a common trend. The “iPad/Netflix/Uber/AirBnB” of Nigeria.

There aren’t many very original ideas. And so they aren’t tailored to the environment, perfectly. There is no causation springing up the need for the solutions in the exact way through which they’ve been made.

So we have a copy of things, in an ecosystem that sees them not as solutions to problems, but as additives. Stuff that’s nice to have given the option.

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The market is not big enough yet. This will change over the next couple of years. The market is not big enough because:

  1. Not enough people have access to internet
  2. Not enough people are sophisticated internet users

Both will change faster than anyone thinks, and then the big companies will appear.

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There are not very many original ideas in China also, but the equivalent clones are very big.

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There are not a lot of original ideas anywhere. Let’s not get carried away. Nigeria’s problem is a market problem, not an idea problem. If it was an idea problem, a company like Rocket would not be successful. I don’t think they have a creative bone in their body :smile:

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