Exactly startups in Africa will be big no doubt… It’s just a matter of time! start-ups now should generate as much rev as possible, stay focused and be patient.
founders that decide to quit now - will be pissed they did in the next few years!
PS - Startups in Africa will also fail (no shame in it) ventures often fail but good entrepreneurs don’t.
I’ve said and it and I’ll say it again, despite that Africans simply don’t get it. And here’s the thing we don’t get; it’s not that we don’t have star developers i Africa or great product managers or even the highly glorified “lack of financial resources”. Yes, compared to the west, we might have less of the above, but less doesn’t mean none. In fact, less is more because scarcity is the mother of all inventions.
Anyway, having blogged for about 5 years at what’s now Dignited (www.dignited.com), watching the Tech ecosystem especially in Uganda, it boils down to this one thing – competition.
I’ve watched great prdoucts launched in Africa, only to be taken down my the big dogs. One of them is Baraza, a Mobile Instant Messaging Server built by Digital solutions , a software development firm in Uganda. The client/server app was close to today’s Whatsapp messenger. It was purely mobile implementing mobile Instant Messaging and presence services (IMPS) protocol and with J2ME/Java you could build your own whatsapp on Nokia phones of those days (early 2000). Even more is that the software was purely open source. But that’s not enough, the company had other great software products that were more than just bundling wordpress themes and rolling a website. I wrote about it here http://bit.ly/1ARpIu7
Anyway, nobody adopted this revolutionary messenging systems. One of the Mobile telecom’s stole one the firm’s airtime sharing software!! That’s how horrible it is here in Africa.
Then boom. Whatsapp comes and overshadows everything that was there before like mobile messaging was entirely new in Africa or that no body knew that it would work.
Another innovation that suffered an terrible death was a mobile messaging App that promised free sms to users togther with instant messanging. It could enable users to send messages to feature phone users for free. It worked even without the internet. But once again, the app couldn’t compete against Whatsapp.
Borrowing from Peter Thield, 4 things our products fail;
Conversely “global” products already enjoy the above 4 factors because of;
In other words if an African startup develops a product that solves a local problem (like communication or accounting) and a US startups does, the same, chances of the US startup succedding are high because of what I"ve already talked about.
If you think we don’t have awesome B2B products in Africa, take a look at these in Uganda http://bit.ly/1uWQj8g but our governments or private companies are going to prefer to work with Microsoft or IBM or Oracle than local companies.
Too many African startups see themselves as competitors even if they are not in the same space. If only we can learn to compliment ourselves than compete, then businesses will grow faster.
Lots of smart opinions above. This discussion is amazing!
But from trying to build a great company from Africa myself it boils down to one simple thing one of my mentors told me one day 
“Something people don’t realize about great companies is that it is often a team of people who each could have built something smaller themselves working together who make it work. That’s how you get a company that truly transforms the world.”
One day we’ll get there and I’ll be alive to watch, help and invest in them…
For now, let the cat and mouse games continue
There is a nice Quora thread the explains this very well, http://www.quora.com/Why-do-most-of-the-successful-startups-come-out-of-the-USA
It seems its actually USA vs. the World.
Invention is not a must in business. A business is there to solve problems in a profitable manner. As long as the “clone” solves a problem in Nigeria or Africa, it is welcome. Having a cloned solution is better than having none at all.
This says it all. We simply don’t believe in ourselves in enough to consume our products/services and tell the whole world how amazing our own technologies are!
You can say that again, marketing is fucking hard
So many reality based reasons have been given for this limited capacity in growth strength of African startups. But what is big to be big enough? A million dollar, a 100 million dollar or a multi billion dollar valuation? It depends on what valuation scale you define big. However, getting big to me depends
Very engaging thread … However, after 10 years with different tech related startups, I can honestly say that my experience has led me to accept the following reasons for failure of African startups :
People hardly wake up in the morning with the intention to change the world. Neither do they encourage those who try to. This is one major reason people cannot hold onto ideas long enough for people to start adopting their ideas
2.Absence of loyalty: I vividly remember the day someone I believed was in the boat with me, typed a proposal I believed was for our startup and appended his own name onto it. He even registered a biz name expressly to push the proposal with. I found it more shocking because it was one of our prospects whom he was handling that he decided to take. Generally you have to watch your back as a startup. This singular reason is why groups don’t survive long. No entrepreneur wants to be betrayed so he would rather run a one man show with limited growth ability than partner with other people who can bring value. Our society just recognises the rich not minding how many people and relationships they left burnt on the journey. The end does not justify the means…never does
Limited understanding of business : I gained in the last one year a series of experiences which I can call epiphanies. And I discovered that I really knew nothing about business within the nigerian space. I can’t condense what I’ve learnt in a few words but It would suffice to say, business has a few intricacies not in the books. It takes humility, persistence and patience to learn them.
Problem of scale: I believe this is one of the most overlooked reasons why startups fail. Most businesses have optimal scales at which they are profitable. Operating on less will bring stress and operating above that scale will bring unnecessary overhead. Some businesses are just not worth it considering the number of prospects available locally. We all need to determine beforehand how many clients will make our businesses grow, and thrivd. We need to get a good fraction of those clients before we start…then we need to set a plan for how we can get the remaining clients to hit target scale.
That’s all for now… lovely thread
i. Africa isn’t a large enough online market.
ii. Buying power is vastly, widespreadly limited.
iii. Pending conversion of Africans to sizable online consumerism.
Any startup looking to succeed will need a strong offline play, which in turn requires a strong understanding of business as usual.
An online presence may serve a singular primary purpose; viral & cheap awareness for the middle class end of potential customers. Which may form your strongest customer base.
The play that keeps you in business may still be offline.
The answer my friend is blowing in the wind.
Although the middle class is rising (aka Africa is rising), the stern reality is that relatively the continent has a very long way to go. Nestle for instance is cutting its workforce by 15% - on the premise of an overestimated middle class.
Yes opportunities abound, but the fundamentals are still lethargic. Strikingly, many (arbitrage) opportunities abound for those who want to look beyond the continent – i.e. set up shop in Africa for a global market. The default mode for most however (and nothing wrong with this) is creating ‘African’ start-ups for the ‘African’ continent.
Wow !!! why do i always come late in talk like this. From my own opinion for this question “Why do you think many startups in Africa don’t seem to get very big?”
Note: my reply is based on Nigerians, bcos i live in Nigeria not in Africa.
TRUST : The few user from Nigeria don’t trust the Internet to transact or invest their hard earned money, that is why payment models like "PAY ON DELIVERY"works better here, With the popular keywords which still exist till now (‘YAHOO BOYS’, ‘MAGA’, ‘YAHOO PLUS’) if not wipe out and the image of Nigeria and Nigerians on line is changed, then we cannot have big startups, at least not now but in the future to come.
KICKSTART We have a whole lot of innovative ideas, you want to know, goto the innovation hubs (Cchub/Ideahub) and checkout on those individual developers who are great thinkers but are failed executioners, they just jump from project to the other, we know ourselves and i am one them, thank jah i have left and started my startup from home than from the incubator hubs. because they are not encourage by the innovation hubs to develop their ideas using the lean + agile + business model approach not the waterfall approach in which they are using and will always fail in the idea stage. so most of the developers are either scared to startup or keep on failing in the idea stage.
COST OF INTERNET ACCESS I tell people until when the cost of the Internet is as cheap as using a radio here, Until then, before we can see the full innovations and potential of the on line world/culture, something which our government is not interested in because it has no spell of oil in it, until the like of Iroko, Jobberman, Jumia, Konga, Hotels.ng kickstart and look for cheaper and affordable ways to compete with our bad market mtn,airtel,etisalat,swift,smile e.t.c with more open source but a model to get revenue from the users back maybe with use of drones, balloons or innovative stuffs to cut down the cost of Internet then we are still on a long thing.
OFFLINE BUSINESS The business is off line not on line, Olumide (Prep class Founder) the popularity and marketing is off line but the users, those you want to give value to are in the streets not on line. we need to leave those nice ac chairs and hustle hard to get these users in different sectors of the economy if want to be disruptive in our innovations. These people hate change but we have to pet and force them to accept it, that can only be achieved when we hustle off line, because a very good hustle off line will create a word of mouth advertisement will make your brand or product achieve the sky limits and increase the trust for the usage of the Internet for business. These is the right time to start investing in off line businesses before existing brands with loads of cash start seeing opportunities in the web and taking full advantage of that.
GLOBAL MARKET Correct me if i am wrong but i think it is time we start seeing international brands serving products to the world from Africa especially Nigeria not just to Nigerians/Africans abroad (Which is a very viable market | Jason has proved that hypothesis) but the world at a whole, the like of “wechat” and “2go” which are African early stage startup companies and are serving the world, until when we start serving the world market then maybe we will grow big.
It’s simple!
They don’t give the market what they need.
People should stop making products that can’t help users to achieve their goals. They should stop making products that people won’t want or use, thinking they can convince users to use their product… such startup business will not last. The fact that you have a great idea to create something unique, the developer needs to check whether people will find the product very useful, especially for a long period of time.
They don’t employ the right people
If business is growing and they need to add to the founding team, they need to get the right people. I have seen some startup companies make that mistake. They employ people just because they know how to do one thing out of many responsibilities they are supposed to do. Then they start wasting their time and resources to baby-sit these people. Get the right people in marketing, technology, operations and finance department and watch the business grow impressively.
Poor Marketing
There are many aspects of marketing and you need to balance the equation to grow. Some just focus on social media marketing and do some press releases that their products is out!
@Keemite am sorry to use this term. but i just have to use it though “Your head is there.”.
That’s the answer best suited for this thread!
Too many small Kingdoms … they don’t want to come together to build an empire!
I feel it is an African problem! History has show us that those who ventured out to build dynasties have some how encoded it in the DNA of the future generations!
Take Nigeria for example… so fragmented from time we have so many tribes that never came together… tolerated at most, but never consolidated! We had nothing to come together to build and it’s still the mentality till today… all man for themselves!
Spot on! Especially the part about the predominant consumer behaviour in this market…
The question is similar to asking why Chinese startups were not big enough in the year 2003. The answer is TIME and PATIENCE… We need alot of learning and we have to adapt alot of tech to fit our people. It takes time, learning failing and adapting while staying focus. Even Facebook was a business failure for 7yrs. Google was in the search engine market for 5yrs and that market was failing - investors were running away from anything search in 2003. So give it time
Language vs. local problems: Nigerians speak English and can easily use American products. So any startup not solving a problem American companies can’t and aren’t solving, will not gain traction.
Because most people still have an implicit trust of foreign things. I think that’s why clones work in China/Germany and not in former British colonies.
As always, we can always blame the British for everything!
Startups should solve the problems we have that isn’t currently being solved by the Americans! So don’t do Slack for Africa because most people will just use Slack! Except of course you do Slack in Pidgin and then we are talking (or not because Nigerian people on the internet have shaky self esteem and pidgin or local languages are well local)!
I still can’t believe that we haven’t figured out a solution to that Nanny/Baby sitter problem! Seriously though that is a billion dollar industry! Fuel scarcity! Renewable energy before Solarcity comes for our lunch. Health (but don’t come to health because I am trying to retain a monopoly here… thanks in advance).
Very little mergers and acquisition which means little scale!
Time without focus is useless