I also think an issue overlooked is that our stock market is shite. It lacks transparency, too many underhand deals, etc. So everyone will put their money into the one they know lool.
The right people hardly want to work for cheap and we know money is always an issue for startups. Look for passionate people who are excited about the product and company. They will be eager to learn and be willing to take on a lot of responsibilites.
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@Lamidi_b_a they wont just work for cheap, they wont even work for equity.So money oriented people. GOSH!!!
Culture and Religion. These two(2) wonât allow us think and act differently. LOL!!!
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Time and money to start a business is unnecessarily long and excessive. In some countries it takes one day tk start a business
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I like this last paragraph, someone once told me that in the end "the economics always wins i.e. Supply and Demand.
Forget the technology, if the economics isnât right your startup would be dead on arrival.
Nigerian entrepreneur need to look beyond technology, and they need to focus on the economics i.e. supply and demand. On the demand side i.e. (Customers interactions, pricing, use cases for the product or the jobs the product do and the switching cost) is very very important and is usually the most ignored.
On the supply side, entrepreneurs need to solve the right problems e.g. (cost of tomatoes is high now so this would be a good time to group buy tomatoes and food stuff), they need to think the streets and look at real problems facing the bulk of the population to solve.
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WORD of the day
Dear Foundepreneur,
Your equity has about the same value as a Baba Ijebu lotto ticket. It may or may not bear fruition.
Unfortunately lagos landlords do not accept lotto tickets, and mama ijebu wont sell me Tomoatoes for equity!
So keep your equities to yourself.
Seek serious funding or merge with similar oriented startups
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I think itâs a problem of the market. The market in Africa is so difficult to navigate, itâs a miracle if you innovate something and it takes off. Thatâs why most African entrepreneurs just stick to the low hanging fruits.
The market problems I can list off the top of my head:
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Africa is a poor continent for the most part. This means that both consumers and businesses only spend their money on the bare essentials(food, clothing, shelter, healthcare and education) and only deviate slightly from that. Things like gaming addons or music downloads or paid business chat apps will find they have no room in the typical Africanâs budget.
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There are few exit opportunities, meaning less capital flowing. Investors are most keen on how they get their money back. Whereas in the US there are so many acquisitive companies that will buy you on the slightest sign of traction, here in Africa, there are less than 10 companies that are willing to buy your website/app, and even if you do get offers, itâs crap offers that donât even go past 1 years worth of revenue
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Fragmentation of the market. Language barriers, border and government problems, cultural differences etc
and then I will add on an answer that I agree with from Mbwana Alliy on Quora:
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Aid Dependence & Colonialism 2.0: You canât ignore the legacy that billions of dollars and decades of western powersâ influence has had on many African countries. Even today a country like Tanzania gets half of its budget from aid donors. This makes it incredibly hard for Africans to get a coherent top down message on innovation when they are constantly being told what to do or their own investments to innovate may be crowded out by well intentioned donors. I have seen this first hand with the Tanzania incubator I tried to help where the World Bank and Finnish Govt imposed their view of the world because they provided the funding- completely shutting out any other help including from indigenous Tanzanians. Even new philanthropy initiatives that come from the west feel a lot like an âEmperor in New Clothesâ- whilst the west can make giving more efficient with new models, if they are not empowering Africans, its no different- its just colonialism 2.0âŚ
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Outdated Educational System and Lack Problem solving âcan-doâ outlook: Many Africans are not taught basic problem solving skills so even a highly educated local potential innovator is not thinking âMVPâ or âlean startupsâ or design thinking even if they happen to have funding and be quite smart/educated. The STEM basics are also often lacking- to engineer solutions and hence innovate, a strong problem solving culture/approach backed with a foundation of Science Tech, Engineering & Math is needed. Public schooling in Africa cannot support it right now. I was lucky enough to get this education by leaving Africa aged 13 cause my parents could afford to send me. When I come back and see all the problems, I always ask âhow can I make this better?â- many of my local African friends have the mindset of âIt will never changeâ. I should note that America leads (but may be stalling) in this and even Europe and other parts of the world need to improve here if they want to lead the world in innovation- its not just Africa. A place like Stanford d-school teaches you unique way to view the world and you are not only surrounding by the funding, but by examples and encouragement to achieve what to many Africans just seems hopeless- they donât have the map to navigate to the solution.
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Focus on survival & providing for others: Many 1st generation middle class Africans are risk averse, they just want a steady job to provide for their families (many still in dire need given their poverty situation and hence rely on a bread winner who has a steady job)- it becomes very hard even if one has innovative ideas to take a risk when you have to provide for a family- sometimes it leads to extreme short term solutions like foregoing long term training/development just for a quick buck by switching jobs or, God forbid, working for the next best NGO/NFO who pays better. I often lied to my parents about my next risk venture/career move was because asking for their permission I would get a solid âNo, donât do it- why would you do a startup when you are getting so well paid at Microsoft!â
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Welcome to the radar @MistaMajani
There are few exit opportunities, meaning less capital flowing. Investors are most keen on how they get their money back.
I agree with you - this is likely the biggest bottleneck. You create something big however canât raise the necessary capital to go to the next level. The exit options are very limited. Until we create enablers to allow young companies to raise capital (e.g via NSE), the system will struggle. We donât need to do NASDAQ style, we can do the LSE AIM (more flexible regulatory system vs. main market)
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An NSE AIM will be great, but a lot of Nigerian companies still need to do a lot more in-house work. How liquid is the NSE? How many internationals invest in companies listed on NSE, getting them to invest in smaller companies might be tricky.
Very True, the market always wins. Patience, more concerted effort to keep building an ecosystem(an ecosystem would be very important in building infrastructure and frameworks that would in turn unlock the market.)
One word: SCALE
How many Nigerian/African startup products or services can scale beyond its first thousand users? If your product or service is only useful and accessible to consumers in Lagos, not Accra or Nairobi, Cape Town or New York, then it cannot scale. If it cannot scale, then it cannot grow. And if it cannot grow, it dies a natural death. Only a matter of time.
The world is a global village. Until we begin to think globally and act locally, all weâll have are just âlocal championsâ. But startups aside, how many Nigerian businesses are known beyond the shores of River Niger and Benue? I can count a few South African companies that youâld mention on the streets of Brooklyn NYC and they are known, same may not be said of Nigerian brands.
We need to think globally and act locally. The world is our oyster, and there are universal problems that can be solved from a garage in Lagos to meet the needs of both local and global markets.
Simplicity is the highest form of sophistication. Think.
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Hi Leslie,
I belief you have rounded it all up.
Probably also a lack of understanding of their users/customerâŚwho they really are, what they want and how to best reach them.