What is the future of the African startup? This question was posed to me a couple of days ago and I have battled with the answer. The easy answer is somewhere between tech and agriculture, that’s what surface me would say. I truly believe in the power of technology to change people’s lives. Also, let’s face it if we fix some of the basic infrastructural issues that plague the African agricultural space, I think we would be aces.
This is too easy, tech is broad enough to be a non-answer. Agriculture?!? This is a no brainer. So I started thinking about it more deeply. What is our future? How will African startups succeed and set themselves apart from the world? How will we as a continent truly scale (read: this is subjective)?
Before I delve into all of that, I think it’s best to drill down on some global tech trends. We all know that machine learning, fintech (key emphasis on blockchain and the trust economy), everything as services, virtual reality (building of immersive experiences for users) and analytics (specifically insights into unstructured data) are making the rounds globally. Fintech alone is estimated to see over US$150-billlion in investment globally this year, according to PWC. Oh, let us not forget all the rage around 5G these days.
How does Africa factor into these trends? What does our trend future look like? I am sure all the above-mentioned trends are relevant to the continent, but some are more relevant than others. Yes, Africans too, want nice things like 5G and VR but some people are still trying to get GPRS in these parts, while others are just making sure the electricity is on. Two key things are crucially important to this continent from the above trends: Fintech and everything as a service. Note, I am specifically avoiding access/infrastructure mostly because that deserves an entire post on its own. For the purposes of this post, we will live the fantasy land that access and infrastructure will be solved soon.
Shall we begin with Fintech? The meteoric rise startups in Africa playing in the financial services area has been Hitchcockian. Navigating interesting regulatory environments and heavy populations of the unbanked. The companies that are succeeding, of which there are many, are finding ways to make money easier. One of the biggest crisis in Africa is financial inclusion. This presents challenges to many of the unbanked who may have business ventures but aren’t able to take advantage of many of the resources that the financially included have. When we think about Africa’s future and more particularly its startup future, we need to think hard about fintech. One of the key challenges that will plague fintech in Africa is the trust economy, Africa still has low credit card penetration or people who are willing to hand over their credit card information. If you think about the calibre of people who can afford (I use this word loosely) to have a credit card – trust shouldn’t be too difficult. How do we expect to solve the trust issue in a cash economy? Before we can truly conquer the world of fintech in Africa, I think trust must be tackled. Yes, price and convenience will also play a big part but the consumer differentiator will be trust.
Everything as a service, this might seem a bit far-reaching but I think the success of Uber on the continent speaks for itself. Africans want services that work, if we can preorder our lives then we will, for a fair price. Even poor people like nice things and the simplification of their lives. I think there have been some success in Africa around service, SweepSouth and WumDrop on B2C side and Ongair on the B2B side. I am sure there are tons more, which you can Google for yourself. I think as we think of the future and what entrepreneurs do, we need to think about platforms that provide mundane services. Not just for the benefit of the users, which is critical, but for the impact companies like this have on unemployment.
I am very interested in the current funding landscape. I have a number of VC friends so you can see why. Yes, we can all agree that Lagos is the most valuable startup ecosystem in Africa now, depending on many variables – who you read, ask, who is willing to share funding numbers and who is getting a lot of press. Whatever you are reading, Africa is getting more money and more is still to come. Will they fund the right things? What impact will it have on the ecosystem?
Mobile-only internet users make up over 50% of internet users in most emerging markets, India, Indonesia and the Philippines being good examples of this. Africa is there, and chances are surpasses the Asia numbers. Startups don’t ignore them. I am not giving this too much attention, because it’s obvious.
Press, press and more press! This will probably get me booed, but I worry that we all get off on the general hoopla about the ecosystem. I think about it as teens sitting on the quad, saying “OMG the African tech ecosystem is so hot right now. Hype is good, it brings investor attention and customer awareness. Overhype is bad, it creates one hit wonders, no names mentioned.
So what is the future of the African startup? As this dude put it…
bright actually ! https://t.co/WEA51wY9B9
— L.A (@thepopdad) March 24, 2017
Heck what do I know, I am just some girl that asked questions for a living.
Feature image: Francisco Anzola via Flickr.