How to scale a startup in AfricaFeatured

Mumbi

Mumbi·Dec 10, 2020·12 replies

Over the last two years, I have come across several startups and organizations that have expanded into key markets in Africa or are looking to launch in the near to medium term. Why Africa? First, looking at the continent from a macro level, Africa is the second-fastest-growing continent economically and expected to double in population size in the next 30 years. More importantly, the startup and tech ecosystem is buzzing. In 2019, startups in Africa received over $1.3 billion in funding. This is compared to $725.6 million in 2018, showing approximately a 2X growth trajectory year on year. I have spent the last three years working to gather best practices for the growth and expansion of startups in Africa. My geographic-expansion-specific journey started while I was working with an ed-tech company based out of Nairobi that was looking to expand to South, West, and eventually North Africa. When I started, I had limited experience in new market entry and I had to learn on the job. This meant spending five hours a week at minimum speaking to other expansion heads across Africa to better understand what their experiences had been and what strategies they had employed. However, a huge challenge I faced was the lack of information online on how to go about the geographical expansion of a startup in Africa as compared to other markets. From where I stand today, my list of learnings over this period has been extensive. However, there are a few recurring learnings that I have observed through conversations with other expansion heads and personally learned from through my work. Here are the three key lessons to keep in mind if you are considering geographical expansion into Africa. These three key factors apply to other developing markets such as Asia and are transferable as key learnings. Each market is very different This might seem obvious, but it is a very easy mistake to make. Africa is a continent with 54 countries and should be treated as such. It is almost impossible to successfully copy-paste solutions from market to market, and you will quickly find that each market has its dynamics that will need to be addressed into your product. Above all, expect anything and be open to learning fast.Localization This too might seem commonplace but ends up being a very common mistake especially for companies expanding into Africa from outside the continent. Localization in this context means:The first country hires. As you are setting up, prioritize hiring local experts however long and tedious the process might be. This eventually saves you a lot of time taken to get relevant market context and gives you the much needed local edge among your customers. I have heard enough stories of companies that sent MBAs from the US into markets such as South Africa, Kenya, Tanzania, and Nigeria, which resulted in failure and loss.Product localization. It is key to understand differences in users and culture in that market and adjust your product around the core accordingly. Allow flexibility of around 10-20% for customization of your product to local market needs.Scaling Culture Another key issue to keep in mind is how to scale culture. As you are setting up in new markets, how do you ensure that new offices hold the same cultural values? There have been enough cases of failure of culture transfer that resulted in a lack of growth and other legal challenges in new markets.I am currently co-writing a guide to African expansion for startups, with Meredith Karazin, President at Moringa School. This growth and expansion handbook is part of a builders series for the COOhort, a primarily African and European network of COOs and other similar leaders. The handbook will incorporate the experiences of various expansion leads in Africa who have been kind enough to share their experiences. This will be distributed freely on various channels once finalized later in the year.

Iynna

iynna·Dec 10, 2020·1 reply

Iynna

iynna·Dec 10, 2020·1 reply

@Mumbi Thank YOU so much for sharing this! I was so so excited reading this and would even reword the title by saying "how to PENETRATE the African market""Each market is different" AMEN to that. One of my biggest pet peeves is when someone tells me "OMG I really want to go to Africa"... -_- like you do realise it is not a country right!" I have heard enough stories of companies that sent MBAs from the US into markets such as South Africa, Kenya, Tanzania, and Nigeria, which resulted in failure and loss." -- YES! For local problems we need local solutions that are homegrown! When I move back on the continent, I personally cannot even pretend to know the problems and will have to hire locally!Now I have a question for you - for someone used to a certain culture say in New York we are super fast paced and when I go back to Cameroon (where I am from) I am personally so frustrated by the lack of sense urgency people have there and I know I need to readjust my ways but at the same time, I cannot be too lenient. How have you seen leaders successfully manage that?Lastly: let's connect! We have so much to talk about and I met Audrey years ago in Boston and loved the vision of Moringa school - big congratulations to your team for all the great work :) !

Sugo·Dec 11, 2020·2 replies

This is so timely! I recently started using a product called Creft after being invited by one of it's founders. Creft is like an AI super-connector dedicated for top African professionals. On Creft, I met my co-founder for an AI-powered hedge fund (launching soon!!), and a lot of people are meeting each other at scale. I think it's still invite-only and in private-beta, but you can skip the waitlist using my invite link here: creft.io/#/signup?ref_code=iJaBG.@Mumbi @iynna

Iynna

iynna·Dec 13, 2020

Iynna

iynna·Dec 13, 2020

Someone actually reached out to me with an invite on LinkedIn :)

LundieStrom·Dec 14, 2020

I also received an invite but still need to take advantage of it - good to know it's working well!

Jolleen

Jolleen·Dec 11, 2020

Jolleen

Jolleen·Dec 11, 2020

Love this! Looking forward to get the guide.

GinaRobertson·Dec 11, 2020

@Mumbi At my last company I had the honor of partnering with a nonprofit that is working to open a school in Botswana, and it is some of the most meaningful work I have been involved in. Botswana is the only African country I have worked with but have been involved in supporting and opening schools in eight other countries, and your comments regarding different markets are spot on. You are involved in exciting and important work, and I welcome your insight. Thanks for sharing!

Finz·Dec 11, 2020

Thanks for sharing this post @Mumbi

Nefrititi

ElizabethKaranja·Dec 11, 2020

Nefrititi

ElizabethKaranja·Dec 11, 2020

@Mumbi Your tips are spot on. As an African Cofounder who plans to scale her startup the challenges (although plenty) are not insurmountable. One word of advice for returnees or non-african founders, trust the locals and LISTEN to their recommendations. Too often your copy paste solution is 1. not novel and 2. not necessary 3. too early. To scale your startup you'll have to demonstrate its demand which may look different than you're used to. While silicon valley may want 100K users, you may have to be satisfied with a smaller, less homogenous group.

Stephanie

steffy89·Dec 12, 2020

Stephanie

steffy89·Dec 12, 2020

Hello Mumbi! Thank you for this.I run a startup in Lagos Nigeria called Vendorgeng, we connect people looking for vendors online to the right vendors.Needed this information. 💜

IclaudiaD

IClaudiaD·Dec 12, 2020

IclaudiaD

IClaudiaD·Dec 12, 2020

Thankyou for this post @Mumbi. I am working through planning for future geographical expansion in Africa. As my product is an EdTech solution (https://www.scormor.app), localization and incorporating a scaling culture is super important even in my small team. Looking forward to the handbook.

LundieStrom·Dec 12, 2020·1 reply

Loved to see this title pop up in the newsletter, Mumbi! I work for MEST Africa currently, a Pan-African tech startup seed fund and incubator, but in 2021 I'm planning to work with a US-based VC with an investment thesis focused on expanding international interest in African markets. I'm based in Cape Town at the moment and would love to chat more about your guide and work. Let me know if you have some time before/after the holidays! :)

Iynna

iynna·Dec 13, 2020

Iynna

iynna·Dec 13, 2020

@LundieStrom 💕❤😘