How to scale a startup in AfricaFeatured
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.