Startup and Funding

Building a Startup is Tough, Especially in Africa

6 Mins read
Building a Startup is Tough, Especially in Africa

 On a continent where governments do not always act to benefit smaller local businesses.

As daunting as starting a business can be, it’s always helpful to learn from the experiences of others who have walked the road. This can be true even when they did so in a completely different country because while legal environments may differ, many of the problems encountered are the same.

Take the case of Frank Nana Addae, the co-founder of Shopa. His company is a Ghanaian distribution platform that aims to ensure that essential goods reach everywhere in Africa. But to achieve this, his team needed to be strategic in building the business by first building credibility and then using that to encourage customers to adopt a tech solution.

Assumptions vs Research 

That strategy was based on his own history.

Before Shopa, he co-founded Startup Fundos, a community built to give African entrepreneurs and startups equal opportunities to receive funding from anyone anywhere in the world.

His second startup was Frikanda, a social on-demand marketplace for made-to-order and ready-made fashion and accessories. Both of these startups were teaching moments for him.

He learned from these two ventures the importance of timing and experience. He also assumed there was a need for his products, and he launched them without taking the time to understand the space first.

This reshaped how he would approach future ventures, and he wasted no time doing so. Indeed, Shopa conducted six months of market research by speaking to potential customers before taking the product to market.

Relationships are critical

This also allowed the company to build relationships with around a hundred retailers, making it easier to launch the product among these customers before releasing it to other customers.

The team had to gather data about the industry, understand the industry’s challenges, analyse the data, design a solution, test it and get customer feedback. But he also learnt the benefit of understanding industry dynamics and having experience in that field.

“Instead of approaching an industry from an idea perspective, you should rather use a bottom-up approach. This includes a process where you eliminate any bias you may have about it.

“Go out and explore it, talk to your potential customers and find out about their needs and pain points. That is the only way you are going to build a business that solves a real problem,” he says.

Trust is key

But it does not end there. Any product that is introduced to a market is not automatically trusted because people want to see what services are provided and how the company operates before buying into it.

Addae started understanding that people want to rely on service providers and essentially needed to trust them, adding, “The more reliable you are, the more they will feel that they can trust you.”

Shopa, therefore, built a solution that was not complex to use and fit well into the existing processes of its customers. He was operating on the knowledge that products fail when they are too complex, too complicated to use and too technical, so he aimed to make the user experience easy.

“To get people to trust you, you have to give them reasons to trust you, you have to be trustworthy,” he says. Shopa did this by delivering on promises and ensuring that customers received their goods within four hours of their order.

“Customers are more willing to trust you when they see others trust you. Our trusted customers did the talking for us and that is how we gained our credibility.”

Funding will always be significant

Businesses need investors, and he mentions that the tough part of the current journey is finding the right partners from both an investor’s and a manufacturer’s perspective. This partnership is about finding investors that believe in the company and what it is selling.

“In building a business, the most important thing is who is backing you,” and explains, “when you have a good investor, not only are they bringing the cheque, but they are also giving you access to partnerships and bringing in expertise.”

Shopa was lucky to secure catalyst funding and partner with Google and MEST, both of which added value, as detailed previously on Inc.Africa.

He adds that investors’ roles extend beyond monetary contributions. He adds: “A startup’s ability to raise follow-up funding will greatly depend not only on the business model/revenue growth but also the investors that have previously backed it.”

Passion is non-negotiable

Even after conducting market research, gaining credibility and onboarding investors, Addae stresses that passion has to be evident. “When you are passionate about what you are building, you don’t give up easily when you hit a roadblock or face challenges.

“You persevere and press on regardless. In business, it is easier to give up when what drives you is an interest instead of a passion.”

His closing words of advice to aspiring entrepreneurs is to build something they are passionate about.

As daunting as starting a business can be, it’s always helpful to learn from the experiences of others who have walked the road. This can be true even when they did so in a completely different country because while legal environments may differ, many of the problems encountered are the same.

Take the case of Frank Nana Addae, the co-founder of Shopa. His company is a Ghanaian distribution platform that aims to ensure that essential goods reach everywhere in Africa. But to achieve this, his team needed to be strategic in building the business by first building credibility and then using that to encourage customers to adopt a tech solution.

Assumptions vs Research 

That strategy was based on his own history.

Before Shopa, he co-founded Startup Fundos, a community built to give African entrepreneurs and startups equal opportunities to receive funding from anyone anywhere in the world.

His second startup was Frikanda, a social on-demand marketplace for made-to-order and ready-made fashion and accessories. Both of these startups were teaching moments for him.

He learned from these two ventures the importance of timing and experience. He also assumed there was a need for his products, and he launched them without taking the time to understand the space first.

This reshaped how he would approach future ventures, and he wasted no time doing so. Indeed, Shopa conducted six months of market research by speaking to potential customers before taking the product to market.

Relationships are critical

This also allowed the company to build relationships with around a hundred retailers, making it easier to launch the product among these customers before releasing it to other customers.

The team had to gather data about the industry, understand the industry’s challenges, analyse the data, design a solution, test it and get customer feedback. But he also learnt the benefit of understanding industry dynamics and having experience in that field.

“Instead of approaching an industry from an idea perspective, you should rather use a bottom-up approach. This includes a process where you eliminate any bias you may have about it.

“Go out and explore it, talk to your potential customers and find out about their needs and pain points. That is the only way you are going to build a business that solves a real problem,” he says.

Trust is key

But it does not end there. Any product that is introduced to a market is not automatically trusted because people want to see what services are provided and how the company operates before buying into it.

Addae started understanding that people want to rely on service providers and essentially needed to trust them, adding, “The more reliable you are, the more they will feel that they can trust you.”

Shopa, therefore, built a solution that was not complex to use and fit well into the existing processes of its customers. He was operating on the knowledge that products fail when they are too complex, too complicated to use and too technical, so he aimed to make the user experience easy.

“To get people to trust you, you have to give them reasons to trust you, you have to be trustworthy,” he says. Shopa did this by delivering on promises and ensuring that customers received their goods within four hours of their order.

“Customers are more willing to trust you when they see others trust you. Our trusted customers did the talking for us and that is how we gained our credibility.”

Funding will always be significant

Businesses need investors, and he mentions that the tough part of the current journey is finding the right partners from both an investor’s and a manufacturer’s perspective. This partnership is about finding investors that believe in the company and what it is selling.

“In building a business, the most important thing is who is backing you,” and explains, “when you have a good investor, not only are they bringing the cheque, but they are also giving you access to partnerships and bringing in expertise.”

Shopa was lucky to secure catalyst funding and partner with Google and MEST, both of which added value, as detailed previously on Inc.Africa.

He adds that investors’ roles extend beyond monetary contributions. He adds: “A startup’s ability to raise follow-up funding will greatly depend not only on the business model/revenue growth but also the investors that have previously backed it.”

Passion is non-negotiable

Even after conducting market research, gaining credibility and onboarding investors, Addae stresses that passion has to be evident. “When you are passionate about what you are building, you don’t give up easily when you hit a roadblock or face challenges.

“You persevere and press on regardless. In business, it is easier to give up when what drives you is an interest instead of a passion.”

His closing words of advice to aspiring entrepreneurs is to build something they are passionate about.

Source: Charissa Chassels | Inafrica.com

Related posts
BusinessStartup and Funding

Ignite Your Business: Apply Now for the Mastercard Foundation Africa Growth Fund for SMEs (USD$200 Million Fund)

1 Mins read
Ignite Your Business: Apply Now for the Mastercard Foundation Africa Growth Fund for SMEs (USD$200 Million Fund) The Mastercard Foundation Africa Growth…
HeadlineStartup and Funding

Former Flutterwave VP Launches Mira, a Game-Changing Way to Eat and Pay at Restaurants

1 Mins read
Former Flutterwave VP Launches Mira, a Game-Changing Way to Eat and Pay at Restaurants Ordering and paying for meals can often feel…
HeadlineStartup and Funding

A Look at How Startups Successfully Raised Funding in 2023

5 Mins read
A Look at How Startups Successfully Raised Funding in 2023 After defying the global funding slowdown of 2022, VC investments in African startups…

Leave a Reply

Your email address will not be published. Required fields are marked *