“Many Silicon Valley investors can tell a story about missing out on an Uber, Facebook, etc. What you’re seeing now is those stories of missed successes with African businesses. More FOMO is coming through. I don’t think you have to have an understanding of the market to appreciate the compelling nature of opportunities in those markets”
— Melvyn Lubega, CEO of Go1 (South Africa’s 1st Unicorn)
Aspart of our ongoing series to highlight entrepreneurs in Africa, we recently hosted a Clubhouse discussion, “How Africa Built This: Tech Giants”. The conversation centered on the journeys of three rising African startups with a deep dive into their business strategies for international capture and expansion into markets beyond Africa. Our panel included Melvyn Lubega, CEO of Go1, Toyin Bajomo, CEO of rising Nigerian eCommerce company BabyBliss, and Falgu Shah, Head of BizOps and Expansion at Paystack.
Recently both Paystack and Go1 sent ripples of excitement across the African tech ecosystem, with Paystack’s recent acquisition by Stripe and Go1’s billion-dollar-plus valuation. African technology has earned its spot on the global innovation stage and its entrepreneurial spirit is being felt across different markets, and countries, while catching the attention of investors and strategic partners across the globe.
“African technology has earned its spot on the global innovation stage and its entrepreneurial spirit is being felt across different markets, and countries, while catching the attention of investors and strategic partners across the globe.”
As our conversation kicked off we had a chance to hear about the factors that contributed to the success of these tech giants. Not surprisingly, entrepreneurs with a human-centered design approach and focus on community-building models took their startups to the next level.
The story of Babybliss is a prime example of an African company that is bringing value to the community. Bajomo discussed how she identified a pain point for mothers who needed access to high-quality baby products that were unavailable to them locally. Because of the unavailability of these products, most expectant mothers in Nigeria have no choice but to shop at the open-air, informal (cash) markets which offer no type of product quality control or guarantees. Babybliss made it a point to connect to their community, which largely fueled their growth and the company is part of the major tech transformation happening in Africa through the digitization of the previously informal economy. Although they are fairly early on their journey, BabyBliss has big aspirations starting with Ghana. Bajomo shared that their key focus will continue to be on developing the community first step, and then eventually setting up physical stores.
Melvyn Lubega of Go1 shared that it was their customers who were the ones who defined and directed their journey through geographic referrals and focus. “For us, what informs the marketplace is retargeting proximity to our existing markets, and through that, we can grow through our clients and our partners”. Go1 is South Africa’s First Unicorn, they offer the largest curated eLearning library from top training providers in a single subscription.
As a service that is changing the way developing markets do transactions, Paystack’s growth model was largely focused on brand recognition and consumer confidence, “Trusting the brand is key to being able to thrive in competition” according to Paystack’s Shah. “People have seen our solutions, and they know what we can do.”
Building for Growth
Building a product for customers in developed and developing markets comes with many challenges because of the stark differences between the two markets, yet there are advantages to doing both.
Lubega stated, “You can go to the US and be a market capturer. Whereas, in many African countries, you are a market-maker”.
The significance of this cannot be overstated because while some companies may prefer to focus on one country, or region, breaking into a market requires a different business strategy and growth plan than starting a business in a developing market and filling the gaps.
“You can go to the US and be a market capturer. Whereas, in many African countries, you are a market-maker.”
In contrast, Bajomo shared her experience of leveraging strategic geographic partnerships to gain further market share. The company recently merged with MumsVillage, a Kenya-based eCommerce platform, “Why try and build the same thing in several markets, why not just come together and capitalize on our strengths?” asks Bajomo. She explained consumers across Africa were encountering the same challenge of not being able to find quality baby products. “There was an opportunity to develop markets with partners by building a community that brings women across the continent together to meet their needs” she continued.
Investor Connections are also Critical
Building community is key, but investor connections are also important to seek out and develop.
The connectivity is vital, Shah stated “ I’m talking to some founders now in Kenya, who are building eCommerce businesses and want an investor who has been through the whole cycle from startups to growth to exits”.
Those invaluable learnings are critical to any startup’s success, the advantage Silicon Valley has brought up to now is that those networks are developed and experienced advisors are accessible. Paystack has been a bridge to Nigerian companies and Silicon Valley since it became Nigeria’s first Y Combinator company in 2015. Since then, the accelerator has accepted 27 additional Nigerian companies. That connectivity Shah pointed out is the main reason Paystack was acquired by Stripe in 2018.
Benchmarking and the Right Markets
When considering where these giants will go next, there were two lessons to take away from our conversation: Benchmarking and the role of US markets. A big part of how businesses become giants in this interconnected world is through comparison.
“When I am benchmarking myself, I’m looking at the economies that are similar to us, because there’s just no point in trying to align ourselves with an economy that is significantly ahead of us,“ Shah stated. Especially for companies who are building markets, there are many gaps to overcome, benchmarking is key to strategizing the trajectory forward.
While the African VC landscape is rapidly evolving, the US remains one of the strongest, most dynamic markets for funding and ecosystem building. Even having some US investors onboard can be useful in finding connections to VCs, strategic investors, or even customers. Lubega pointed out that this certainly was the case for Go1, “One takes for granted the fortuitous nature of an introduction of something real,” Lubega emphasizes this as well the importance of developing those networks and points to his success in raising Go1’s Series B and C as attributed to the strong US network of investors the team had cultivated.
As Untapped’s CEO and founder, Jim Chu says, “In Africa, while unicorns can be found, it’s all about the camels and gazelles,” smaller startups with strong fundamentals and market opportunities that can still survive the drought.
The reality is that African Giants come in all shapes and sizes, but the difference in Africa is that they are solving real pain points and poised to capitalize on a massive wave of digitization with a rapidly growing population in need of new digital solutions.