There are many phases involved when creating startups. In this piece, I focus on what it takes to build startups in Africa. Though we have challenges with our infrastructure and legal ecosystems, the fact remains that people are building great startups in our continent. If you spend time in Nairobi, Cape Town and Lagos, you will observe that founders are turning the challenges into opportunities.
In my journey as an entrepreneur, here are steps to consider as you begin your exploration and excursion into the future of making over just talking (Update: I have added some examples as requested in the comment section using Zenvus, my agtech firm. as an illustration):
- Fix a Friction: Frictions exist in markets and because of those frictions we have the need for companies. Those frictions are the market needs which companies are created to solve and fix. As an entrepreneur, your main job is to find frictions which are prevalent in markets and which affect many people and companies. For example, in Nigeria, we have a friction in the inadequacy of electricity. It affects many people and companies and certainly something that needs to be fixed.
- A friction could be providing precision agriculture to African farmers, making it possible for farming to become science, with lesser guesswork involved. You want to fix that guesswork which has affected their capacities to improve yield over the years.
- Map a Solution: You have identified the friction. Next is finding a clever way to fix it. That means you need to provide a solution in the marketplace. How smart this solution is will determine if you would be successful in this venture. If you are very ingenious, you may even change the basis of competition. When you do that, you have disrupted the incumbents.
- The solution is to provide a data-based decision system that uses data from farms to help farmers make decisions, at scale. That solution has to be affordable and also usable by spectrum of farmers with different level of capabilities on technology. So, you need a business model that will provide capacity to the farmers.
- Raise Money: You need to have money to execute any idea. The nature of the problem you are trying to solve will determine where you will raise money. But the key is that you need to raise. It could be from families, friends or even from a venture capitalist.
- Raise money from family, friends or even international organizations. In the Zenvus case, USAID (United States Agency for International Development) and Western Union Foundation funded it. A startup can raise capital from an Africa-focused VC like HartNamtemah.
- Build Capabilities: Once you have identified the friction and the solution, the next phase is to develop or acquire capabilities in the specific area to implement the solution. In other words, you want to solve the problem and you need to have the talent and skills to solve the problem. Sometimes, you already have the capabilities. Where you do not have the capabilities, you can hire people and build a team to fix that problem.
- We have a team led by me. I have built capabilities in electronics, AI and modeling. I brought in guys with skills in crop science, agronomy etc to build the business.
- Begin Small for MVP: You cannot build completely whatever you have conceived before you can launch your business. You need to have a minimum viable product (MVP). That means something good enough that markets will understand that you are ready to fix that friction. It may not be perfect, but it must add value to users in the process of fixing the friction. Just note that if Google founders have waited to have the Google they have today, they may never be where they are today. Yes, building a business is a journey, but you must begin that journey to have any chance of success.
- We unveiled our first product and it was awesome. We learnt some new things and updated our software to deal with larger farmers and cooperatives. Those cooperatives were not part of our initial business strategy. Today, we focus on cooperatives and governments to have the volume to work with farmers.
- Test, Iterate and Improve: As you launch that MVP, you need to ascertain how the market is responding. It may be that your old hypothesis has not aligned with the friction in the market. You need to iterate and improve your strategy based on what you are seeing from the market. The use of a product is whatever customers use it for. That must be clear in your mind because it is possible that customers may even push you to pivot to an entirely different angle.
- We continue to improve our AI, adding more crops and improving their growth engines. As we learn more, we improve and farmers send feedback, we update.
- Begin Growth Phase: Immediately the pivot has happened, and traction has emerged, the next phase is to grow the business. In other words, you have seen what is working. No argument, scale that thing that is working. This is where having a great scalable advantage becomes critical. That growth can take many phases but the key thing is that you are adding customers and/or building revenue. Yes, in some web businesses, the focus may be just adding users in order to enjoy the benefits described in the invertibility construct.
- We have since started growth phase by working largely with cooperatives and governments, having validated our hypothesis. With the volume such entities bring, we can provide better support to customers, at scale.
- Continue to Innovate: Building startups is a race. It is a continuum. You never finish building and that is the main lesson. As you grow, you need to keep innovating. That is one way you can keep your customers.
- Zenvus is unveiling Zenvus Genius to help people use mobile devices to ascertain if baby food, drugs etc are adulterated. We want to ensure the food chain is safe, and this device is part of the innovation pipeline that will keep Zenvus on top of its category in Africa.
The phases involved in building startups are not linear. Nevertheless, you can see key elements in what I have noted above when you speak with founders and entrepreneurs. The most important phase is identifying a good friction to fix. While it may be an idea to prevent the sun from shining, you may be out of luck finding many customers to buy that product even if you have a novel way of doing that. So, take time to find an exciting friction to fix and pursue it. The good news is that Africa has many opportunities, from agriculture to energy. When you have a good one to work upon, your moment of glory could come.
Updated: This piece has been updated. A reader asked us to provide examples. I just used a case from my firm.---