As Africa’s tech landscape evolves, a compelling question arises: How can the continent's startups not only survive but thrive on a global stage? In our November newsletter, we discussed this imperative in the wake of Instadeep’s remarkable success—a clear signal that building for the world is not just an option but a necessity. - Olumuyiwa (Writer & Contributor, African Pre-seed Podcast).
November’s newsletter was the result of some preliminary conversations the African tech ecosystem was having in response to the mega sale of Tunisia’s Instadeeep–a big win if we ever needed one.
For me, the conversations became a lot more real in Uganda last year when the country invited investors in the hopes of kickstarting its tech ecosystem. Here’s what I wrote after my 2023 visit:
“For instance, three of Africa’s Big Four have experienced currency devaluation and crippling inflation. For venture-backed startups in these countries, there’s been a lot of talk about how earning revenues in depreciating local currencies may not deliver the kind of returns that excite foreign investors. Enter the most recent proposal: African startups should begin to build for global markets.”
🧱 Scaling business models and building beyond borders
In November, my position on startups shooting for the world was from the framework of countries with small markets, but I’ve adjusted that thinking a lot. Even countries like Nigeria with large local markets are seeing startups thinking about how to serve the world.
Two weeks ago, I was back in Uganda for the deeptech conference. On the sidelines of the conference, I had a fascinating conversation with a senior partner at a VC that invested in Instadeep and who was also present as a certain asset financing company was voted the best deal of 2023 by the Africa Private Capital Association (AVCA).
That company has expanded from Nigeria to eight other countries and is now in the United States and Mexico. That VC told me that company was voted the best deal of 2023 because its business model is scalable globally and like we’ve seen with Instadeep, it provides immense value to investors.
This month, the Moonshot by TechCabal conference also had the theme Building for the world with an opening conversation on how Africa must move from consumption to producing for the world. We’re increasingly seeing companies thinking about products that scale globally.
🛠️ Some problems are universal, which startups can solve
Before now, regional expansions were generally thought about as the way for startups to expand beyond their home markets. South African companies and startups spread their tentacles to Nigeria while Nigerian startups tried Kenya. Success was always difficult to find.
Many startups found that the problems in their home country were present in the African countries they expanded to. The macroeconomic conditions were just as difficult and currency devaluation was just as severe. Without knowing those markets and their nuances, the regulatory struggles were just as bad. Some of those startups beat retreats to their home countries.
So what has changed now?
There is an increasing sense that the world has connected problems and that anyone anyway can take a stab at solving some of those problems. In remittance for example, startups that began by serving their home markets like Nigeria and Ghana have expanded that service to the Philippines, India and whatever country has a large section of citizens in foreign countries. They’re solving real problems and earning FX revenues, allowing them to escape the drudgery of currency devaluation.
💸 Follow the money. It’s there
The almost altruistic reason of Africa building from a place of staking their place at the table of production is great. But the reality is that there’s money on the table. African startups need to step up and take it.
“Some of the strongest demand for deep technology is out of Africa,” the senior partner told me in Uganda. I can’t help but think that demand also exists outside of deeptech.
📚 What we've been reading…
- Renewable energy is the future. We know this and Africa has a lot to go round. This abundance is not matched by available offtakers and investment…yet.
- AI is all the rage and it pays to watch what the big players are up to. Microsoft, which knows its B2B business backwards, is looking outwards and walking so it can run in the AI Wars. Copilot on Word anyone?
- In South Africa, the taxi business is serious business. The launch of ride-hailing app Shesha reportedly seen its taxi union backers resort to violence and intimidation to gain market share, who blame imposters for reported incidents.
💥 Parting shot
What's on your mind? Drop us a note via connect@africanpreseed.com to let us know. Or, tag us on socials using #africanpreseedpodcast, #APSnewsletter or #APSVibeCheck.
That's it for now. See you next month! 😉
