In November, Moniepoint became Africa’s newest unicorn, joining an exclusive group of startups valued at over $1 billion. This milestone is not just a win for Moniepoint but for Africa’s broader startup ecosystem, particularly in a year where funding has been harder to come by.

Moniepoint’s $110 million raise has sparked important discussions about the challenges and strategies of market expansion. Here’s what they had to say about their next steps:

“The opportunities that exist in Nigeria also exist in multiple countries. They are at different scales and levels of development; some countries are 10 to 15 years behind Nigeria, and very few are ahead. We are exploring our options to determine which ones are best for launching into new countries."

This statement perfectly captures a key conversation we’ve been having this year about scaling successfully. For startups looking to expand beyond their home markets, the question isn’t just how to grow, but how to adapt and replicate success across diverse regions. - Olumuyiwa (Writer & Contributor, African Pre-seed Podcast).  

🚀 More Markets, More Opportunities (and Challenges)

So, how can African startups successfully scale into new markets? Is it enough to replicate a winning model, or must they adapt to local conditions in each new region?

As Africa’s startup ecosystem evolves, scaling across borders is increasingly seen as the way forward. Moniepoint’s expansion beyond Nigeria exemplifies the larger conversation on navigating new markets in emerging economies. For any startup looking to scale, the key question is not just how to grow, but where and how to replicate their success in unfamiliar, diverse markets. Understanding each market’s unique complexities—whether launching a super app or a more specialized solution—is crucial for long-term, sustainable growth.

One approach, as Abraham Augustine points out, is to choose between two models: the geocentric model, which involves building a range of complementary products around a core offering (think super apps), or the heliocentric model, which focuses on solving a specific, targeted problem. In Africa’s fragmented markets, the choice between these models depends on how well startups understand local customer needs and market conditions.

🌍 Local Markets Hold the Clues

Scaling isn’t just about selecting the right model—it’s about understanding the nuances of each market. Take Nigeria’s fintech space, for example: though it may seem saturated, countries like Cameroon and Kenya offer fresh opportunities and different challenges. From navigating regulatory hurdles to fine-tuning products for local consumers, each market has its own dynamic.

Consider MDaaS, a Nigerian startup that expanded into Cameroon. By observing local diagnostic centers, MDaaS recognized key differences—slower service, a lack of digital solutions—and quickly adapted its offering to meet these needs. Their success wasn’t about creating a new product, but refining an existing one to address a specific local challenge.

As African startups look beyond their borders, the key to successful expansion lies in how well they tailor their offerings to new markets. Whether building a super app or providing a niche solution, understanding the complexities of each market will determine how well they scale across Africa.

👩🏽‍💻 Juggling Super Apps? Not Always the Best Strategy

One Substack writer weighed in on Moniepoint’s super app ambitions with a lighthearted analogy:

“We’ve seen this playbook before – African fintechs trying to be everything to everyone, building a super app that promises to solve all business problems from payments to inventory management. But history shows that building a multi-product fintech in Africa is like juggling while riding a bike – technically possible, but probably not the best use of your energy.”

📚 What Been Reading

• Solar Power in South Africa: Recently, solar power has been a game changer in South Africa, helping to alleviate the country’s rolling blackouts. As Africa’s leading renewable energy market, solar provides valuable lessons for startup founders looking at financing models.
• The Impact of U.S. Tariffs: With Donald Trump’s return to the White House, “tariffs” has been a buzzword in the news. While the U.S. takes the spotlight, other countries are also increasing tariffs on Chinese goods, reshaping global trade dynamics.
• The Role of Telcos in Africa’s Tech Ecosystem: Africa’s telecom companies have been key drivers in building the continent’s tech ecosystem. Their success (and failure) across diverse markets offers valuable insights for startups trying to navigate the complex African landscape.

💥  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! 😉

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! 😉

🎙️ Welcome to Season 3: New Beginnings, New Brand, Same Mission

In this special season premiere, we unveil our new brand positioning as The African Pre-seed Podcast Powered by 54 Collective. While our mission remains the same—delivering rich insights for Africa-focused founders and investors—this season reflects our partnership with 54 Collective, a venture capital firm redefining investing across Africa. Together, we aim to help founders to build without boundaries.

This episode, recorded live in September at Nairobi’s Capital Club ahead of the African Fintech Summit, features a dynamic discussion on the types of capital early-stage startups need. Our host, Loraine Achar, Investment Manager at 54 Collective, is joined by Djiba Diallo, Steve Biko, and Andreata Muforo  to explore critical topics like bootstrapping, venture capital, and grants.As Africa’s tech ecosystem recalibrates after the 2020-2021 funding wave, local investors are stepping up to focus on sustainability, unit economics, and tailored capital opportunities for founders. This conversation offers valuable insights for navigating the evolving funding landscape in Africa.

Some key take aways:

• Bootstrapping vs. Venture Capital: Founders must define their success goals—venture capital drives rapid growth, while bootstrapping offers more control, each with unique challenges.
• Beware of the Bells and Whistles of Grants: Grants can power innovation but may lead founders off strategy or come with heavy reporting requirements—understand expectations clearly.
• Aligning Incentives with Investors: Ensure alignment with investors whose success metrics match yours, understanding their return expectations and risk appetite to avoid future conflicts.

💡 Top five insights unpacked in this episode: 

• Understanding the right type of capital for your business [11:34]
• Is debt investing the way to go? [17:59]
• What banks look for in partnering with startups [20:38]
• How to balance securing the right kind of equity [30:08]
• Audience Q/A : How early stage startup can effectively demonstrate their growth potentials and scalability to attract investors? [38:12]

 CONNECT VIA SOCIAL MEDIA:

• Djiba Diallo, the Senior Fintech Advisor at Ecobank Transnational, 
• Loraine Achar, Investment Manager at 54 Collective, 
• Steve Biko, Co-founder and CEO of  Zanifu, 
• Andreata Muforo, Partner at TLcom Capital LLP

Tell us...

• What was your favourite quote or lesson from this episode?
• What topic would you like for us to feature on a future podcast?

Let us know via the hashtag: #AfricanPreseedPodcast

In 2024, Africa’s tech ecosystem has found itself talking a lot about capital and funding. After the excitement of 2020 and 2021, a global correction also affected the tech ecosystem, with some foreign investors retreating from the continent. It has allowed local investors with deeper knowledge of the terrain to lead the way. 

It has also led to deeper conversations on what early-stage startups need, more focus on unit economics and sustainability and the differing capital opportunities available to founders. - Olumuyiwa (Writer & Contributor, African Pre-seed Podcast).  

In conversation with Djiba Diallo, Senior Fintech Advisor at Ecobank Transational, Steve Biko, CEO of Zanifu and Adreata Muforo, Partner at TLCom Capital, and moderated by Loraine Achar, Investment Manager at early-stage investor 54 Collective, the types of capital early-stage founders need was the focus of a recent African Pre-seed Podcast LIVE recording in Nairobi (Full Episode drops 30th September 2024 😉).

Here are four key takeaways from that conversation:

💸 Should you bootstrap or raise venture capital?

The answer ultimately comes down to the ambition of the founder, says Andreata. Founders must define what success means for them before they jump on the venture train. 

“Venture or private equity will take you to a completely different destination than if you either bootstrap or get debt and continue to have more ownership of the business.”

If one definition of success is ownership and the flexibility to make your own decisions without the pressure of delivering returns to VCs in 7-10 years, then bootstrapping might just be for you. While this is of course a simple way of framing the decision, it will always come down to the founder’s definition of success.

Any path you choose will have its fair share of challenges. 

Here’s how Steve describes the early days: “So we would actually go and find my aunt and my friend and my colleagues, borrow cash onto our balance sheet and lend it, and we have to make a margin on top of that. It was very challenging when you start, because, you are using your personal reputation and, people are trusting you with capital.”

🚨 Watch out for bells and whistles 

Grants are a great, non-dilutive way to raise critical funding for business or experimenting with new ideas. Many startups are often on the grant circuit, pitching and hoping to land some of these grants.

While grants will not ask you to 20x their capital in 10 years, they’ll definitely have expectations, aka bells and whistles. “If they're taking you off strategy, you shouldn't take it. Sometimes they're also pretty burdensome in terms of reporting.” 

It’s not all doom and gloom. Many startups have leveraged grants to power innovation. Just keep an eye out and ensure you understand the expectations first! Due diligence from a reporting standpoint is its own cost.

🤩 Aligning incentives is critical 

In a February 2023 APS newsletter, I argued that founders must go look out for investors whose success metric matches theirs. Here’s what I wrote at the time:

“For first-time founders, there’s nothing that beats having an investor that can hold your hand as you figure out complex problems. Care and support can be as granular as getting critical feedback on a product.”

And here’s Steve: 

“If you're talking to debt investors, you have to understand how much have they told the investors what's their hurdle rate? How much are they going to make annually? 

What's their time horizon? What kind of risk appetite do they have?

So incentives are everything. We're in the money business. Everybody here earns an income, and whoever is paying you is making money somehow. Right?”

📚 What we've been reading 

• Keyes said the good times are when austerity is needed. FoodCourt seems to be taking that approach.
• There is cash, equity and crypto. Then you get coffee. Costs are reaching 13 year highs amid a supply squeeze.
• A first-hand account of how InstaDeep become a success, through the eyes of its CEO

• The Retention Challenge: The importance of retaining genuine users over time and its role in finding sustainable product-market fit for startups.
• Emotional Connection: How customer emotions reflect the effectiveness of a product in solving problems and the significance of feedback in navigating product-market fit challenges.
• Adapting or Pivoting: Exploring the difficult decisions startups face when product-market fit is elusive—whether to pivot, persevere, or return to investors.

If you have a boatload of money, you can acquire millions of users at a stunning pace, publish press releases about those numbers, and maybe even raise even more money. Yet, the actual test is not really in the acquiring of said users but in ensuring they’re using the product. If they are, you’ll arrive at the most critical metric: retention. - Olumuyiwa (Writer & Contributor, African Pre-seed Podcast).  

🧭 Genuine users stay the course. Acquired users come and go depending on the cheque

In July, a report showed that an African-focused crypto startup paid users referral fees to acquire users. It touted those 4 million users in the press. One year later, one company executive claimed that “75% of the 4 million verified users reported were fraudulent accounts.”

We’re circling right back to the importance of retaining genuine users. 

Retaining many customers over time is at the heart of finding product-market fit, something we’ve discussed a lot this year as we’ve seen more startups close their doors after failing to find PMF. 

Before we go down that rabbit hole, a definition.

“Product-market fit describes a scenario in which a company’s target customers are buying, using, and telling others about the company’s product in numbers large enough to sustain that product’s growth and profitability.”

Notice how PMF isn’t just about finding new customers willing to spend money to try the product once? It’s about ensuring you have a significant user base that uses the product on a recurring basis so your business can grow sustainably. It also helps if those customers do the most scam-proof referral of all time: good ol’ word of mouth *chef’s kiss*. 

You have a defensible product if your target audience pays money for your product repeatedly. 

On a chart, PMF will look like acquiring paying customers, churning some of them but retaining a significant number over a long time. It is possible for a product to be around for a long time without finding PMF. It’ll likely mean they’ll spend money and energy to keep going and like we’ve seen a few times this year, those products become unsustainable once venture funding stops coming. 

🤔 What emotion does your product evoke?

This week, I overheard friends talking about their finances. One friend, an entrepreneur, was sharing his plans to scale his business using his own funds by the end of the year. He was saving money using a popular fintech app. While setting up the app, he had unknowingly picked an interest-free plan. 

His friend, who also used the app, talked him through moving to a plan with an interest rate. Hours later, his first interest rate was paid, and it’s impossible to describe his joy. That’s one customer who’s never ditching that app. 

Emotions tell you how well your product solves the defined problem. This means you should speak to your customers frequently and take in all of that feedback. 

While I’d love to tell you that speaking to customers and taking feedback is the magic bullet, sometimes PMF is nowhere to be found—you may be too early, or the market just doesn’t think the product solves a real problem— in your first couple of iterations, so pivoting or persevering may be the next best thing. There’s also the option of returning whatever money is left to investors and setting out on a new venture. 

📚 What I’ve been reading

• How controversy over a beauty contest drew in Uber in an unlikely battlefield between Nigeria and South Africa
• Everyone has spoken about how Africa will be the world’s population growth engine. The result? The rise of megacities
• The funding winter or correction (depending on who you ask) may finally be reaching its end-game

💥  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! 😉

• The Funding Downturn: Insights into the impact of the Zero Interest Rate Period and lessons learned from the recent funding challenges in African tech markets.
• The Return of Optimism: Emerging trends of renewed confidence among investors in African startups and a call for African VCs to lead with conviction.
• Future Opportunities: The potential effects of global interest rate changes and the importance of long-term conviction and market creation for sustainable growth in Africa.

You know the dry rundown by heart now: Between 2020 to 2021, the Zero Interest Rate Period (ZIRP) meant investors had all this money that needed spending and some of that money found its way to African tech markets. Those investors, with no real understanding of the market and not very keen on due diligence, figured they could fund their way to producing a few unicorns (2021 data tells us 77% of active investors in Africa were international). 

Between 2022 and 2023, the results from that influx of money showed that it took more than money to build innovative companies. And, as the United States began to raise rates, a lof of foreign investors headed for the exits. The ensuing funding winter spurred a lot of articles on what we could learn from the downturn. - Olumuyiwa (Writer & Contributor, African Pre-seed Podcast).  

🤩 Finding the silver lining in the funding downturn

In articles and newsletters about the funding downturn (I may have contributed one or two…) most authors arrived—more or less— at the same lessons for the African tech ecosystem:

• Building a sustainable business with great unit economics will always be cool 
• Foreign money won’t always save you. It’s crucial for African investors who understand the lay of the land to lead the way
• Valuation games don’t end well 
• Incentives are everything. If you create incentives for people to game valuations and get funding, that’s exactly what they’ll do 
• Tesh Mbaabu, the founder of MarketForce wrote in April that his startup was “completely wrong… Now we know that every dollar a startup can raise is a gift. It should never be the lifeblood of the business.”

It must have been depressing to be unable to escape some of those articles. Yet, in the last week, I couldn’t miss an interesting trend: the return of optimism. 

Here’s Alex in a July article for Semafor:

“Investors in African startups are increasingly confident of a return to more dealmaking, as the causes of a near two-year pullback by global capital providers stabilize or fade away.”

Here’s Stephen Deng—more a rallying cry and a thesis:

”Now more than ever, it’s critical that African VCs send a clear message about what we believe in, why we believe it, and how we plan to support the potential of the continent in the coming years.”

🤔 Same same but different, maybe

We’re seeing some important fundraises from Africa-focused funds, interesting narratives accepting the challenge of how to think about the African market and an insistence of market creating innovations (this has gotten its fair share of criticism in the past month). 

And back in the United States, the possibility of the Feds cutting interest rates means we could get another period where investors, flush with cash, will venture further afield from what they know in search of returns. If these investors pile into their flashy SUVs heading to the continent with bags of cash, will the lessons we learned in the last two years stick? I’m not sure.

If you ask my friend Abubakar Idris what’s what, he’ll say something like:

• There are opportunities in the African market, but there’s an absence of long term conviction that businesses on the continent need
• There’s still an argument for market creation. Not everything will be an instant hit. As Stephen Deng argues, it takes time for technology to transform local markets 
• Every founder needs investors with conviction. It’s been interesting for instance to see Aliko Dangote, Africa’s richest man talk about the sheer willpower it took to build his refinery. It also needed some of his bankers to keep backing him even when the odds looked bleak. Why did his bankers hang in there? They had the conviction that Africa’s largest country should be able to refine its own crude oil.

📚 What I’ve been reading 

• Once again, tech comes to the fore with protesters in Kenya using a walkie-talkie app to coordinate movements and communicate anonymously
• Banking agents are a vital part of Moniepoint and OPay’s success
• Fintechs in Zimbabwe are helping customers to get US Dollars in their hands by physically flying it in themselves

💥  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! 😉

• Startup valuations: Everything is fair game.
• Good and Bad Money: Upgrading your startup dating game.
• Changing Perceptions of the Relative Risk of Assets: Notes from Nvidia.

Two weeks ago, at the demo day of his recently launched accelerator, Iyin Aboyeji—the “2x unicorn founder” per his Twitter bio once upon a time—told the crowd tongue in cheek, “unicorn is a bad word.” 

Predictably, it made headlines, and some of the first reactions questioned why someone who made a name founding two unicorns was telling new founders not to obsess over this industry-defining metric. Instead, he talked about helping startups reach $1 million in revenue. 

While his comment may have been delivered in jest, it’s an opportunity to re-examine an old idea that African founders have held since the entrance of global VC funds: Africa needs its unicorns, and founders have a sacred duty to achieve the $1 billion valuation. - Olumuyiwa (Writer & Contributor, African Pre-seed Podcast).  

📍 Where are the unicorns?

For a while, the rallying cry of “Where are the unicorns?” was answered by convincing VCs to pony up (pun unintended—Ed) large amounts of cash to fund those ambitions. Having created a few unicorns and watched many more businesses crash and burn in trying to reach those aims, the narrative has begun to temper. 

What if you don’t create a unicorn? What if you create a sustainable business that makes many millions of dollars and is sustainable?  

To be clear, there’s nothing inherently wrong with aiming to be a unicorn. Yet, we’re seeing that founders play valuation games, which produces perverse incentives and as Morgan Housel often argues, human behavior is all about incentives.

When you’re incentivised to deliver a valuation, everything is fair game:

• Ill-thought-out expansions to 14 countries even when it's doubtful if there are large markets in those countries? Check again.
• Incinerating large amounts of cash subsidising products and services for customers to produce vanity metrics like growth in monthly users? Check again.

🏃‍♂️ It’s about the marathon runner, not the shoe they wear

Of course, there’s also obsessing over narratives and telling a story about unstoppable progress even in the face of instability. 

All these factors have contributed to the failures of some well-funded startups. One Kenyan startup that raised $100 million in its lifetime has gone into administration and may need to raise funding again if it will avoid shutting down. 

While no one has yet analysed the business and its struggles, some of the conversations I’ve had with experts have pointed out that the company’s struggles coincided with the entrance of VC funding. At least two other Kenyan startups that have struggled have alluded to the same thing.

But VC money isn’t the devil. 

💸 There’s good money and there’s bad money

Failures like the ones we’ve seen recently are a combination of pairing ambitious partners with long-held narratives like “I need to build a unicorn” with VC firms that can provide the funding, pressure and advice to encourage them to pursue these incentives. I’ve argued in a previous newsletter how important it is for founders to pick their investors carefully. 

One early investor at a logistics startup that also recently shut down spoke about how the business was sustainable early in its life but that the pressure to deliver on huge valuations led to a rash of poor choices that cost money and eventually the life of the business. 

Human behaviour is all about incentives. 

If you’re unclear about what the takeaway should be from today’s newsletter, here are some bullet points (writer types assure me that readers like you love bullet points):

• It’s okay to change your position if you have new information or experience 
• It’s great to build a unicorn, but obsessing over building a $1bn company may provide some bad incentives
• We’ve seen that playing valuation games can be tricky. In the last week, we saw a startup that raced to an $850 million valuation in a few years shut down
• The end of the Zero Interest Rate Policy (ZIRP) has reduced the flow of “free money” and has forced a hard rethink
• Focus on building a sustainable business. If it ends up being valued at over $1 billion, that’s fabulous! Be the camel that is steady as she goes for the long-haul 
• One smart person I know always asks, “Why do you need a food delivery startup in Africa to be worth a billion dollars?” (Happy to share his email so you can get that argument going)

That’s it on this month’s edition. See you in the next one!

📚 What I’ve been reading:

• Incentives are important. It pays to know a bit about how they work, in theory
• Language models have always favoured a handful of countries and languages. Awarri is doing its part in Nigeria, backed by the government
• Nvidia is now the world’s most valuable company. It’s also changing the view of investor risk

💥  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! 😉

🎙️ In the same week GITEX Africa Conference drew to a close in Marrakech, this month's episode takes us to Tunisia, speaking to Mariem Sellami, a founder and former program manager at Startup Tunisia to understand what it’s like running a venture in Tunisia. 🇹🇳

Like most nascent tech ecosystems, the government plays an important role in the Tunisian ecosystem, with legal frameworks like the Startup Act—passed in 2019—helping founders get indirect funding and promoting the ecosystem on a regional and international level. 

There are quite a few interesting things about the Tunisian ecosystem:

• It has a strong technical skill base because tech and digital literacy skills are a key focus for the country. 
• As a result, 47% of founders are engineers, while 13% hold PhDs in various disciplines. Its proximity to Europe has also been useful for exposing the country’s technical talent to gain experience and skills beyond its ecosystem. 
• Remember InstaDeep, the Tunisian startup acquired for $549 million? Its success is spurring a new class of dreamers with similar dreams of groundbreaking startups that make outsized impact. 

So what kind of startups are springing up in Tunisia?

According to Sellami, the verticals that are seeing the most activity give insights into the country’s challenges.

“We see a lot of business software with a strong emphasis on digital transformation issues in the region, solutions that enhance productivity and streamline business operations that give traditional businesses a competitive edge in the region.”

“There are lots of successful businesses in health tech and a growing need for efficient and accessible healthcare; telemedicine, health data analysis. Anyone who visits Tunisia experiences traffic in urban areas, so mobility is one of the developing verticals. Challenges with hard infrastructure drive the need for innovative and fast solutions.”

That’s enough spoilers already. Listen and enjoy! - Olumuyiwa (Contributor and Writer, African Pre-seed Podcast).

💡 Top five insights unpacked in this episode: 

• Making Tunisia a startup friendly nation [01:15]
• Tunisia's startup ecosystem developments over the last 10 years [08:34]
• Leveraging international culture diversity [09:06]
• Factors driving innovations within the Tunisian tech ecosystem [11:28]
• Addressing some oversimplifications and stigmas about entrepreneurship [15:20]

CONNECT VIA SOCIAL MEDIA:

• Connect with Mariem Sellami on LinkedIn

Tell us...

• What was your favourite quote or lesson from this episode?
• What topic would you like for us to feature on a future podcast?

Let us know via the hashtag: #AfricanPreseedPodcast

• The journey to product-market fit: A practical guide to finding product-market fit.
• Lessons from Braid: A dispatch from the wild, vicious world of consumer payments.
• African Pre-seed Community Survey: We want to hear from you.

In April, one of the biggest stories out of Nigeria was the closure of a fintech startup that decided to return money to investors after it failed to find product-market fit (PMF). Some of the reactions were centred around the age-old question of what it takes to find product-market fit. 

While we’ve written about PMF previously, it’s never a topic that’s quite exhausted. Because it’s especially key to startup survival, I spoke to the cofounder of a profitable remittance venture who has scaled his product to over 10 countries and knows a thing or two about PMF. I also spoke to an experienced operator whose company had just been canceled acquired. Unsurprisingly, their ideas mirrored each other and were complimentary. 

They both asked not to be named so they could speak freely. 

Before I share some of the most interesting bits from our conversations, let’s bring back that timeless quote about PMF:

“There are two types of product-market fit for a fintech company: fake PMF and real PMF. Many fintechs, including us, dupe themselves into thinking their PMF is real when it’s not.”

- Olumuyiwa (Writer & Contributor, African Pre-seed Podcast).  

🔍 Finding PMF comes down to understanding the market

Giving practical advice on how to get to PMF is difficult, but the first thing that’s required is an in-depth understanding of the market. You need to know the key metrics to measure or identify fit for user interests. 

If you don’t know what to look at or look for, you’ll probably never find product-market fit. 

Beyond knowing what to measure for, understanding what’s behind product or adoption bottlenecks is crucial. This is the part where experience is very important; without experience, it may be unclear what to look for. 

You should understand the people you’re building for and the space you’re building in. Sometimes you have an idea and there’s no real business there. As prolific investor Otunba Soyombo asked, “There might be a gap in the market, but is there a business in the gap?”

Your experiments must also answer whether your product is needed right now.  Getting to the market too early or too late can lead to failure. 

🧪 When the results of your experiments come in, believe them 

Don’t get so married to an idea that you remain tied to it even when your experiments show they will not work. Holding on too tight to how the product should be in your head makes you inflexible when the data shows there’s a different way.

The only thing you should be inflexible about is the problem you want to solve. The “how” is something you need to be flexible about. 

Be stubborn about solving the problem, don’t be dogmatic about the how!

🏎️ Iterate fast! 

You’ve probably heard this one a million times, but it’s as true as anything you’ll ever hear. You need to iterate extremely fast, especially when you examine the data or other related metrics you use for decision-making. There’s a lot of value in knowing when to throw stuff away and move in a different direction.

To be clear, not everything that gets paused or canceled is straight-up nonsense. Sometimes, you bring back a product or feature that didn’t previously work because new information may arise, and you may also have a different or clearer view of the market.

🦾 Grit and having the right people at the table

You need grit, especially with early team members and, more importantly, with the senior members of your team. The reality is that startups are hard, and only grit gets you through.

As one prolific investor shared in an earlier edition of this newsletter, grit is a trait many investors look for in founders. When asked why he invested in a founder’s second company, he said, “There were several times it looked like the (first) company was going to die, but the founder kept it running for much longer than I thought possible.” 

Building a great product goes beyond writing the code. You need product management or marketing experts. You may not always need to hire them full-time. You need a team that can design experiments to determine if the product will work. 

You’re also part of the team, so self-awareness helps. The fact that you own the idea doesn’t always mean you should be the CEO. If you feel like your idea or business could benefit from having a cofounder who may be better suited to holding certain roles, always be open to hiring them or convincing them to join the team.

In the end, that advice is easier said than done, but remember that the goal is to build a successful business that solves a problem! 

📚 What I’ve been reading:

AI is all the rage, so here’s an article on how they can become even more useful

Bringing back this timeless post-mortem of Braide that talks about PMF.

An interesting way to think about debt  

African Pre-seed Podcast Survey: We would love to hear your thoughts.

💡 Spare a few minutes to fill out our survey. Your insights will guide us in improving and tailoring our content to provide more value, practical knowledge, and actionable insights.

💥  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! 😉

🌍 Creating impact in the African tech ecosystem takes many stakeholders, and while venture dollars might grab the biggest headlines, foundation and impact partners also play a crucial role. You might even argue—correctly—that these impact partners have influenced traditional VC players and shaped how they think about investing on the continent. 

🚀 This month’s podcast is a conversation with Dr. Nina Smidt, the Spokesperson for the Board and the CEO of the International Siemens Foundation, an independent non-profit organisation that has been promoting and investing in sustainable social development for the last fifteen years. 

According to Dr. Smidt, the Foundation focuses on three key topics: access to essential services, connected societies, and climate and sustainability. 

At the heart of this conversation is the importance of sustainable social enterprise. Another key theme is the importance of working with local stakeholders in specific regions because they know best what will create the most significant impact on their work and impact in their communities. 

👀 It’s a particularly valid point when foreign VC players in Africa have received criticism for their poor understanding of the landscape and lack of knowledge of sustainable business models. In 2021 and 2022, a time when foreign VCs poured money into Africa, there was a sense that partnering with local players familiar with the lay of the land would have led to better investments. 

But it’s not all about divergence. VCs and impact foundations also have notable points of convergence. Impact foundations can, for instance, invest in late-stage social enterprises that may not receive follow-up VC funding but serve very important purposes. 

💡 Here’s a quote from Dr. Smidt that drives the point home: 

“The biggest obstacle is still a lack of funding in general. Funding is there for ideation and later stages, but the so-called middle experiences a funding gap. We support social enterprises that are not in the early stages anymore, that are already generating revenue but are not sustainable in themselves from a funding perspective. So here’s where we come in.” 

Enough spoilers for one episode. Please listen and share what you found the most impactful in this episode! - Olumuyiwa (Contributor and Writer, African Pre-seed Podcast).

💡 Top 5 insights unpacked in the episode:

• The International Siemens Foundation's point of view on impact and social entrepreneurship [03:37]
• The foundation bridges funding gaps for social enterprises in the "missing middle" stage, supporting them until they become self-sustainable [08:34]
• The importance of local understanding in driving innovation and change [11:30]
• Monitoring and evaluation methods to assess programs and continuous improvement [17:22]
• Investing in research and development, empowering local innovators to pilot and scale solutions [24:06]

📣 We want to hear from you!

Spare a few minutes to fill out our survey. Your insights will guide us in improving and tailoring our content to provide more value, practical knowledge, and actionable insights.

Together, we can create an even more enriching and impactful podcasting experience!

CONNECT VIA SOCIAL MEDIA:

• Connect with Nina Smidt.
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🤩 Thank you for being a valuable member of the African Pre-Seed (APS) Community!

💡 Spare a few minutes to fill out our survey. Your insights will guide us in improving and tailoring our content to provide more value, practical knowledge, and actionable insights.

Together, we can create an even more enriching and impactful podcasting experience!

🎙️ While you're at it, catch our recent live audience podcast recording in Nairobi on our YouTube Channel 🇰🇪

Join our host, Loraine Achar-Ogada, alongside panelists, Bruce Nsereko-Lule (General Partner, Seedstars Africa Ventures), June Odongo (Founder & CEO, Senga Technologies), Jason Musyoka (Chief Financial Officer, Rology), as they touch base on the factors to consider when choosing capital in 2024. 💸

Watch the full episode here: ✅ https://lnkd.in/gBqnrs4Y ⬅️

💡 Check out this article published by The Kenyan Wall Street → https://lnkd.in/dfRFp5ek

💥  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 soon! 😉

• Doubling down on revenue drivers: Leveraging early feedback for product iteration. 
• Startup growth calculator: Crunch the right numbers.
• Spotlight on Paul Graham: Improving the survival chances for your startup.

This week, one of the biggest global accelerators held a graduation for its latest cohort and reiterated what seemed like a super obvious point: stay alive! It was the same advice many VCs gave their portfolio companies in 2023 as the global tech ecosystem began facing the realities of a funding downturn and the shuttering of some of the best-funded startups.

Per Paul Graham, Default Alive (or Dead) measures whether a startup lives or dies if its expenses remain constant and the revenue growth over the last few months remains the same. 

Basically, will you reach profitability before you run out of money if all your current metrics remain the same? It’s an important question, and unfortunately, many founders don’t ask themselves until they run out of money and aren’t able to raise funding. By that time, they’re Default Dead. 

“It’s more important than ever to understand if you’re Default Alive or Default Dead. Because when the stakes are high, the slightest shift in one vital metric or another could ultimately mean the difference between life or death for your startup.”

Thankfully, there are some tried and trusted ways to improve the chances of survival for your startup and make sure you’re default alive. - Olumuyiwa (Writer & Contributor, African Pre-seed Podcast).  

💸 Figure out a revenue driver from the jump

Let’s face it: not everyone will build the next OpenAI, a company that was able to raise money and undertook research for years before releasing its first commercially successful product. Most startups will benefit from approaching things in more orthodox ways. 

While many VCs will back you pre-revenue, it’s a great idea to think about a product that can generate revenue from day one. 

Additionally, having a customer or client-facing product that generates revenue from the jump will give startups and founders the necessary experience in sales and marketing and offer the kind of early feedback that’s necessary for either tweaking the product or doubling down. 

It’s also critical to remember not to overthink a product. The aphorism that “done is better than perfect” is key here. For example, a Nigerian fintech startup that got into digital banking pretty early still didn’t win significant market share because it took too long to put its product in front of customers. People involved in the product said the company was focused on having a perfect product.

Spoiler: no product is perfect, no matter how long you spend on it. That’s your cue to ship your product! 

📉 Keeping costs low is one of those cliches no one really listens to 

Remember that one of the key metrics in calculating your Default Alive state is “How long can you cover your expenses?” While early-stage startups begin trying to do more with less, raising a seed round or a family and friends round typically means there’s a little more money to do more.

One of the biggest temptations is to overhire or spend massive amounts of the new financing on marketing. It’s not unusual for startups to hire pricey PR agencies, have law firms on retainer or even bring in some superstar hires. There are also expensive technology costs like cloud fees that can climb quickly without monitoring. 

There are lots of resources available on keeping costs low, keep your costs manageable, under control and predictable every month. 

Growth is critical 

One of the things that distinguishes a startup from other businesses is hypergrowth. Startups are expected to grow quickly. For many people, this looks like growing revenue by 20-25% every month. 

Growth is generally a metric that measures if your product resonates with customers and if they’re willing to consistently pay for it. It will also help you, in some part, help you in your journey towards product market fit. 

📚 What I’ve been reading:

Default Alive or Default Dead, a fantastic essay by Paul Graham 

The startup growth calculator to help crunch the numbers

How this startup founder ended up $97k in debt 

💥  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! 😉

📍 The end of the year's first quarter is typically a time for companies—and their founders—to take stock of what has been accomplished so far. So for public companies, we huddle over investor calls and try to understand performance. For private companies, we hope and pray a media publication somehow finds their numbers and shares them with us. 

Yet, as far as stocktaking goes, metrics like Gross Merchandise Value (GMV), net income, operational profits, and margins are pretty easy to track. What can be difficult to measure is your mental wellness and performance and how we can improve these. 

🎯 For this month’s podcast, Adam Wakefield speaks to Dr Kirti Ranchod, a clinical neurologist and the founder of memorability.co. The conversation focuses on brain health, mental wellness, and understanding that, much like everything else in life, you can learn skills to improve your mental wellness. 

What specific brain skills can we consider useful, especially for entrepreneurs looking to improve performance? For Dr. Ranchod, there are 8 brain skills, and 4 of those matter the most to founders: creativity, empathy, focus, and calm. 

For calmness, for instance, a lot of people practice meditation or mindfulness so that they learn to stay even in tough situations. And before you get super cynical, some science shows that the brain can change in response to the things we do or to our external environment. 

Big takeaway: For instance, Dr Ranchod says that studies have shown that when you feel loved and supported, a specific gene is switched on that supports the development of memory. Those genes change the brain's physical structure some science shows and can reduce the possibility of dementia. 

Bonus: Want to improve your mental well-being? 3 easy things to do: find a practice that makes you calm, don’t skimp on your sleep, and pay attention to your diet. 

That’s enough spoilers for one episode. Listen and tell us what you found the most impactful in this episode! - Olumuyiwa (Contributor and Writer, African Pre-seed Podcast).

💡 Top 5 insights unpacked in the episode:

• Brain and mental health and its impact on founders [07:03]
• Efficiently maximizing the brain's capabilities [09:24]
• Creating an environment that promotes health and mental wellness [16:05]
• Leveraging community and communication for better wellbeing as a founder [20:19]
• Mental health at the intersection of running a business [24:43]

CONNECT VIA SOCIAL MEDIA:

• Connect with Kirti Rachod.
• Connect with Adam Wakefield.

Tell us...

• What was your favourite quote or lesson from this episode?
• What topic would you like for us to feature on a future podcast?

Let us know via the hashtag: #AfricanPreseedPodcast

💡 Choosing the right capital for your startup is a crucial decision that can significantly impact a company's trajectory. Beyond financial support, good investors provide expertise, networks, and guidance that are essential for a startup's success.

🎙️ Join our host, Loraine Achar, featuring esteemed panelists Bruce Nsereko-Lule (General Partner, Seedstars Africa Ventures), June Odongo (Founder & CEO, Senga Technologies), Jason Musyoka (Chief Financial Officer, Rology), as they go bar-for-bar on the topic of discussion, “The Good and Bad of Funding - Choosing the Right Capital in 2024.” 💸

Against the backdrop of shifting priorities among investors over the last two years, the recent African Pre-seed Podcast Live in Nairobi, Kenya, organised by Founders Factory Africa, a pan-African venture capital investor, provided invaluable insights into this pursuit. Acknowledging the challenges posed by a decrease in African startup funding in 2023, the panellists unanimously agreed on the importance of founders being prudent in their choice of investors.

Read all about it: ✅ https://kenyanwallstreet.com/a-guide-... ⬅️

CONNECT VIA SOCIAL MEDIA:

Follow us on LinkedIn.
Subscribe to our YouTube channel. 

Tell us...

• What was your favourite quote or lesson from this episode?
• What topic would you like for us to feature on a future podcast?

Let us know via the hashtag: #AfricanPreseedPodcast 

• Market-creating startups: Driving transactions versus revenue tapping. 
• Why African startups don’t always need to expand: Lessons from PiggyVest co-founder, Odunayo Eweniyi.
• Fintech disruption: Getting it right is a lot harder than it looks.

Welcome to African Pre-seed Newsletter for March. If you weren’t paying attention, we’re almost at the end of Q1 2024–yes, I know, time flies.

It’s been one of those months I’ve found great content everywhere. Interviews of founders sharing real advice and not tired soundbites, VCs talking about the difficulties of matching investor expectations with the reality of the market and some blunt but needed advice for everyone out there building a fintech startup. 

It got me thinking about sharing some of the most interesting ideas from those articles. That’s more fun than simply recommending them to you. - Olumuyiwa (Writer & Contributor, African Pre-seed Podcast).  

🚀 Market-creating startups: driving transactions versus revenue tapping 

Wake anyone up these days, and they’ll tell you about how most products and services in Africa are competing for wallet share with essential things like food. For good measure, they might also throw in that chart showing how only a small percentage of people in major African cities can afford to spend $10 daily. 

“A majority of business models that exist today are targeted at existing consumption,” an essay from the Christensen Institute says, pointing out how metrics about the size of the middle class, disposable income and the total addressable market are the theme of conversations when models target existing consumption patterns. 

In Africa, beyond targeting existing consumption, a lot of startups focus on digitising existing processes. These “asset-light” and tech-driven models, which basically copied global models, were supposed to be slam dunk winners, but many of them have struggled. 

These models didn’t work because “in Africa, it’s more important to create transactions than to get revenue share by tapping into existing transaction flows with tech solutions,” says Satoshi Shinada. 

Shinada believes the big winners will be market creators. And if you were looking for a definition, he goes on to provide one:

“Market creators refer to those creating economic opportunities for people based on the changing dynamics of the overall African economy, for instance, increasing GDP.”

Read the article that inspired these thoughts here. 

🌱 Is there an argument for staying small?

While we’re still on the subject of models that target existing consumption, one way to get around the problem of a small addressable market in your home country is to expand into secondary markets. The thinking is straightforward: an aggregate of small addressable markets can create one big business anyway. 

But the reality is often disappointing. Between 2020 and 2022, ZIRP saw VC dollars flow into Africa at an amazing pace. Some of these VCs with very little experience of the African market loved the idea of startups that could expand and establish themselves across the continent.

So e-commerce startups like Jumia spread themselves thin, establishing themselves in 14 countries. Others expanded more cautiously to Ghana and Kenya. While some fanfare often greeted these expansions, there was silence whenever these startups beat a retreat back to their home countries. Benoit Delestre, managing partner at Saviu Ventures, has spoken about some of the nuances of expansion on the African Pre-seed Podcast. 

Here’s Odun Eweniyi on how she thinks about expanding: “Besides the similarities in macroeconomics, you’ll realise that products aren’t necessarily replicable in African countries. For instance, product adoption is slower in countries like Ghana, and scaling a digital savings product in Kenya will be a huge challenge.”

Read her interview here.

📈 Fintech is a lot harder than it looks 

“Don't start a fintech unless you understand finance and how to maintain a core banking service,” argues Joseph Benson-Aruna in a week when the struggles of some fintech startups in Nigeria hit the news. 

Many fintech founders set out to disrupt traditional banking and payments and have often unbundled some parts of banking as their focus. The argument goes like this: traditional banks are complacent and have lost customer obsession or don’t provide real value to their retail customers. 

To be fair, some of the financial technology bets have seen impressive levels of success, but we’ve also seen some struggles. Digital lenders have learned expensive lessons on why banks aren’t in a hurry to serve sub-prime borrowers, and neobanks know first-hand that without extensive funding, deciding not to charge fees is pretty difficult and wins you fickle customers anyway. Navigating and avoiding fraud will also take up much of your time.

So before you quit your day job to build that beautiful fintech, it’s worth understanding fintech costs and why this space is much harder than it looks. 

🔫  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! 😉