Balancing Volatility - Emerging African Ecosystems [Part of our new blog series: AT, Entrepreneurship & Finance - with GDI Hub's Assistive Tech Impact Fund]
For local founders, creating an assistive technology (AT) company offers the opportunity to significantly improve the lives of people in your community. For international founders looking to enter new markets, African entrepreneurial ecosystems offer a vibrant and untapped customer base, exciting experiences, and the added bonus of providing meaningful benefits to customers that have historically been unable to access AT. That being said, speak to any entrepreneur from Lagos to Johannesburg and you’ll hear that African emerging entrepreneurial ecosystems can be tough. In this blog, we explore some of the trademarks of these ecosystems, and what they mean for ambitious founders in AT.
When speaking with a prominent venture capitalist about entrepreneurship in Africa, the first word that came to this investors mind was ‘volatility’. In the words of this investor:
“it’s unpredictable in ways you really just don’t know”.
Volatility is a hallmark of being an entrepreneur in any African country. The level of volatility in emerging entrepreneurial ecosystems makes building a company challenging. Although startups can be more reactive to sudden changes than larger companies, limited cash resources often mean that short term disruption can sink a company.
Volatility also acts to disrupt the progress you have already made, undermines stability, and hampers future growth by making the baseline ecosystem conditions for your company less favourable. Imagine you are an AT entrepreneur, volatility could mean that an unexpected change in government now means that there will be far reaching regulatory changes that block your sales. A natural disaster could abruptly bring your and your customers personal and professional lives into chaos. It could take months, if not years, to recover. An economic shock could mean that government and business budgets are cut and now only cover urgent and life threatening needs, and there’s now no money for AT.
These scenarios may sound extreme, but some variation of them often plays out in African entrepreneurial ecosystems, where events with significant impact can happen in an instant, and leave long-lasting effects that disrupt the entrepreneurial conditions.
Build across the value chain
Around the world, and especially in sectors that are geared towards tech, the mature entrepreneurial ecosystems support a wide range of ‘plug and play’ products, services and organisations that make building new companies easy.
A Silicon Valley CEO can use ‘Onfido’ to verify customer identity, manage payments using ‘Stripe’, provide customer credit with ‘Klarna’, and ship their product using any of the delivery companies. This saves the resources, keeps teams small, and means that each company only needs to focus on doing a small handful of things really well.
Speaking to AT entrepreneurs and investors, this just isn’t possible in most African entrepreneurial ecosystems yet, and as one investor put it
“If you have a good solution to a pressing problem, you have to solve more than just that problem”
In AT, companies must not only be an expert in AT (not an easy feat), but also need to master financing, hiring, logistics and distribution, warehousing, both physical and digital advertising, customer services- the list can seem endless.
The net effect is that companies in African entrepreneurial ecosystems cannot always move at the lightning fast speeds we associate with entrepreneurs in mature ecosystems. As well as slowing things down, the need to build more increases the resource burden, because teams need to be bigger with more diverse skills and expertise, which in turn makes progress cost more.
Stamina leads to success
If the average successful Silicon Valley entrepreneur is a race horse, the average successful African entrepreneur is a camel.
Founders in Africa must be patient, prepared to drive things forward and find ways to stave off burn-out. It’s not unusual for founders to spend one year working on solving one problem, only to find another similar sized problem just around the corner. In the words of one venture capitalist:
“It’s not something that entrepreneurs are good at, right? Because they want to get stuff done now, not manage seven layers of bureaucracy”
Stamina and patience doesn’t mean that AT entrepreneurs can sit back and wait, instead it means that they need to set realistic timelines, manage stakeholder expectations, and be prepared to keep nudging, or occasionally jolting, processes along. Road-unblocking must become second nature, whilst also building up a tolerance for delays as entrepreneurs build across the value chain.
Partners make the difference
Even though it’s true that companies with an African focus need to build much more of the value chain than their entrepreneurial counterparts, there are ways to make things easier.
For AT entrepreneurs in Africa, partners can be the difference between blockbuster success and failure. A partner may not always be able to provide a neat ‘plug and play’ solution, but they often provide invaluable human connections, expertise, and contextual understanding that you need to succeed. Many aspects of business in African entrepreneurial ecosystems are still reliant on human processes, connections and ‘face-to-face’ relationship building. Take for example registering a business.
One AT entrepreneur based in the US was expanding to Kenya and found that they needed a person to physically go to the government offices to submit paperwork, and to follow up in person to ensure the paperwork was not neglected. In lieu of establishing their own offices in country, international AT companies can make use of local partnerships in the short-term to navigate hidden complexity, and benefit from local peoples' networks to keep things moving. Regardless of if AT entrepreneurs are local or international citizens, the ability to look out for partnerships that compliment teams skills, networks and resources is essential. However, partners also need to understand and support your vision, believe in the value of AT, and have natural alignment with your goals, because if the partner isn’t on the same wavelength, the partnership simply will not work.
The importance of partnerships resonates with us at GDI Hub. We place partnerships as a core building block of everything we do, especially when working outside of the United Kingdom. However, we often take the approach of building partnerships over time, experimenting with small projects first to build trust and get to know partners, before expanding to more significant projects.
Emerging entrepreneurial ecosystems like Nairobi, Lagos and Johannesburg are immature and can be volatile, which means that entrepreneurs have to build businesses that do more, and always face the threat of unexpected risks. In the context of AT, the baseline ecosystem conditions act to make AT entrepreneurship even more difficult. However, AT entrepreneurs can overcome these difficulties by expecting volatility, and preparing a safety net for their organisation. The founders of AT companies also need to develop an appetite for bureaucracy, and stamina to keep going as they build across the value chain, whilst also creatively and proactively forming partnerships to offset the challenges that all AT companies will encounter. African AT entrepreneurship is not easy, but these ecosystem factors can be overcome, mitigated and managed, unlocking the way for success in our sector and ultimately building the ecosystem to support high-quality and fairly priced AT for everyone.