Why is it Important that African Startups build for Africa First (Part 1)

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There’s been a lot of controversy surrounding what it means to be an Africa Tech start up, and whether it is best to build in Africa for Africa, or to build in Africa for a global market.

For starters, 2018 has been the best year so far for recorded venture capital money coming into the tech echo system in Africa. There have been several African tech companies springing up every day, with a controversy surrounding whether they are actually African tech companies festering even faster.

Several definitions have been given to who an African tech company is. One of the definitions have been; an African that is on the continent who is building a tech startup. There’s also a wider definition of any company in Africa that is offering tech services. So for companies that are mostly run by a western team, most people will not consider them as an African tech company. Jumia for example will not be put under the category of an African tech company; that is why I personally do not agree when it is said that Jumia is the first African unicorn.

What I want us to do is to look at the “local champions”- who are the Africans in different countries who are building.

I had my team do a research to find out if it is more profitable to build for the global market or build for the African continent. Considering that there are 1.3 billion people in Africa, with a combined GDP of 2.19 trillion, there’s money to be made. We looked at the numbers for the top 50 people who have received venture capital funding in Africa like Flutterwave, Yoco, Wakanow, you realize that almost 90% of those receiving the highest amount of venture capital are companies that are built solely for Africa and the work they do are mostly for Africa. The people that are attracting money, are those building solutions for Africa, because of our many developmental problems. For example, in agriculture people like Peris Bosire who has created a system uses mobile phones, alternative data, and machine learning to close the critical data gap that prevents financial institutions from lending to creditworthy smallholder farmers.

The numbers have told us if you don’t build for Africa, you’re not going anywhere. This is because Africa has so many problems that need to be solved and venture capital funds are interested. How we came to this conclusion is by using the Top 50 Tech Companies that have attracted venture capital funds.

For the Tech companies that are run by a Western team, my suspicion is that once they have figured out the market, they will start to move away and be global. An example of such a company is Andela, that builds distributed engineering teams with Africa’s top software developers. To build for the global market, you have to be able to integrate and understand who your customers are, and this is what a lot of people from other jurisdictions usually do. It is important to localize in order to succeed.

Building a product for the global marketing is not a bad thing. Looking at the numbers, the tech companies who get the most venture capital funding are Africans building for the African market. As to whether tech companies need to build for Africa or build in Africa for the global market, the advice will be to look at the data and align yourself.

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