X for Africa

X for Africa

This piece was originally published on The Flip. To receive The Flip Notes directly in your inbox, subscribe here.

I wrote about?disruption?back in July 2020.?

…what are we even disrupting? I think this question is especially pertinent at the current stage of development.
In other words, where are growth opportunities on the continent coming from? Surely, in an environment where millions are unbanked and/or are non-consumers, growth isn’t coming from disrupting incumbents or stealing market share.?

In that piece, I made the argument that the disruption narrative was counterproductive, and has incumbents – who startups should be collaborating with – wary of working together with the tech ecosystem. But my thinking has evolved further since then.?

It’s not even that today’s startups need corporates to collaborate with. It’s that many of today’s startups aren’t going to grow up to become Big Tech disruptors – there is much more to build than there is to disrupt. Instead, many of today’s startups are going to grow up to become big corporates themselves.?

Over the past few years, I’ve read a lot about the history of Silicon Valley. I’ve been reaching for an analog to help me better understand what the development of the African tech ecosystem?might?look like.?

In learning, it becomes quite clear that this isn’t a good comparison. The Bay Area was home to military research and technology since the early 1900s. Shockley Semiconductor was producing transistors, giving Silicon Valley its name, since 1956. While local markets may draw inspiration from more developed ecosystems, it’s hard to compare, and often inappropriate to do so.?

And yet, we often hear the term X for Africa. Stripe for Africa. Plaid for Africa. Affirm for Africa. Brex for Africa. But if we’re going to do X for Africa – a thing that I know a lot of founders don’t like, because the comparisons lack nuance – we should widen the aperture.?

So what about Cargill for Africa? Back in Season One of The Flip, we interviewed Hello Tractor’s?Jehiel Oliver. In discussing the company’s ambitions he asked rhetorically, “would you rather be Uber for tractors or Cargill?” And Cargill is family-owned and the largest privately-owned company in the US. Per it’s Wikipedia, “By 2019, twenty-three Cargill-MacMillan family members owned 88% of the family company, which earned $113.5 billion in revenue in 2019.”

Right now, B2B commerce is having its moment. It’s a topic we explored in a podcast episode last year, and in?TFN #93, we took a deep dive into the model with Wasoko, alongside their $125 million Series B. (Since then,?Rest of World?and?TechCabal?have explored, as well.)

These aren’t necessarily highly scalable, zero marginal cost software businesses, with commensurately high tech valuations (as indicated by Wasoko’s?$625 million valuation). They’re unsexy – in the eyes of many VCs –?yet tech-enabled. And they’re using technology to solve wide problems in offline and analog industries.?

Likewise, as?tech companies?struggle?in the public markets and as the?macro environment?has some speculating that we’ll see a contraction in venture capital, we’re seeing a renewed,?sober discourse?surrounding the venture-backed model, in general.

Last week, Sahara Ventures’ Jumanne Mtambalike published an editorial entitled?A Sweet Big Lie Told to African Startups, in which he argues against the ecosystem’s outsized focus on VC funds raised and valuations and YC acceptances. He closes with,?

If I were an African founder today, which I am, my focus would be to build a real business. I don’t worry much about valuations and exits, but I care. If I can deliver value, there is always a chance of attracting capital or strategic partnerships that will accelerate my growth.

Perhaps African markets will benefit from more founders with the ambition to build Cargill for Africa.

Ucha Unimke-Ulayi

African MSME & ESO Program Manager || I guide Clients to Access Impact Investments|| I Implement Sustainable Business Practises for MSMEs||

2 年

Great piece????

Anye Wanki, MBA

Commercial Market Intelligence Strategy| Kellogg| Wharton

2 年

I think the Sokowatch (now Wasoko) comparison is apt. Sokowatch initially tried to build only the software solution for last mile delivery but they came to find out the hardware (physical supply chain) was lacking for software to be truly effective so they pivoted to addressing both. In general, tech will always be sexier than capital intensive businesses to VC because it is able to scale without much marginal cost. However, in order for tech to be truly effective, we also need innovation in the physical world.

Jehiel Oliver

Power (tractors) to the people (farmers)!

2 年

Agriculture is a long game. This business was built from very humble beginnings and so were all of the ABCDs of food. Amazing to think that similar companies are being built in Africa today... Hopefully, tech will accelerate their ascension!

Abraham Augustine

Tinkering with technology media, data products & connectivity in Africa

2 年

This is what Africa needs far more than glitzy tech businesses. There's a skill to being a Silicon valley entrepreneur that is different from building a lasting Cargill-type business. Many names have come and gone over the past decade in African tech, and it's a delusion to not expect same a few years from now. For Africa, valuations should never have mattered as much as value. Maybe more of us will begin to think this way?

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