Technology
Why African Tech Startups Fail and How to Mitigate Risk
By Otori Emmanuel
Technological start-ups in Africa are innovative about providing solutions to challenges that exist in Africa. However, with these solutions come several bottlenecks which eventually create a barrier to the survival and sustainability of the business.
There are several factors that contribute to the failure of start-ups in Africa and the ability to learn from these failures would support a new way of thinking to help mitigate these risks.
In this publication, I would be sharing risk factors from working with not less than 100 companies in the technological, FMCG, retail, agro, fashion, events, confectionary and manufacturing in providing consultancy services and some of the patterns I found led to the business failure.
- Huge Injection of Capital Without Traction
Generating and implementing an idea has to go through several stages of design thinking to ascertain the viability of such a product before it is released into the marketplace based on the feedback from prospective end users.
Due to the fact that some early-stage entrepreneurs have already built a name in the ecosystem can easily make them access funding even when an idea is still just an idea that has not been properly researched but because entrepreneurs sometimes are also very emotionally attached to an idea sometimes, they can make several assumptions without considering the facts and then begin to seek capital inflow to kick-start this idea.
Traction is important because it signifies growth and growth could be seen in the form of demand which eventually leads to cash flow. Investing in an idea is too risky and even riskier for an early-stage entrepreneur with limited experience and exposure.
In order to ensure an idea would scale, it is important to employ design thinking to limit assumptions.
- Not Working With the Right Team
Not Working with the right team has huge consequences in itself. A start-up should have one core, and it is in the ability to execute with the team. Because most start-ups bootstrap at their early stage, they tend to work with whoever is available and not necessarily the skilled and competent professionals who would hit the ground running and deliver the required expectations.
I remember working in a pharmaceutical start-up where mislabeling of medications occurred because the professional involved was not aware of the procedures as a pharmacist would. This could have been a huge mistake if it was unnoticed until it reached the retailer who did checks and found out.
The right time would limit the time a task is expected to be done. Start-ups should never play down on experience, proficiency and competence. In fact, it is necessary to develop specific in-house procedures for hiring that suits the company’s culture.
- Lack of Product-Market Fit
A product could be a fantastic one, but if the market is not ready, then its sustainability is questionable. A very innovative start-up that came with the idea of solving the challenges of travel is GoMyWay, this Start-up was launched in Nigeria but did not thrive.
Was the product fit for the market in terms of providing the needed solution to the already existing challenges, I would say yes, however, factors such as kidnapping, assault, killings have created trust in the mind of travellers and so this travelling application that was supposed to connect a traveller with a car with another traveller going in the same direction could not survive because the safety of travellers was in question.
- Government Regulations
Several administrations of government have worked tirelessly to make the business environment conducive, however, there are still gaps to ensure that the start-ups do not get gagged as their benefits are very key to economic development.
The recent move to create a start-up bill to ensure that the interest of start-ups can be protected is one to secure sustainability and increase interactions with regulators in such a way that regulations understand the peculiarities of these businesses and work around policies that would not see capital investments go down the ground with just a regulation.
I believe the start-up bill would create stakeholders in the overall value-chain and then ease how business is done.
There are other factors that contribute to business failure and the listed are some common ones that affect businesses based in Africa.
I however believe that as there is an ongoing conversation to create a roundtable for stakeholder’s interaction, there would soon exist synergy in the ecosystem.
By Modupe Gbadeyanka
A leading Artificial Intelligence (AI) computing firm, NVIDIA, has made an undisclosed investment in Cassava Technologies.
NVIDIA joins Cassava’s impressive roster of investors comprising Econet Group, British International Investment, DFC, Finnfund, Fund for Export Development in Africa (Afreximbank/FEDA), Gateway Capital, Google LLC, International Finance Corporation (IFC), Public Investment Corporation and Royal Bafokeng Holdings.
Cassava operates across Africa, the Middle East and Latin America through a strong portfolio of business units comprising Liquid Intelligent Technologies, Africa Data Centres, Liquid C2, Cassava.ai, and Sasai Fintech, all of which are leaders in their respective sectors.
The organisation will continue collaborating with its partners and customers on the continent and beyond, establishing it as a leading technology company of African heritage.
“Cassava is Africa’s leading technology company, driving the continent’s digital transformation with digital infrastructure and digital services.
“Securing this investment is an important milestone that we expect to unlock additional value from and catalyze the further expansion of our digital infrastructure and services to bridge the digital divide on the continent,” the chief executive of Cassava, Mr Hardy Pemhiwa, stated.
By Aduragbemi Omiyale
To deepen access to smartphones and digital services for underserved communities, Airtel Africa Foundation has joined forces with others to train some persons in Rwanda.
This aligns with Rwanda’s ambition to become a knowledge-based economy and complements national programmes such as Connect Rwanda.
The organisation is collaborating with the International Telecommunication Union (ITU), Rwanda Information Society Authority (RISA) and Cisco on capacity and digital skills development under the Digital Transformation Centres (DTC) Initiative.
The parties will bridge the digital divide and promote digital inclusion by providing free Internet connectivity and digital skills training to underserved communities in the country, in connection with the advancement of the 2030 Agenda for Sustainable Development.
ITU will provide digital skills training content to the DTCs under the Initiative along with other ITU regional capacity development activities. In addition, ITU will facilitate networking opportunities related to promoting digital literacy and inclusion, which will enable access to expertise and best practices.
It was disclosed that Airtel Africa Foundation, through Airtel Rwanda, would equip DTC locations with routers, Wi-Fi and data packages at no cost, ensuring the effective rollout of training and access to digital educational platforms.
According to the chief executive of Airtel Rwanda, Mr Sujay Chakrabarti, the collaboration marks a significant step forward in bridging the digital divide and empowering Rwandan youth with digital skills.
He described the partnership as “a powerful example of what happens when government, private sector, and international organizations come together to empower communities.”
“This partnership reflects our commitment to supporting national development goals and closing the digital divide through meaningful collaboration,” said the Head of Programs at Airtel Africa Foundation, Ms Esi Asare Prah, said on behalf of the chairman of the foundation, Mr Segun Ogunsaya.
“We are honoured to partner with ITU to bring this vision to life and contribute to Rwanda’s journey toward becoming a digitally empowered society,” he added.
Also, the Regional Director for International Telecommunication Union (ITU), Mr Emmanuel Mannaseh, said, “Our partnership with Airtel Africa Foundation begins in Rwanda, where we are joining forces to strengthen digital skills in underserved communities to advance connectivity. This initiative lays the groundwork for broader regional collaboration, as we aim to expand this work to other Digital Transformation Centres across Africa.”
On his part, the chief executive of Rwanda Information Society Authority (RISA), Mr Antoine Sebera, said, “What we are seeing here today is partnership in action. Statistics show that 900 million people in Africa remain unconnected, extra effort needs to be made to make sure that no one is left behind.
“This positions Rwanda a step ahead by being intentional to involve the youth. These centres are going to play a transformative role in educating the youth to leverage AI. Digital Transformation is driving the world and Africa or Rwanda cannot be left behind.”
By Faridat Yusuf
OpenAI, the creators of ChatGPT, has launched a new web browser called ChatGPT Atlas, powered by artificial intelligence (AI) and is said to be a big competition to Google Chrome and other browsers.
The new browser, which was announced on Tuesday, aims to change the way people search and browse online. Instead of typing keywords like on Google, users can just talk to ChatGPT inside the browser, and it will summarise information or even do tasks for them.
According to Reuters, OpenAI already has about 800 million weekly users on ChatGPT, and with Atlas, the company is now trying to bring AI into people’s daily internet use.
Atlas allows users to open a ChatGPT sidebar in any browser window to summarise web pages, compare products or even analyse data from websites.
Business Post gathered that there is also an “agent mode” for people who pay for the premium version of the service. This feature lets ChatGPT perform online tasks, to make “improvements that make it faster and more useful by working with your browsing context.”
During the demo, OpenAI developers showed how ChatGPT used Atlas to go on the Instacart website and add items to the cart all by itself.
For now, the browser is available globally on Apple computers (macOS), but OpenAI says it will soon release versions for Windows, iPhones, and Android phones.
Experts say Atlas could become a serious challenge to Google Chrome, which currently controls about 71.9 per cent of the global browser market. Google’s parent company, Alphabet, saw its shares drop by 1.8 per cent after the announcement.
Google, which has majority of the online search market share, has also been trying to improve its browser using its Gemini AI model, which is now part of Chrome for US users.
Analysts believe OpenAI’s new browser might later start showing ads, which could make it compete directly with Google’s advertising business.
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