The Next Wave

Tech startup founders face a series of challenges on the path to success. When do they finally get to reap their rewards? The thing with arguments like how much a founder should earn is, it is subjective. We can speculate and harmonise based on an industry standard but who sets it anyway? If indeed there is a standard for how much a founder should earn, it is still subjective and mostly dependent on the founder to set.

One of the biggest news stories last week, at least in Nigerian tech circles, was my colleague’s (Ngozi Chukwu) reporting about Payday, the virtual card app. Per her reporting, Payday which announced a $3 million pre-seed earlier this year is now seeking a buyer after a potential deal with Moniepoint fell through amidst internal strife and customer complaints. Like Payday, two other fintechs, Dash and Float, raised significant sums which were subsequently lost or misappropriated. Stories like this, where startups raise significant sums only to go bust months down the line, inevitably get a lot of attention. The businesses involved usually have thousands of customers and interested stakeholders from investors to regulators.

Smallscale modern retail in Africa will not completely replace open markets in Lagos, souks in Cairo, or storied markets like Karatina in central Kenya. But a subtle shift that can become a major marker of African retail is underway.

Last week, the Africa Climate Summit was held in Nairobi, Kenya. The conference was attended by key delegates from African countries, international organisations, and the private sector. The summit was a significant event for Africa, as it was the first time African leaders had come together to discuss climate change on a continent-wide scale. It also served as a platform for multiple electric vehicle (EV) companies—including BasiGo, which serves Nairobi with 20 electric buses for public transport—to showcase their products.

In 2012, Jumia, Africa’s first ecommerce giant, revolutionised shopping by offering the service online, alongside shipping. Since then, they have grown as a market leader over the African continent. They have also gone on to list their shares on the stock exchange, in 2019. The listing went well; their stock prices surged 75% on its first day of trading. This made the company a unicorn with an over $3 billion valuation. But four years after that IPO, everything has crashed. Its stock now trades at somewhere around $4, losing nearly 70% of its value since its listing date.

Ethiopia has always enchanted foreigners with its rich history and dated traditions. Some of them are preserved in the form of solid rock monoliths that defy explanation, given the crude tools of the era they were built. More recently, Ethiopia enchanted global emerging market watchers with its average GDP growth of more than 10% from the mid-2000s to the 2010s. This economic growth miracle dipped to 8% in 2015 and has since struggled to break 7% since 2019, around the same time that violent fraternal conflict drew storm clouds over economic reform and progress.

Having a concentration of mature technology players but very little startup activity is precisely why Mauritius makes my list of interesting technology ecosystems to review. It is easy to dismiss Mauritius’s technology arena as simply a corporate IT and business process outsourcing world instead of a startup ecosystem. But that perception has too many blindspots. The island nation may house more business process outsourcing firms than what qualifies as a startup. But it is certainly not a laggard. It has just being too concerned with regular business administration, its bread and butter, versus pursuing innovation on its shores. And it knows this. Hosting some of Africa’s largest IT infrastructure players is a flex, but Mauritius wants more. And it wants this “more” to extend and enable its robust financial services sector.

This week, I’ll take a break from the ecosystem review series to share a bit of my evolving thoughts on B2B retail digitisation in the past few weeks. The summary is that hurting FMCG sales leaves a question mark over how thick the digital layer in FMCG retail should be.

In Tunisia, raw talent and a tight-knit community of builders, entrepreneurs and tech workers could create Africa’s axis for deep tech. But not before a few important and urgent changes. With almost 5,000 students registered, Tunisia has the most number of student members in the Europe, Middle East and Africa region of the Institute of Electrical and Electronics Engineers. That is a stunning 1900 increase from 2011 when the country had only 263 student members. By total membership, Tunisia is the only African country in the Top 10 ranking of IEEE chapters in the EMEA region.

How many cities on earth have natural forest reserves occupying almost a quarter of the city area and are still entirely within city bounds? Not too many. Only one city on the planet—and perhaps the universe—fits the bill. Nairobi.

Rwanda is Africa’s most ambitious ecosystem and country. A place I am optimistic about and invested in. Here’s how it can win for itself. This is the first of a series of ecosystem reviews, where I will attempt to pull at the threads of what often goes unspoken as African countries cultivate unique identities around technology, innovation and impact. Our first stop is my host for the past 7 weeks, the fledgling technology and innovation space in the Republic of Rwanda.

As the population and youth unemployment grow side by side and disposable incomes fall, Africa’s need for stable, visionary and effective political leadership at all levels has never been more acute. But Next Wave is not a very political economy newsletter. We’ll leave that for others. Instead, let’s focus on what the broad technical features of what building a business despite the dreariness might look like.

Outside of tracking fundraising metrics, the last $12bn to $15bn invested in African startups through VC should have been a learning experience. So what are we learning about these experiments in African venture capital so far?