In October 2017, I walked into the African Leadership Academy (“ALA”) in Honeydew, Johannesburg. When I received an invitation from my mentor to attend the Anzisha Prize Gala, I had no idea what to expect but I found more than I could have anticipated. I was impressed by the immaculate lawns, crimson brick-faced buildings, the confident students from diverse backgrounds as well as the star-studded sponsors of the school. ALA has made an investment into the future of the continent through the Anzisha Prize – a competition that recognises Africa’s youngest entrepreneurs between ages 15 to 22, providing 20 finalists with $2500 in funding and the top 3 with $12,500, $15,000.00 and $25,000.00 respectively. That evening, I made a commitment to stay as close to the ALA community as possible, because this was a palpable presentation of African excellence and high impact innovation.
ALA was co-founded by Fred Swaniker and Chris Bradford, who met at the Stanford Graduate School of Business and started ALA in 2008. Its community of sponsors, mentors and partners is enviable because it is wealthy in both knowledge and money. At the Decennial celebrations dinner in February 2018 the ALA raised $20 million in pledges to provide scholarships to half of its students over the next 5 years. It is through this community that I have had the opportunity to meet some of Africa’s game changers in the field of technology, such as Tonje Bakang – the founder of Afrostream and Sim Shagaya – the founder of Konga.
The Adventure of Afrostream
I met with Tonje to interview him for my podcast “Cheat The Hustle”, where he spoke about his ‘adventure’ with Afrostream which ended in September 2017. Afrostream, a video-on-demand service, was dubbed the Netflix of Africa, providing 2000 hours of African, Afro-Caribbean and Afro-American content to a French-speaking audience. Afrostream exhibited all the signs of life and sustainability as they had over 10,000 paying subscribers, raised $4 million and spent months in Silicon Valley at the startup accelerator Y-Combinator.
Tonje took me down the memory lane of his fundraising journey with Afrostream. He explained that it took him 2 years to raise $4 million in the US and he did not have any investors from Africa.
I am always intrigued when I meet an African entrepreneur who has raised money successfully in western markets for a business that primarily services African consumers. One question I always ask is: “What does the West think of Africa as a market?” I ask this question, because when I was in the US for a business fellowship, I was surprised to discover that a number of Americans did not consider Africa as a viable, or feasible market to invest in; although that is changing slowly with the African expansion of retail brands and the investments in different African technology companies.
Tonje explained that US investors compare the 50 states of the USA to the 54 countries in Africa. This reasoning is faulty as each African country has its own history, language, politics, currency. Even though there are some similarities, they are not the same. He added that US investors prioritise anglophone countries, while European investors prioritize francophone countries. Tonje shared his strategy in partnering with the large American studios like Sony Pictures, Warner Bros, Viacom, Lionsgate and Disney. He approached them on the basis of providing business development services for them, by exposing their content to the francophone audience.
Tonje warned African entrepreneurs who raise money with the narrative of Africa as a“ fast-growing market with a youthful population that is connected to the internet and the birth of a middle class.” Subject to the country, the story of the middle class could be a myth and the youth connected to the internet may not have smartphones.
According to Internet World Statistics, as of 31st March 2019, only 35.9% of the African continent is connected to the internet. This is an estimated 474 million users. He added that the cost of data is also quite prohibitive in many countries, and just because people are active online does not mean that they can afford the products or services that are being sold. This is especially true when we consider friends and family with smartphones but have never used Uber.
I asked Tonje how he did not internalise the end of Afrostream and see it as a personal failure. He explained that Afrostream was not a failure, but rather that he had reached the end of “a great adventure with Afrostream”. He added that “it is not the end of my journey as an entrepreneur or as a human being.” A recent article in Forbes revealed that up to 30% of startup founders battle with depression. This perspective is important because it shows that the rejection of your business or idea is not a rejection of you as a person.
Running a business can be like a choreographed dance where you have to keep counting with the tempo or everything is thrown off. Afrostream was successfully growing its subscribers and wanted to develop original content while expanding into 24 African countries. Tonje put on his best dancing shoes to tango with investors for the second round of funding. Unfortunately, no one wanted to come onto the dancefloor with $10 million, so like musical chairs, the music stopped and Afrostream had nowhere to sit.
The King of Konga
In a 2016 interview, Sim shared how the name Konga came about; he spent 2 months looking for a name that was Pan-African and easy to recall and came up with Kongo. Unfortunately, the domain name was already being used by someone in Asia who wanted to sell it for $300 000.00. Sim decided to change the last letter to an “A”- resulting in Konga.
Unlike Afrostream, Konga raised the majority of its capital on the continent from Naspers, the media and internet giant headquartered in South Africa. Kinnevik, a Swedish investment firm was another shareholder within Konga and in total, the parties invested around $124million before selling Konga to Zinox Technologies for a rumoured $10 million in the early months of 2018.
Over a short conversation with Sim, he reflected that Konga could have used a different model of inventory management and shipping of its products. This would allow retailers to deliver products themselves as opposed to the warehouse model which was adopted in 2016 by the birth of Spaceship by Konga. This model is similarly used by e-commerce giants Amazon and Alibaba. He also added the rule of law is extremely important in Africa because investors need to know that their investments are safe and they have means of legal recourse.
The End of An Era
Both Sim and Tonje, show that the ability to understand the African market is essential to becoming game changers and playing by the rules of global majors like Amazon and Netflix may not be adaptable for Africa. Konga realised this with respect to its shipping model, among others, and Afrostream realised this with the cost of content.
In an interview with Reid Hoffman(founder of LinkedIn), Mark Pincus (founder of gaming company Zynga) said: “As entrepreneurs, part of the journey we’re on is learning how to separate our winning instincts from our losing ideas.” Afrostream and Konga were clearly winning instincts and looked to solve a need within Africa – in terms of content and also of retail respectively. Afrostream garnered over 10,000 subscribers and at 2016 Konga had 184,000 monthly active users.
New Kids on The Block
In August 2018, the Jack Ma Foundation officially launched a tech-based initiative called Netpreneurs: The Rise of Africa’s Digital Lions. The initiative’s goal is to give opportunities(including funding) to African startups that are primarily involved in e-commerce, payments processing, logistics, tourism and big data.
The incumbents of the payment platforms such as EcoCash and M-Pesa, which are popular in Southern Africa and East Africa, have some competitors or collaborators on the scene. WeCashUp is a universal payment platform that allows users to accept and disburse payments in cash, bank wallets, cards and cryptocurrencies through single API integration. It’s a cross-border and cross-platform solution that allows the ease of payments. The co-founder Cedric Antagana is based in Marseille, France but started the company in Cameroon and was named one of Forbes 30 African entrepreneurs under 30.
I also met Derrick Muturi during the Netpreneurs launch and he shared his vision for Herdy. Herdy is to be “the Amazon of agriculture in Africa” by delivering fresh meat and groceries to its customers. The company offers free delivery of orders above 2500 Kenyan Shillings($24.50) and provides same-day delivery within 4 hours. Although it is important to provide convenience to customers, Derrick’s passion is to support local entrepreneurs and reduce the final cost of the customer. Herdy exclusively sources products from local farmers and small businesses.
Derrick started out as a rabbit breeder and brings expertise managing livestock farms to Herdy. The platforms also assist farmers in livestock management, as well as livestock trades with each other. Herdy has raised funding from a Dutch investment group and its website says this will help it expand beyond Nairobi.
The future of Africa is secure. We applaud the efforts in the past by trailblazers like Konga and Afrostream to mention a few, but also due to the work that is going on currently from the ‘young lions’ that come up through Anzisha, Netpreneurs or on their own. The beauty of innovation in Africa is that it can happen anywhere, and is not restricted to a location or industry, because the needs are many and fortunately for us, even more entrepreneurs are stepping out to find solutions to the challenges.
This article is by Tiyani Majoko. Tiyani is a legal solutionist based in Johannesburg, South Africa and her ambition is to “Disrupt the status quo of the law” . She is the co-founder of Lawgistics Legal Consultants which provides Corporate Governance and Legal services to small and large businesses, which aims to expand beyond South Africa. Tiyani is also keen to contribute to the entrepreneurial movement on the African continent through her podcast Cheat The Hustle and writing articles for publications like the Huffington Post, she is a Mandela Washington Fellow alumni of 2017 and was recognised as one the 100 Most Influential Young South Africans in 2017.