How youth can build tech businesses
Africa’s ongoing digital revolution has not only fast-tracked economic development across the continent but also produced a fresh crop of young and dynamic entrepreneurs.
Tech hubs in major cities like Nairobi, Johannesburg and Lagos are teeming with young men and women determined to roll out homegrown tech businesses that can rival Facebook, PayPal, Alibaba and other global heavyweights.
Some of these young innovators have enjoyed a relative level of success. This is illustrated by the heightened investor interest in African tech start-ups, majority of them youth-led.
Last year, venture capital funding in African tech start-ups reached a record $560 million (Sh56 billion), a 53 per cent increase from $367 million in 2016, according to a report by Partech Ventures, a venture capital firm.
With the steadily growing investments in youth-led tech start-ups, it is tempting to sensationalise the achievements of a few and forget the multitudes who suffer successive failures despite the commercial viability of their solutions.
I have experienced first-hand how difficult the entrepreneurial journey can be — especially when you are trying to figure things out all by yourself. In my entrepreneurial journey, I have found three principles that can be particularly useful to youth who have tremendous talent but lack the benefit of experience.
In 2004, in the earlier days of our business, we convinced Dr Samuel Kiruthu to serve as our board chair, a position he holds to-date.
We greatly benefited from his business acumen and experience as he interrogated our financials more exhaustively and helped us to establish strong corporate governance structures.
Bolaji Akinboro, my co-founder, who heads the business in Nigeria, always reminds me that this was a watershed moment for Cellulant. Having a board that held us accountable to our business plan helped us to realise that a business is not a hobby. People had staked their entire careers and reputations on us. Failure was not an option.
As an entrepreneur starting out, it is important to reach out to experienced people outside your core network to help you to set up a board and establish solid corporate governance structures.
This will help you both at the beginning and later on in the business when you want to raise capital from investors.
When Cellulant started, we were focused on mobile content distribution. The pivot into digital payments evolved as a result of going out to solve a payments problem that our customers faced and we competitively positioned ourselves in digital payments in Kenya and across the continent.
While it is understandable for entrepreneurs to be sentimentally attached to their first big idea, evolution and adaption are necessary — especially if there are other commercially viable opportunities within reach.
It is important to look out for big trends that have the potential of giving your business access to multiple markets. Investors are always eager to back businesses that have the potential for scalability across different markets. Entrepreneurship is a journey, not a destination.
Last year, American e-commerce giant Amazon reported revenues of $177.9 billion (Sh17.8 trillion), which is close to six times Kenya’s current annual budget.
One would think that Amazon is resting easy after achieving this kind of wild success. Quite the contrary. It is aggressively exploring other emerging areas in tech, such as artificial intelligence.
According to Mary Meeker’s ‘2018 Internet Trends Report’, Amazon is now the top spender in research and development and capital expenditure in the United States, surpassing pharmaceutical companies which develop new medicines.
After hitting one milestone, you realise that there are several more down the road. You need to realise from the outset that entrepreneurship is not an easy fix to your financial problems but a demanding journey that requires you to make a long-term commitment.
Bolaji and I thought we would retire in 10 years. But after seeing our impact and getting a clearer sense of the immensity of the digital payments opportunity, we decided that we would be in this for longer.
Two thirds of Africans are still locked out of the financial system. We are keen on accelerating financial access for this unserved market segment by leveraging on mobile phones.
This is one of the reasons why we recently secured $47.5 million (Sh4.7 billion) in equity capital in one of the largest fintech deals in Africa.
I personally had to do 400 presentations to over 60 investors before settling on a set of investors who subscribed to our vision and mission.