By learning from their US counterparts?
Every African start-up aspires to the sometimes-elusive unicorn status; that exalted stage signalling a valuation of over $1b; also known as the billionaire’s club, in a complete league of their own.
So far in the continent’s thriving and vibrant start-up ecosystem, only eight start-ups are members of the exclusive billionaire’s club called unicorns.
Below are eight ways other African start-ups, itching for a spot in the club, can get in the door:
- Solve a big problem.
US giants like Amazon, Google and Facebook solved big problems and transformed industries.
African start-ups like Andela, Flutterwave and Paystack solved huge payments, financial services and talent problems.
- Don’t stop.
Facebook wasn’t an overnight success. It took five years of grinding to get to 300 million users.
WhatsApp didn’t make a dime for five years. It was a question of patience, focus, and intense hard work.
The journey to $1b is a marathon, not a sprint.
- Scale smartly.
Uber arrived in Africa in 2013 and had to adapt to the lack of internet connectivity and local regulations. But before it moved into Africa, Uber had succeeded in over 400 cities.
Start small. Perfect your offering. Then scale aggressively but smartly.
- Know your numbers.
In 2007, Google acquired DoubleClick for $3.1b. DoubleClick had an annual revenue of $150m, making the price 21x revenue.
To reach a $1b valuation, understand your finances and target a market size that can support it.
- Hire the best team.
Y Combinator rejected both Airbnb and Dropbox. Yet they never gave up. They built teams of the best programmers, marketers, and designers and went on to become huge successes. Your team is everything.
- Secure funding.
Securing funds has always been the biggest challenge for African start-ups. But knowledge, slowly and surely, is seeping through to those with capital.
Accept funding from those who understand the problem you’re solving and can help provide valuable insight.
- Support the ecosystem.
Today’s successful US start-ups actively support the ecosystem they came from. Africans can learn from this too. Thankfully, successful African founders are ploughing back into other start-ups to enable them to grow. Ex-employees of start-ups (especially fintechs—Paystack, Opay, Jumia, Cellulant, Careem) are forging their own paths in the ecosystem after being tutored by their founders/employers.
Teaching, mentoring, and investing in the next generation set up an ecosystem that can support $1b and more exits.
- Don’t be afraid to go global.
Africa is home to over 1.2 billion people, but taking a product globally is vital to admittance into the billionaire’s club.
Founded in 2010 in the US, Stripe became a global behemoth by opening up to new markets and currencies.
Understand your international competition, get the right technology, and grow relentlessly.
African start-ups have all the ingredients needed for success. They just need to apply them with patience, intelligence, and focus.
This article, by Eunice Ajim, first appeared on LinkedIn. She is the founding partner of Ajim Capital, an early-stage fund providing start-ups in Africa with financing.
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