Meet the Tech Companies Creating Opportunity in Africa – Harvard Business Review

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For our family, it’s the homecoming routine. I pull up to the house and my son flies out of the car to inspect the box or two on our front stairs. Santa only delivers once a year, but Amazon leaves something on our door about every other day.

Amazon knows our address, but over half the world’s people have no formal address. And they’re not all poor. Hundreds of millions of people have money and internet access, and they’re ready to buy. It’s just that identifying where to leave the box is a problem. Usually, they give their address as something akin to “on Nkomba Street, just across from the Post Office.”

Enter OkHi. (pronounced “Okay. Hi!”) Any delivery person whom the user approves receives from OkHi the user’s mapped coordinates and a picture of the front of their house. The app reduces delivery time by 50% according to OkHi’s founders.

OkHi’s buyer-locating service is one piece in a growing ecosystem. Jumia is an African e-commerce platform delivering to OkHi locations. It started in 2012 and grew quickly, taking advantage of Amazon’s spotty service, long shipping times, and poor user experience. Today, Jumia is in nine countries and valued at $550 million. And African Courier Express (ACE) is a logistics provider built to move products from e-commerce warehouses like Jumia’s to points identified by apps like OkHi. All told, such African technology start-ups attracted $186 million in early stage funding last year.

Two years ago I wrote a book on what succeeds in frontier markets like Africa. It’s a large, complex topic – and a large, complex continent — but Kenyan tycoon Chris Kirubi captured the essence succinctly. “Africa has nothing; we need everything. What an opportunity.” If you see the world Chris’ way, you can succeed in frontier markets.

Tech ventures are well-suited to the environment of scarcity. They require little capital to get started. They deliver value in the absence of incumbents and clear regulations. And while large firms await “necessary” conditions for investment, startups hurdle over those same shortcomings; in fact, they thrive on them, as OkHi thrives on fast-growing megacities with no urban plan. What startups do rely on heavily is entrepreneurial zeal and a talent for problem solving. Those are resources Africa has in abundance.

Doesn’t that talent need training to build software? Yes, it does. And that’s an opportunity. See the terrific start-up Andela, which finds the best raw talent in Africa, gives them 1000+ hours of training, and deploys them around the world.

Doesn’t that talent need capital to grow? Yes, it does. Enter Asoko Insight, which brings Africa’s investable companies onto an online platform used by investors worldwide. (Disclosure: I’m an investor in this company.) Still in beta version, Asoko Insight already reports on 3-4 times as many companies as any prior source, even while maintaining a high bar to list. “Africa is full of great companies,” Asoko Insight’s CEO Rob Withagen says, “Why shouldn’t it have great corporate data?”

Many sectors are crowded in developed markets, but wide open at the frontiers. Premise Data, for example, provides what’s common in California but rare in Nigeria: verified consumer market data. Premise recruits tens of thousands of contributors to gather observations in the marketplace on what products are available, who is walking in the store, and how far they are from the nearest bank.

Premise and Asoko grow not only because they are in new markets, but because they’re developing a new model to succeed there. Silicon Valley’s aversion to human-intensive businesses is well known. But as their operating models demonstrate, deploying large numbers of boots on the ground is precisely what’s called for in Africa, supplemented by machine learning at both companies.

Here’s another key difference. “Don’t invest further than you can drive” is an adage common on Sand Hill Road. In frontier markets, that would prove an impossible limit (as low-performing single-city funds have learned). You need techniques of investment and management that can traverse large distances and unimproved roads. It’s also necessary to invest in culture and guiding principles more, because direct oversight is less frequent. Investors who recognize those skills and mentor young entrepreneurs in them are at an advantage.

Like many promising new markets, African technology has been the subject of hype. Breathless wonder at the rise of a “Silicon Savannah” outstrips the opportunity that still exists mostly in individual companies and nascent clusters. That’s compounded by non-commercial money from some donors and governments. When they bring the discipline of the market with them, they’re a useful catalyst. When they don’t, they keep more firms alive than is healthy, and divert talent and attention away from companies with the promise of profitable growth. Investors focused on financial returns cannot be guided by press mentions or even cash on hand, as they distinguish African technology companies that are well-intentioned and well-connected as much as those well-positioned for long term, transformative growth.

The technology communities of the U.S. and Africa have a great deal yet to learn about one another, but the long term commercial ties between the two ecosystems are growing. Andela, Asoko, OkHi, and Premise are among the Africa-focused ventures that have attracted experienced technology investors from the U.S.. If current trend persists, over a dozen more will in the year to come. It’s a promising moment when people who see the opportunity in nothing begin finding one another.

Meet the Tech Companies Creating Opportunity in Africa – Harvard Business Review