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    Optimal Strategies for Managing Your African Startup Pivot: Lessons from Over 40 Best African Startup Pivots

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    Uganda’s Numida knew nothing would ever stop it from implementing its business model. It had secured partnership deals with microfinance institutions in the East African country, and was supplying data on a regular basis about small and medium scale businesses desiring to obtain credit from the institutions. At first, it was a smooth sail, but not until nine months into the deals. The microfinance institutions froze their communication channels with Numida, placing them incommunicado for countless days. Piles of new loan applications and data points were mounting, and Numida’s life was hanging on a cliff.

    The issue was simple: there was no confidence that the loan applicants could pay back. Their books had all the facts to support that, against whatever data Numida was throwing about. The businesses simply lacked sufficient collateral and carried with them huge credit risks. As a result, Numida had to take the most significant detour since its inception: becoming a microfinance bank itself.

    “…we thought among ourselves that if our mission is to unlock access to resources that these mom and pop shops need in order to grow their businesses, we’re not going to do that by partnering with these traditional MFIs; we had to do that ourselves,” said Mina Shalid, Numida’s co-founder.

    After multiple revisions, the firm went live in October 2019, with the CEO claiming that startup’s lending had increased by 6x. To date, it has disbursed about $250,000 a month of unsecured credit to 3,000 micro and small enterprises in Uganda, totaling more than $2 million (the CEO explained that this is due to outstanding collections, repayment rates, and customer retention.)

    From Numida to Nigerian ride-hailing startup MAX, pivot is usually the most critical point in a startup’s history, because it could as well signal the very end of the startup’s entire journey.

    The now dead East African delivery startup, CanGo, understands this better. CanGo’s accidental pivot to win the trust of investors probably went beyond the limit of the startup’s elasticity.

    Before altering the business line, the startup had been into transport operation in Rwanda since 2014, operating a commercial motorcycle business called SafeMotos.

    The pivot — or change in the company’s business model — in September of 2019 meant that it became a taxi-moto hailing company stretching operations to Kinshasa instead of a

    bike-hailing platform.

    The result of this move was completing 500,000 trips in Kigali, even when industry giants such as Uber were already on ground.

    In simple and clearer terms, CanGo changed its business strategy to meet the ends — leaving the rags behind and “bootstrapping with a brand new pivot”, but the results were not favorable.

    We dig deeper below, identifying and analyzing some of the most successful pivots in the African startup ecosystem, as well as the lessons learned from them.

    Pivot By African Startups Is In Most Cases Inspired By Learnings From Existing Products

    Unlike in most cases where changes in business models were forced by government policies or certain unforeseeable events, such as the COVID-19 pandemic, most pivots by African startups stemmed out of natural learnings by startup teams.

    This is central to the pivot experienced by Ugandan asset financing startup Asaak, which recently closed a $30 million pre-Series A loan and equity capital from Resolute Ventures (USA), Social Capital (California, USA), HOF Capital (New York, USA), Founders Factory Africa (South Africa), End Poverty Make Trillions (California, USA) , Decentralized VC, and a number of angel investors.

    Asaak’s original lending model focused mostly on farmers and SMEs. However, the firm eventually pivoted its focus to motorbike finance in 2019.

    The company’s co-founder and chief business officer Dylan Terrill said by financing these types of assets, Asaak is not just creating a pathway to vehicle ownership, which is good in itself, but also creating a stable source of income because of the reliance of drivers throughout the countries that the firm is in.

    Since the pivot in 2019, Asaak has financed the acquisition of 5,000 motorcycles and has begun supplying the operators with smartphones and fuel funding. This is perhaps what convinced the investors more to throw their weights behind the six-year-old firm.

    However, sometimes the learnings may take place in an organized, learning environment. This is the case with Nigerian e-pharmacy DrugStoc, which pivoted immediately a year after its incubation at Stanford’s Institute for Innovation in Developing Economies.

    Prior to that, DrugStoc’s business model was built only around the concept of a tech-based platform that connects manufacturers and distributors. The pivot meant that DrugStoc had to be a distributor itself.

    “I think we came out of Stanford with a better understanding of business modeling and value chains than we understood it as a pilot phase,” said co-founder Adham Yehiaon the incubation program.

    “We decided we need to get a distribution license, and to do this the pharmaceutical way. And to do this the proper way, we needed to buy directly from the manufacturers and create the value chains internally,” he said.

    The pivot into building an independent distribution network gave DrugStoc an edge. Barely five years after the pivot, DrugStoc connects 400 manufacturers with 3,200 doctors,

    hospitals, and pharmacies. The platform’s monthly sales have also increased by over 1,500 percent in the last three years.

    African Startup Pivots Almost Always Follow Funding

    The general rule appears to be that pivots usually precede funding, and must be supported by traction, but in order to shore up the uncertainties associated with pivots, some startups in Africa have preferred major product pivots to immediately follow funding rounds.

    Perhaps this is why it is still contentious that startups such as CanGo could not have failed if its pivot had come after funding. CanGo, for instance, pivoted into a taxi-moto hailing company, stretching operations to Kinshasa instead of its original bike-hailing model.

    The startup raised $1.1 million to support its delivery business from inception in 2015 up until it shut down in 2019.

    Therefore, its sudden transition into ride-hailing in an uncertain environment like the Central African markets, where the likes of Uber were already on ground, further put a major strain on the company’s resources.

    Barrett Nash, CanGo’s co-founder, admitted this in his farewell address, stating that “tectonics in venture capital investing change quickly.” “While investor enthusiasm and interest has been high, it has not translated to checks being written,’’ he said.

    One good example of this nature of pivot is that of Egypt’s food ordering platform Elmenus. The startup changed gears from food discovery to online food ordering and delivery services after it raised a $1.5 million Series A round led by Algebra Ventures in 2017.

    However, it must be noted that this is more prevalent with startups looking at making vertical integrations within the same industry. This explains why it was relatively easier for Elmenus and Uganda’s gnuGrid to effect such pivots.

    gnuGrid’s pivot was inspired by insights its gleaned from its solar energy business. The gnuGrid solar energy hardware is bundled with digital payments, predictive analytics, and so it was reasonable that the company had to make a seamless switch into a licensed credit reference bureau on the back of its $612,000 seed round.

    In most cases, investors may, however, be wary of investing in startups that have not gained considerable traction from their pivots. This is especially true if the startup is moving entirely into a new industry. When this happens, the pivots must almost always be backed by investors, because their funds may be exposed to too many risks. A good example of this is Nigeria’s Crowdyvest which moved away from its original model of allowing users to sponsor high-impact opportunities with high yields to a digital savings model. The change in the business model followed a new investment and support by the investors for the startup to pivot.

    Zambian fintech startup Zazu’s pivot in 2017 also followed a similar pattern. Before raising its last round of US$1.4 million, the startup made sure it altered its business model, entirely from that of an agritech firm allowing Zambian farmers with extra produce to connect with new markets, to that of a digital banking platform. Following the alteration in the business model, the startup’s fintech platform was used by over 1.1 million people prior to the investment.

    More Pivots Have Happened Within Than Outside The Same Industry

    It is usually very common for startups in Africa to pivot within the same industry than to move 360 degrees out of the industry.

    In most cases, startups have often relied on pivots to expand the categories of product offerings available to them, such as South Africa’s Carry1st, which pivoted from being a game studio to a full-stack game publishing, distribution, marketing, and operations solution; as well as Stockup, which moved from an online platform for the purchase and delivery of beverages to an on-demand delivery solution in order to expand the categories of its product offering beyond just alcohol.

    The table below shows that a majority of changes in the business models of African startups have happened within the same industries.

    S/N Startup Year Foun ded Sector Base Country of Operatio ns Year of Pivot Nature of Pivot Reasons for Pivot How Brand Was Managed After Pivot
    1 Asaak 2016 Asset Financing Uganda 2019 From lending to farmers and SMEs to financing motorbike s Revenue from motorbik es riders more stable.
    2 MVX Nigeria 2019 Shipping Nigeria 2020 From digital vessel marketpla ce to digital freight booking, fintech. Uncertai nty in oil price and COVID-1 9

    pandemi c.

    Changed name from MVXcha nge to MVXtran sit
    3 Elmenus 2011 Food & Delivery Egypt 2018 From food discovery to online food ordering and delivery services. Pivot followed after a

    $1.5

    million Series A led by Algebra Venturesi n 2017.

    Pivot was necessar

     

     

                  y to expand the company ’s market size.  
    4 WaystoCap 2017 Marketplac e Morocco 2020 From cross-bor der marketpla ce to local marketpla ces in Morocco, Ivory Coast, and Togo focused on retailers  

    WaystoC ap noted that pure cross-bor der marketpl ace was not best for servicing SMEs

    needs in Africa, because it created than eliminate d more middlem en.

     
    5 mPedigree 2007 Anti-counte r-feiting Ghana 2013 From certificatio n service for organicall y grown fruits and vegetable s from Africa to an

    anti-count erfeit product verificatio n service.

    Previous products relied on in-kind investme nts and so could not generate revenue. Rebrand ed from Wospro to mPedigre e following the pivot.
    6 mPharma 2013 Healthcare supply chain Ghana 2019 From building software solutions for healthcare To expand market opportuni ties. Retained mPharm a brand, but created product

     

                to a more comprehe nsive coverage of the entire African healthcare through QualityRx franchise, Bloom, etc.   suites under the brand.
    7 Diool 2015 Fintech Camero on 2017 From mobile recharge retailer to payments solutions for customers and their suppliers.  

    Pivot followed discovery that financial services access was the pain point of its target users in Cameroo n

     
    8 Zeew 2017 software-as

    -a-service (SaaS)

    Egypt 2020 From delivery of goods and foods to a software supplier in the food and beverage (F&B)

    market.

    Necessit ated by the COVID-1 0

    pandemi c.

     
    9 MAX 2015 Mobility Nigeria 2019 From

    bike-hailin g to logistics.

    Governm ent ban on

    bike-haili ng in Lagos, Nigeria.

    Retained name.
    10 Traindemy 2018 Edtech Nigeria 2019 From Pivoted  

     

                consulting to a digital platform for vocational skills. after taking part in the Injini ed-tech accelerat or in Cape Town, SA.  
    11 MarketForce 2018 Retail-tech Kenya 2018 From software company to

    retail-tech, although both are still running simultane ously

    The company ‘s CEOTes h Mbaabu thinks there are more opportuni ties with its

    retail-tec h model.

     
    13 Koko Networks 2013 FMCG Kenya 2022 From a biofuel supplier to selling FMCG

    products through a new tech platform.

    To leverage its existing penetrati on of low income consume rs in Kenya. Pivoted under a new name Koko Club.
    14 BitSika 2019 Blockchain/ Cryptocurre ncy Ghana 2019 From donation crowdfund ing platform to

    cross-bor der crypto remittance

    Necessit ated by the need to tap into the new crypto industry. Retained name.
    15 Rensource 2016 Solar Energy Nigeria From focus on residential buildings to larger systems that power Need to expand market Retained name

     

                urban centers    
    16 Zazu 2015 Fintech Zambia 2017 From agritech allowing farmers with extra produce to connect with new markets to digital banking CEO

    Perseus Mlambo said Zazu was hired by a client to move money for them on a regular basis, and while researchi ng the banking industry, they develope d Zazu Pay, a better offering.

    Name altered to Zazu Pay
    17 SAMA 2015 Artificial Intelligence Kenya 2016 From non-profit to profit Demonst rated need to generate revenue Name retained
    18 Yellow Card 2016 Blockchain/ Cryptocurre ncy Nigeria 2019 From the original bitcoin gift card model to a crypto-bas ed agency banking firm Founders were inspired by a man they at a Wells Fargo who was trying to send

    $200

    dollars to his family in Nigeria

    Name retained
    19 PAPS 2016 Logistics Senegal From a consumer

    -to-consu mer

    The customer to customer Name retained

     

                logistics model to a business-t o-busines s mode model made it difficult to accuratel y estimate the delivery flows in the space.  
    20 Gozem 2018 Mobility Togo 2021 Moved vertically from core mobility to e-commer ce, fintech and logistics Compelle d by the COVID-1

    9 to alter its business model

    Name retained.
    21 DrugStoc 2015 E-pharmac y Nigeria 2017 From a tech-base d platform that connects manufactu rers and distributor s to becoming a distributor itself. Pivot came after a year of incubatio n at Stanford’ s Institute for Innovatio n in Developi ng Economi es. Name retained.
    21 Frain Technologies 2021 Saas Nigeria 2021 From offering APIs to businesse s to offering webhooks infrastruct ure to developer s API

    business lacked economi c feasibility

    . The team discover ed that webhook s were a common issue among startups

    Launche d a flagship product “Convoy” in response to the new business model.

     

                  looking to establish APIs.  
    22 Carry1st 2018 Gaming South Africa From game studio to a full-stack game publishing

    ,

    distributio n, marketing, and operations solution.

    Need to expand market opportuni ties
    23 SeamlessHR 2018 Recruitmen t Nigeria Seamless HR was founded after the team launched numerous prototypes of Insidify, a job aggregato r and company review site. Insidify, accordin g to the founder, was not profitable and did not have the flexibility to scale across Africa. Name changed from Insidify to Seamles sHR
    24 ANKA 2016 Ecommerce Cote d’Ivoire 2021 Moved vertically from a marketpla ce for Africa-bas ed and

    -inspired fashion, clothes, accessori es, arts, and crafts to SaaS mobile infrastruct ure for monitoring sales and

    The founders discover ed that merchant s on the Afrikrea platform were also active on other platforms

    ,

    including websites and social media.

    Changed name from Afrikrea to ANKA

     

                inventory, as well as making payments. Hence it was only natural for them to create another platform, ANKA.  
    25 Payourse 2019 Blockchain/ cryptocurre ncy Nigeria 2021 From a basic platform that collect wallet addresses and then generate shareable link to wallets, remittance s, and liquidity  

    Arose from the learning that the company while creating infrastruc tures for shareabl e links, has also created infrastruc tures powerful and flexible enough for other business es to incorpora te, build, and prosper on.

    All products consolida ted under a parent company Payourse

    .

    26 Lamma 2020 Ecommerce Tunisia 2021 From ridesharin g to ecommerc e & logistics Pivot after taking part in the Flat6Lab s Tunis accelerat or program me.  
    27 gnuGrid 2019 Solar Energy Uganda 2021 From using Pivot came Re-regist ered as

     

                AI-optimis ed sensors to monitor solar systems and collect data on power usage

    to a licensed credit reference bureau

    from insights gleaned from its solar business.

     

    gnuGrid’ s hardware is bundled with digital payment s, predictiv e analytics, customer profiling and data manage ment, among others, to help solar compani es operate more efficiently at lower cost.

    gnuGrid CRB

    Limited

    28 Numida 2017 Fintech Uganda 2019 From enabling traditional MFIs to provide unsecured credit to semi-form al businesse s to lending to micro and small businesse s directly. Although Numida’s database was valued by microfina nce banks, Numida’s customer s were turned down due to a lack of collateral

    . As a

     

                  result, Numida stopped partnerin g with traditiona l MFIs and began doing it on its own.  
    29 Crowdyvest 2019 Wealth manageme nt Nigeria 2021 From allowing users to sponsor high-impa ct opportuniti es with high yields to a digital savings model Investors desired the company to become a digital savings company
    30 Sabi 2020 B2B retail Nigeria 2020 Spawned out of Rensourc e Rensour ce was compelle d to set up Sabi at the height of the COVID-1 9
    31 Wallettec 2013 Sports betting South Africa 2020 From a mobile money integration company to sports betting The idea to pivot came from working with its gaming clients and local partners within each country, for whom they develop  

     

                  custom tools and payment channels

    .

     
    32 Fastvan 2015 SaaS South Africa 2018 From an e-courier platform targeted at individual consumer s to an end-to-en d,

    on-deman d SaaS platform for logistics firms.

    Based on its learning from learning a B2C

    logistics business

    33 Stockup 2013 Ecommerce South Africa 2017 From online purchase and delivery of beverages to

    on-deman d delivery

    To expand the categorie s of product offering beyond just alcohol.
    34 The Student Hub 2015 E-learning South Africa 2016 From a platform for the buying, selling, and renting textbooks to

    e-learning

    .

    The Student Hub was revenue- making through its textbook s division, but decided to start afresh with

    e-learnin g.

    Launche d a new product, ERAOnli ne following pivot.
    35 Bazar 2015 Retail Manageme Nigeria 2016 From an online Traction and

     

          nt     virtual marketpla ce to a provider of

    cloud-bas ed retail managem ent and PoS software for small businesse s

    feedback from Bazar’s customer

    s. As a marketpl ace, Bazar struggled to compete with the likes of Jumia Marketpl ace and Konga Seller HQ.

     
    36 Beam 2014 Fintech Ghana 2015 From facilitating remittance s via bitcoin to allowing Ghanaian s abroad to pay for gifts and bill payments back home to The assumpti on by Beam that its undercutt ing other remittanc e services would lead to large uptake of bitcoin across Africa forcing co-found ers to scrap the bitcoin as a means of payment.
    37 Safeboda 2017 Ride-hailing Uganda 2022 Moved into fintech from

    ride-hailin g

    To expand market horizons Operatin g new arm under the name Guinnes s Tech Uganda

     

                    Limited
    38 Swoove 2016 Logistics Ghana 2021 From website building to delivery  

    After a year of working on the website building platform, the team realised that a major problem for the startup’s customer s was delivery

    — it was expensiv e and not easily accessibl e, making the platform incredibly difficult to grow, the CEO

    Kwaku Tabiri said.

    Name retained
    39 Gokada 2017 Ride-hailing Nigeria 2019 From

    ride-hailin g to logistics and delivery

    Following the ban on commerc ial motorcyc les in Lagos, Nigeria’s commerc ial capital  
    40 Gloo 2012 E-commerc e grocery services Nigeria 2017 From

    e-commer ce grocery services

    Necessit ated by the economi Changed brand name to Gloopro.

     

                to B2B

    e-procure ment that supplies large and medium corporate s everything from desks to toilet papers

    c downturn at the time.

    Then, an e-procur ement request by Unilever, an old client of Gloo cemente d the pivoting idea in 2017.

     
    41 RideLink 2017 Transport and logistics Uganda 2018 From business-t o-custome r (B2C),

    pivoted to business-t o-busines s (B2B)

    Accordin g to CEO Daniel Mukisa,t he B2C customer acquisitio n costs were “quite high”.

    This, he explaine d, was further compoun ded by the fact that the RideLink had “a lot of competiti on” from already establish ed

    ride-haili ng platforms

    .

                     
                     

     

    How African Startups Handle Brand Configuration After Pivots

    In most cases, startups after pivots, have had to introduce new product suites to reflect the changes.

    Immediately after pivot, Nigeria’s Crowdyvest, for example, introduced new products such as Flex Savings, Vault Savings, Pace Savings, Flex Dollar Savings. In majority of the cases, startups relaunch under different names.

    However, where the new industry the startup is exploring requires a new operational license, the startup may bear a different name entirely. This is the case with Ugandan ride-hailing startup Safeboda which recently acquired a fintech license under a new name Guinness Tech Uganda Limited.

    This article first appeared on Afrikanheroes.com, written by Charles Rapulu Udoh, a Lagos-based lawyer and writer.

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