Startups more often than not fail
Startups, for the most part, are bound to fail. Research suggest that 90% of all startups fail, and this statistic drawn globally. Africa has within it some of the poorest countries in the world. This reduces the spending capacity available to the average African, as a result a good startup needs to be a great startup to succeed in Africa. This combined with institutional barriers means that startups in Africa face significant odds when trying to achieve sustainable profits.
Hostile’ Market
There are regions in Africa which experience periodic power shortages, poor internet connectivity, hyper inflation, weak governance and high taxation. This is often further frustrated by high levels of corruption, and governmental vested interests. Although this does not mean that businesses cannot succeed, it does significantly increase the likelihood of failure.
Businesses that do succeed tend to hold a monopoly, and an established relationship with consumers. As a result, new disruptive startups have a harder time establishing any type of foothold in the market.
Idealism
Due to the increasing shift towards digitisation, almost all new business ventures tend to have an online component to them, providing smart solutions to the needs of Africans. Now, if you have a computer, and cheap access to internet connectivity, it is easier to bring innovative ideas to market. However, issues arise when the market does not have access to connectivity. Although Africa is on average getting richer, some startups overestimate this development and misinterpret where this growth is coming from, consequently sowing the seed for future failure.
The solution
Although challenging this does not mean success is not possible. More often we read about African unicorns making inroads and presenting on the world stage. However, fundamental requirements such as market knowledge, a strong team with leadership to match is essential. Networking also forms part of the model for success as the world becomes more global.
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