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What African fintech startups can teach Silicon Valley about longevity

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14 hours ago

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Entrepreneurial firms have traditionally suffered from high levels of failure. According to Bureau of Labor Statistics data for 2022, cited in Harvard Business Review, Approximately 65% ​​of companies in the US alone fail within the first 10 years, and only about 25% survive for 15 years or more. These grim numbers raise the question: What factors separate firms that survive and thrive from those that fail?

One of the most traditional small business longevity strategies is to acquire financial resources. While this approach has gained popularity in the West, especially among tech startups in Silicon Valley, it hasn’t solved the startup’s survival problem. In fact, it seems to have made things worse. Statistics show that US companies are raising the most capital and experiencing lowest life expectancywhile African companies raise the least capital and experience highest durability.

Our study reveals what might be causing these disparate results. Between 2022 and 2023, we studied over 200 senior executives in one of Africa’s fastest growing industries: fintech. We found that the secret may not lie in investor readiness, but change readiness: “the ability to continually initiate and respond to change in ways that create value, minimize risk, and maintain performance.” Fintech companies in Africa have shown a phenomenal ability to initiate change in their environment by increasing the inclusion of low-income populations in the financial system and access to financial services.

Three Misplaced Priorities

We found that Western entrepreneurs display three misplaced priorities that negatively affect their willingness to change and therefore their life expectancy. We illustrate an African perspective with Payhippo, Sycamore and Bankly, the top three African fintech companies we studied.

Targeting investors, not the market

The holy grail for most startups in the West is venture capital. At first glance, it seems that the influx of investment is enough to help the company survive in the nascent stage. Therefore, for so many six to nine monthsEntrepreneurs tend to focus on securing capital.

In accordance with IDEO, four major storytelling points are important to any entrepreneur: elevator presentation, origin story, presentation, and inside story. This is the conventional wisdom of the West. But in their rush to fundraise, many Western startups are neglecting a more important goal: market acceptance.

We have noticed that African entrepreneurs are focusing more on developing marketing materials such as sales pitches, sales letters or websites instead of prioritizing polishing their presentations and refining their presentations. For example, Sycamore took a lean approach to market entry and prioritized product development. By choosing to bootstrap in its early days, the startup freed itself to be more customer-focused in their marketing materials. The presentations, flyers, and online ads were aimed at targeted SME clients, not just the investor class. Based on this approach, Sycamore was able to operate primarily on customer revenue and organic cash flow for much of its first year of operation, rather than relying solely on equity funding.

Bankly’s storytelling strategy was to highlight their ability to meet customers’ key needs of security, reliability and trust with their financial products.

In the case of Payhippo, the company has always focused on direct communication with the client and used direct sales methods for the first two years. In their third year, they decided it was time to start telling their brand story through online and offline advertising. From video content to event sponsorships and sales galvanization campaigns dubbed “market storms”, their approach has always been customer centric. Reviews, for example, are one of the best ways to build a reputation, which is why Payhippo has focused on video content that shows how they help their customers on their business trips. Everyone loves success stories, and the videos helped potential customers understand what they would get after signing up, and also served as a presentation of the product to new users. The Payhippo brand focused on communicating with customers, which helped them improve their product, increase revenue, and expand their business.

Engage individuals, not communities

Western culture is individualistic, and while this trait can be helpful in generating ideas and innovation, it can be detrimental in building the strategic alliances needed to move beyond the idea stage. In accordance with V Journal of Venture Businessentrepreneurs in communal societies such as Africa have an advantage in acquiring resources because they can rely on memberships and relationships built with other firms.

Sycamore’s approach, especially to attracting loan clients, was largely based on closed networks built up over time. For example, the top five clients included former classmates and co-workers of the founders. Leaders used the old sales approach of making a list of professional contacts and then calling each person one at a time to schedule a visit or sell directly to them over the phone. While this took quite some time, it did help Sycamore find some valuable customers that they could serve effectively. This initial client base, combined with personal attention, has resulted in significant loyalty from these clients who have remained with Sycamore over the years.

The bank selected community influencers who could speak the language of their target segment, many of whom were semi-literate rural residents.

Similarly, Payhippo worked with associations and unions that represented the interests of potential customers and ensured brand presence in the markets and other clusters where their customers were located. Working with associations and sponsoring their events has solidified the brand among some of their most important client groups.

Celebrating external fundraising, not external verification

The close attention to capitalization that is characteristic of Western startups allows us to glorify capital raising as the main indicator of progress. According to Financial TimesIn the US, venture capital often pours into companies with untested business models, resulting in “irrational” valuation numbers. This is about stitch, a two-year-old authentication software startup with less than $1 million in annual recurring revenue when Coatue Management and other investors valued the company at $1 billion. Despite the scanned evidence of recognition and popularity in the market, this brought the company cherished tag “unicorn”. To avoid the inevitable downfall associated with this “overvaluation trap”, companies need to come up with fresher and more realistic narratives for valuation and value creation.

For most African startups, the holiday is not about meeting the investor’s agenda, but about meeting the external environment. Milestones such as certification, government approval, and operating licenses confirm that the company makes an impression and has an impact on the operating environment.

While the fundraiser gave Payhippo the opportunity to expand business operations, it was equally important to celebrate product milestones. In 2022, one of the founders created a thread about their collection rate is 97%. It went viral and gave them free product information in three publications. So Paihippo Recently acquired a microfinance bank (under approval at the time of writing) to advance its mission as a one-stop financial service for African businesses.

Similarly, Bankly celebrated its ability to overcome regulatory hurdles as well as user acquisition and transaction milestones such as the number of people they protected from loss. Longevity and the addition of key employees were also highlighted as noteworthy achievements.

The main highlight of Sycamore was Awarded with approval from the Federal Competition and Consumer Protection Commission (FCCPC).. The company sought to be recognized and fully vetted by regulators in order to gain wider recognition as a bona fide player in fintech, especially in lending. Being the first company to receive FCCPC approval in Nigeria certainly increased the credibility of the startup. This was cause for great celebration within the company, and press releases were issued during this period announcing the huge victory. It also showed governments and regulators that a startup could qualify. This is very important given that Sycamore operates in a fintech industry where trust is paramount.

. . .

The pursuit of legitimacy is a major challenge for entrepreneurs around the world. To ensure longevity, we encourage startups to embrace the following three priorities for African entrepreneurs:

  • Tailor the story for clients, not investors
  • Engage communities of stakeholders, not individuals
  • Celebrate specific milestones instead of raising capital

Stories like Sycamore, Payhippo and Bankly are not uncommon in Africa’s fintech industry. We have found that these three strategies are fundamental to ensuring that an entrepreneur is ready for change, as well as their ability to thrive by making a positive impact on society.

How ready is your business for change?

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BUSINESS

New bar exam puts DEI over competence

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12 hours ago

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May 20, 2023

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NextGen aims to “eliminate any aspect of our exams that may contribute to disparity in achievement” by testing fewer areas of law and less in-depth study of each subject.

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BUSINESS

Ukrainian President Meets Leaders, Group Clarifies China Policy

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13 hours ago

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May 20, 2023

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Ukrainian President Volodymyr Zelensky arrived at the G-7 summit in the Japanese city of Hiroshima, held talks with leaders, seeking the support of neutral powers, while relying on the support of the United States and its allies, while Ukraine is preparing a counteroffensive. Russian invasion.

In official meetings on Saturday, the wealthy G-7 democracies focused on China’s role in the global economy, unveiling a new mechanism to combat what they see as economic coercion and looking for ways to reduce risks to their supply chains from the Asian giant.

On the sidelines of the summit, a meeting was held between the leaders of four countries – Australia, India, Japan and the United States. The group is seen as a test of China’s assertiveness, and the meeting was originally scheduled for Australia after the G-7 was moved to Hiroshima after U.S. President Joe Biden interrupted his movement through the region to focus on debt ceiling talks with Republican lawmakers.

Ukrainian leader can visit Hiroshima Atomic Bomb Museum (19:10)

Japan is trying to arrange for Zelensky to visit the Hiroshima Peace Memorial Museum on Sunday, national public broadcaster NHK reported. The facility was visited by G-7 leaders on Friday. It chronicles the devastation caused by a nuclear attack on the city in 1945 and has taken on a large symbolic role as Russian President Vladimir Putin threatened to use nuclear weapons in his war with Ukraine.

Zelensky may also give a speech in Hiroshima as part of his visit, NHK reported.

Zelensky meets with Modi and other leaders (18:45)

The President of Ukraine held talks with Indian Prime Minister Narendra Modi, one of the leaders of middle-power countries that have taken a more neutral stance on the Russian invasion. It was their first face-to-face conversation since war broke out in February 2022.

India has been a major buyer of Russian oil and weapons, supplying the Putin government with hard currency at a time when the G7 seek to defund the Russian economy. Zelenskiy also met with several leaders from Europe, some of whom he saw just a week ago while touring the region.

Zelensky met with Modi on the sidelines of the G-7 summit

Zelensky arrives at Hiroshima airport (15:44)

Zelenskiy stepped off a French plane at Hiroshima airport and shook hands with several dignitaries on the runway, live video footage showed. He entered the car, which was part of a large motorcade headed for the city under heavy guard.

The Ukrainian leader’s visit was not originally on the official schedule, as the presenter had previously stated that Zelenskiy was to give a speech via video link.

Zelensky will arrive in Japan and meet with guests of the G-7 summit

G-7 looks at China with economic coercion plan (14:23)

The G7 has launched a new joint mechanism to counter economic coercion, a measure primarily aimed at China’s alleged hostile actions. The leaders met on the issue, and their subsequent statement did not mention China by name, but described the rise in cases of economic coercion as “alarming”.

The joint mechanism will “address the growing and harmful use of coercive economic measures to interfere in the sovereign affairs of other states,” the UK government said in a statement. He added that China has used its economic power to “coerce countries, including Australia and Lithuania, into political disputes.”

G-7 eyes China with new joint efforts against economic coercion

G-7 seeks stable ties with China, “reducing risks” (14:14)

G-7 leaders have said they want a “constructive and stable” relationship with China, even as they advance steps to reduce reliance on Beijing for critical supply chains, according to a copy of the final communiqué seen by Bloomberg.

“Our political approach is not intended to harm China, and we do not seek to threaten China’s economic progress and development,” said a communiqué due to be released at the G-7 summit on Sunday in Hiroshima.

G7 seeks stable ties with China by ‘reducing risks’, communiqué says

Japan Promises Visa Waiver and Health Care Credit for Brazil (14:00)

Japanese Prime Minister Fumio Kishida met with Brazilian President Luiz Inacio Lula da Silva and informed him that Tokyo would begin procedures to exempt Brazilian citizens from visas for short stays, the Japanese Foreign Ministry said in a statement. Kishida also announced a 30 billion yen (US$217 million) loan to support healthcare and other sectors in Brazil.

Kishida talks about territorial integrity with Modi, Jokowi (11:48)

According to Japanese government statements, Kishida emphasized the importance of maintaining sovereignty and territorial integrity in accordance with the UN Charter in his meetings with Modi and Indonesian President Joko Widodo. He exchanged views with Brazilian President Luiz Inacio Lula da Silva on Ukraine and the situation in East Asia, the Foreign Ministry said.

The meetings took place as Zelenskiy was on his way to Hiroshima and after G-7 leaders released a statement on Friday demanding Russia unconditionally withdraw its troops from Ukraine.

Kishida Meets Modi for Negotiations (8:29)

Kishida met with Modi to discuss trade and economic relations. Modi, one of several other leaders invited to the G-7 meeting, is also due to speak with Zelensky in a Japanese city for their first face-to-face conversation since Russia’s invasion of Ukraine.

Biden looks at Ukraine’s $375M military package: Politico

Biden is set to announce a new aid package for Ukraine after meeting with Zelensky at the G-7, Politico reported, citing three U.S. and Ukrainian officials. The $375 million package will include additional artillery shells, armored vehicles and anti-tank weapons, according to Politico.

China warns Trudeau of “provocation” (4:19)

China’s ambassador to Canada urged Prime Minister Justin Trudeau to avoid further “provocations” as Canada weighs whether to launch a public inquiry into allegations of Chinese government interference in its elections.

Ambassador Kong Peiu said Canada should consider returning to a more independent foreign policy rather than following the lead of the US, its neighbor and biggest trading partner. He also warned against US attempts to ally with allies to resist “economic coercion”.

China warns Trudeau against ‘provocations’ after diplomatic spat

 

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Senators and Sam Altman, CEO of OpenAI, Discuss How to Regulate AI

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4 days ago

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May 17, 2023

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The fireworks that usually go off when tech executives testify before Congress were conspicuously absent from yesterday’s Senate AI hearings. Instead, lawmakers questioned Sam Altman, CEO of OpenAI, for three hours in what appeared to be a sincere attempt to understand the growing importance and dangers of artificial intelligence.

The central issue of the discussion was how Washington should regulate AI, and perhaps surprisingly, Altman and lawmakers on both sides came to more agreement than disagreement. (Another unexpected nugget: Altman says he has no stake in the sensationally growing artificial intelligence firm, the stunning Sen. John F. Kennedy, Louisiana Republican.)

Biggest surprise: Consensus to create a new AI agency. Altman proposed the creation of a new government agency that issues licenses for the development of large-scale AI models, safety regulations, and tests that AI models must pass before they are released to the general public.

Supported even by some Republicans, who usually refrain from expanding the federal government. Senator Lindsey Graham of South Carolina chose AI over a nuclear reactor, which needs a license to operate and regular testing. When Christina Montgomery, IBM’s director of privacy and trust, and another witness, suggested that a new agency was unnecessary, Graham moved back“I don’t understand how you could say we don’t need an agency to deal with the most transformative technology, maybe ever,” he said.

Witnesses and lawmakers have said other restrictions are needed. Altman and Montgomery said users should be able to exclude their data from being used to train AI services. Meanwhile, Senator Marsha Blackburn, a Tennessee Republican, has raised concerns about who owns computer materials that create AI models after training on copyrighted data.

And Montgomery added that consumers should be aware every time they interact with the chatbot. “No one, anywhere, can be tricked into interacting with an artificial intelligence system,” she said.

Legislators sought to avoid repeating past mistakes, including what they called a failure to rein in tech giants like Facebook. “Congress didn’t capture the moment on social media,” said Senator Richard Blumenthal, a Connecticut Democrat and chairman of the Senate committee that conducted the hearings.

But skeptics fear that Washington may again miss important nuances. when developing new rules. Sarah Myers West of the AI ​​Now Institute’s Center for Policy Research told The Times that Altman’s proposals don’t address how the technology is being used in policing, nor does it limit the speed of new product development near Silicon Valley.

The latter may prove difficult for some lawmakers: Delaware Democrat Senator Chris Koons said China is working on products that “strengthen the core values ​​of the Chinese Communist Party and the Chinese system” and suggested that US industry should serve as a counterbalance.

It’s unclear whether Altman’s collaborative approach will save the AI ​​industry from a Washington ban. Consider that some cryptocurrency executives have also called on Congress and regulators to create and refine rules for their companies, only to see the SEC take a hard line.

The work in Congress continues. Yesterday, in less visible Senate hearings, it was assessed how government agencies should use AIwhile the House Judiciary Subcommittee will hold a hearing today AI and copyright.

BlackRock will require employees to go to the office four days a week. Investment management giant new policy, compared to three days a week, is due to many Wall Street firms seeking to return to pre-pandemic work patterns. But the hybrid model still seems to be gaining momentum. offices are half empty.

US Attorney’s Office accuses former Apple employee of stealing trade secrets. Indictment, Weibao Wang’s accused receiving thousands of documents — including those related to the tech giant’s work on autonomous vehicles — as well as working for the US subsidiary of a competitor headquartered in China. This is one of the first prosecutions by a task force dedicated to protecting US critical technology.

The Florida government intends to sue Wall Street firms. Lawmakers yesterday presented the bill to the governor. Ron DeSantis, who allows the Florida State Council, whose work he assists, to move additional $18 billion in government pensions in alternative investments such as hedge funds and private equity. This may raise the question of whether DeSantis is really could receive campaign donations from financial leaders.

EU Member States are adopting the most extensive cryptocurrency regulations to date. The rules will require companies involved in issuing, trading or managing crypto assets in a block of 27 countries to get a license already in 2024. From 2026, the names of senders and recipients must be disclosed in crypto transactions. The move could put pressure on other countries, including the United States, to adopt similar rules to regulate the industry.

Markets looked volatile this morning as warnings of a deadlock on the debt ceiling in Washington put pressure on investors.

Almost no one was surprised that yesterday the negotiators failed to conclude a deal. Speaker Kevin McCarthy suggested an agreement could still be reached “by the end of the week,” but Senator Chuck Schumer, the majority leader, said bipartisan support would be needed. However, both sides agreed that a US default was out of the question.

Business is getting more and more worried. Over 140 leaders large companies, including Goldman Sachs and Pfizer, wrote an open letter to Congress warning of the “catastrophic consequences” of a default.

Meanwhile, some Senate Democrats wonder if McCarthy can bring his assembly together to make a deal. They are concerned that Republicans in the House of Representatives will not bow to their demand for massive spending cuts to address the country’s $31.4 trillion debt problem.

Debt ceiling confrontation poses a much bigger threat to the economy than debt argues Stephanie Kelton is professor of economics at Stony Brook University. Debate over the debt limit, she told DealBook, is “scarier” than in the past, though she still hopes an agreement will be reached.

US debt is fundamental No problem, Kelton argues. This assertion is based on her commitment to Modern Monetary Theory, which essentially states that a government’s debt is not a concern if it can print its own currency. In other words, the United States must spend heavily on social programs because it can easily pay off its own debt and never go broke. (The idea sparked heated debate.)

This message has received the support of progressive lawmakers such as Senator Bernie Sanders, independent of Vermont, and Representative Alexandria Ocasio-Cortez, Democrat of New York. That could make MMT’s commitment a political factor in the fight for the debt ceiling: lawmakers like Ocasio-Cortez. warned President Biden disagree with Republican demands to cut government spending, as this could provoke a backlash from his left flank.

— Noam Chomsky, professor at the Massachusetts Institute of Technology. When asked by The Wall Street Journal why he received about $270,000 from an account linked to Jeffrey Epstein.Chomsky said the money was part of an effort to reorganize his finances and did not include “a dime” from a convicted sex offender.

Elon Musk sat down yesterday long interview with CNBC after Tesla’s annual shareholder meeting, ostensibly to discuss the electric vehicle business.

Instead, the billionaire insisted on often-controversial opinions on a wide range of topics and refused to back down.

Musk defended his tweets even if they cost him money. The tech mogul has come under fire in recent days for George Soros’ sympathy for once-X-Men villain Magneto, and for being weighing about whether the man accused of organizing the Dallas mall mass shooting supported Nazi ideology.

“I will say what I want, and if the consequence is loss of money, so be it,” Musk said.

This approach could make life difficult for the new head of Twitter. Linda Iaccarino has been hired to help rebuild the social network’s advertising business, which was in crisis due to the digital advertising slump and advertiser concerns about layoffs and changes to content moderation caused by Musk.

Other points from the interview:

  • The billionaire once again poked fun at remote work, calling it “immoraland blaming the higher-paid knowledge workers — the “laptop classes,” he says — for pushing it while front-line workers still have to show up in person.

  • Musk said Twitter’s finances have been grim from day one, claiming the company only had $1 billion in the bank when it took over last fall and was spending $3 billion a year.

  • Tesla will face challenges in the next 12 months, with issues such as high interest rates and consumers cutting back on spending. But he did praise the company’s upcoming Cybertruck.

  • Musk also shared his concern that the Fed would cut interest rates too slowly; asked about fraud in the 2020 elections but admitted they weren’t stolen; and said he was no longer friends with Google co-founder Larry Page due to disagreements over the dangers of artificial intelligence.

The Times has launched a new audio journalism iOS app featuring our podcasts, stories from our journalists, columnists and critics about business, politics, technology and more. The app is now available to Times news subscribers. downloaded here.

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