Article 1, Part II - Mapping startup support organizations, their positionning and their models

In Part I, we have seen how the landscape of SSOs got structured around key stakeholders with skin in the game, providing a clear strategic framework that is then declined in clear objectives, KPIs, targets and programs. In Part II and III, we will look distantly at the composition of the African landscape of SSOs, understand the positioning of its key players, highlight the main differences with their international counterparts and where these differences have led us now.

PART II - IN AFRICA, FINDING A RELEVANT POSITIONING AND FOCUSING ON CLEAR TARGETS IS PARTICULARLY DIFFICULT

Understanding African SSOs requires internalizing two simple facts.

First, Africa’s tech startup ecosystems are still young overall. Napkin math says most of the ecosystems hatched nearly 10 years ago. As a proxy, one of America’s most storied VC firms, Sequoia Capital, was established over 50 years ago.

Second, Africa is heterogenous. The continent’s 54 countries vary drastically in terms of market sophistication, political system, talent presence, infrastructure quality, capital availability, not to mention culture… On the other hand, the “West” (North America and Europe) are relatively uniform in those aspects.

These two facts have influenced how the African SSO landscape has evolved.

A complex and heterogeneous reality on the ground

Startups basically need the same ingredients, wherever they are born.

They need capital, they need talent, they need a market, protected by a stimulative and protective regulatory framework, they need information, and finally they need a sufficient infrastructure to move their goods, people, money and knowledge around. A conducive environment would present a consistent level for each of these ingredients.

African countries are more or less equipped with these ingredients. Surely less than their Western counterparts. But each country presents a different picture, making it more or less conducive to the appearance of high growth ventures.

African SSOs are born in these different realities and witness to the obstacles they mean to early stage founders. By design, African SSOs were born as ecosystem gap fillers, bringing together the missing pieces in the ecosystem to give fair chances to their founders.

As a result, African SSOs are not only startup support organizations, although they are judged only on that aspect.

They often carry several mandates that can include: ecosystem building, the provision of business education, of some sort of capital, supporting SMEs and very small businesses and / or finally supporting startups.

52% of surveyed SSOs say they engage in all four of these activities. This is not feasible. Each of these activities is a full-time job and requires a distinct skill set.

On another note, YC, TechStars or any other Western-based SSO wouldn’t have to worry about juggling these different tasks.

Taxonomy confusion

African startup ecosystems’ youth makes it hard to engage private capital. Indeed, juicy tech startup exits on the continent are few. And that’s what investors are looking for. African SSO operators thus have to scour for different, less commercial-minded funding sources.

Enter DFIs, NGOs and impact investors for whom immediate financial returns have less importance. They fund most African SSOs.

These institutions’ “impact” objectives, such as job creation, women empowerment or informal business support, and the complex reality on the ground in most countries, where the type of businesses to support includes anything from roadside vendors, to SMEs, to startups, has created a general taxonomy confusion.

Most African SSOs are prone to mixing these businesses in the same program, sometimes encompassing all of them under the “startups” banner. This reinforces confusion.

In our survey, 51% of SSOs claim they accompany both informal entrepreneurs as well as startups. This means one of two things: either the SSO hasn’t well-defined what a “startup” is or they are actively accompanying two diametrically different businesses. In any case, something’s off.

For the record, we define a “startup” as a company with stated high-growth potential and ambition.

Many African SSOs have adopted a hazy definition of “startup”, which includes both SIM card vendors and university students with an app idea. While laudable, mixing support for both of these fictional businesses is erroneous. This existing confusion is compounded by the appearance of VC funding in an overall scarcity, nudging every business to label itself a startup.

For “true” African startup founders, this has made it harder to figure out which SSOs are truly dedicated to their needs. And for founders who took the leap without necessary due diligence, has led to disappointment. 90% of African founders interviewed in one of Sendemo’s previous research (13 countries in Africa) said that SSOs yielded little to no value.

This marks the end of PART 2, Article 1. We have seen how the complex reality on the ground, along with the scarcity in funding, forces SSOs to each adopt a singular taxonomy and a strategic framework that serves both the reality they witness and their operational needs. In PART III we will try to map and categorize African SSOs based on their singular positionings. We will then reflect in the next articles on the challenges that they face and the good practices they could take inspiration from.

Stay tuned and follow Digital Africa, Sendemo and AfriLabs for the rest.