How To Set Up A Business In Africa That Serves Customers Internationally

How to set up a business in Africa that serves customers internationally

Evidence suggests that Africa has made significant progress toward realizing its goal of becoming the launching pad for the vast majority of new businesses in the developing world. Africa, on the other hand, has a very different track record when it comes to sustaining and growing startups. Only a handful of African startups with global impact exist on the continent, with the vast majority of them operating in the technology sector.

When compared to Africa, the Western and Eastern hemispheres of the world are home to a plethora of multinational corporations that rely heavily on the African continent as a source of revenue. Taking the technology sector as an example, the United States has more than twice the number of pillar startups found in China, which is more than 100. Compared to other continents, African startups with recognition and financial muscle are few and far between, accounting for less than a quarter of the total number of startups on other continents.

According to the most recent data from Statista (2020), African startups are exploding, with Nigeria expected to have more than 3,300 startups by 2020, the highest number in the region and the highest number in Africa. In the same year, approximately 660 and 600 new businesses were established in South Africa and Kenya, respectively.

The deliberate effort required to expand a startup's reach beyond Africa in order to connect with customers on a global scale is a prerequisite for success. Existing factors, such as native African migration to other continents and universal needs shared by many people regardless of race or color, necessitate this action.

African startups can be structured in a variety of ways to make them more attractive to foreign investors. These strategies include channel, value, and investment strategies, among others.

Channels of Distribution

• Make use of technological solutions: In today's world, it is difficult to have an impact without incorporating some element of digitisation into it. When undertaking a global quest without a remote strategy, the results are likely to be delayed and often expensive processes; however, including technology in startup activities makes operations more efficient and effective from the point of showcasing solutions to the point of delivering value to customers.

Value Strategy

• Create a product that is universally applicable: Consumers purchase products that meet their specific requirements. African startups should consider providing solutions that are applicable beyond their immediate geographic region, as there is a demand for such solutions on a global scale. Keep in mind that target markets are dispersed across a wide geographic area. Customers could be found in any part of the world, from the smallest to the most populous.
• Adding value to regions that have specific requirements in relation to the proposed value includes the following: A startup looking to expand its customer base can create value that is tailored to the lifestyle and culture of the region in which it operates. Seek out areas that are in desperate need of the services that a startup can offer.
• On a global scale, there is room for cultural diversity and universality, which can be achieved by removing the qualifier "African." The "African" clause in this contract embodies the ideology that a business must originate, build a team, grow, and die entirely within Africa, without branching out to other continents or establishing branches in other countries. As a result, African potential remains confined to the continent, but expansion to other continents exposes African startups. Starting a business in Africa requires the ability to collaborate with others and promote oneself on a global scale.

Relationship Management Strategy 

• Seek international assistance: Business networking is a powerful tool for expanding a company's reach worldwide. Although this technique has been tested and proven to be reliable even when businesses are operated in the traditional manner, it is not recommended for all situations. The power of "Word of Mouth" helps businesses spread faster than ever before. The development of relationships with international and federated organizations allows the sale of business solutions to immediate networks that share common interests with theirs, resulting in the acquisition of new customers and revenue.

Investment (Financing) Strategy 

• In order to grow, a startup must go through a series of funding and investment sourcing stages, which range from Series A to Series B and finally Series C. Investors and sponsors must meet a specific set of requirements at each stage. Due to the fact that this strategy is typically competitive, startups that excel at each process must put forth more effort. Only a small percentage of African entrepreneurs make it past the Series B investment stage, putting a damper on the amount of revenue generated by venture capitalists. When African startups pitch their solutions to a global customer base, they can compete for global investment slots, grants, and sponsorship, which will increase their exposure to a broader customer base.