To run a profitable business or startup, you need steady electricity, something most African countries lack. You need the internet if you work with technology… or are in 2015 with the rest of us.
You need a good transportation system, investors, a healthy financial system. You need a support system… people who don’t think you’re crazy for dreaming. Most importantly you need a market that’s flexible and open to new innovations.
African businesses have it tough!
Basic amenities like electricity and the internet are the biggest financial drain on capital. Building a million-dollar business in Africa is equivalent to a hundred-million-dollar business in the States. In Jay’s words in Empire State of Mind, ‘If you can make it here, you can make it anywhere.’
Here are five of Africa’s business outliers, compared with similar businesses in the States. Let’s imagine for a minute just how huge and global they could be if they weren’t in Africa.
Photo-sharing apps: Suba & Instagram
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Suba is an event-based photo-sharing app developed by Ghanaian developers, Nelson Klutse and Eric Hackman. It is available on the web as well as iOS and Android platforms and allows users at social gatherings to see and share photos in one central album making the photos accessible and shareable by everyone attending the event in real-time. No more mass emails with numerous photo attachments or WhatsApp and BBM sharing, Suba solves the problem of gathering all your cute pictures taken with different phone cameras at events you attend.
Suba has been around since September 2014. They have won numerous awards; received cash injections from international investors; and have been marketing through events and partnerships. But Suba is still yet to reach critical mass or gain continental acclaim. With traction of over 15,000 users, Suba is a product with all the potential of what Instagram already is.
Compared to Instagram…
Instagram was created in 2010 and purchased by Facebook in 2012 for US$1 billion. With over 400 million monthly active users, Instagram boasts 80 million photos shared every day and over 40 billion shared overall. That’s a lot of daily photo sharing! If you’re wondering who’s using Instagram (and not Suba), we’ve got the answer. Twenty-four per cent of the entire adult population and 59 per cent of those users use the app daily. Instagram has more users than Twitter at the moment and is worth over US$35 billion. This just proves how big the market of sharing photos really is.
Media distribution: Irokotv & Netflix
iROKOtv, the world’s largest digital distributor of African movies, began operations in 2010, and now has branches in Lagos, Johannesburg, New York and London.
While Netflix is changing Hollywood and the US, iROKOtv is making sure Nollywood won’t ever be the same again.
iROKOtv is a hugely successful company by any standard. It runs on a subscription model and has raised over US$25 million total in venture capital, making it one of the most heavily funded West African internet companies to date. The company’s audience is predominantly in other continents, with top five countries including the US, Canada, UK, Germany and Italy, because Africa’s internet speed is still comparatively slow.
The portal has over 5,000 movies presently, which equals an estimated 10,000 hours of content.
Compared to Netflix…
Netflix started its subscription-based service in 1999. They were offering about 100,000 movie titles, and catering to over 10 million subscribers by 2009. The company runs on a subscription revenue model, just like iRokotv.
And as of October 2015, Netflix reported 69 million subscribers worldwide, with more than 43 million subscribers coming from the United States alone. Netflix’s market value now stands at US$32.9 billion.
Blogs: Linda Ikeji & Huffington Post (Arianna Huffington)
Question: How do HuffPost and Linda Ikeji manage to corner and control massive site traffic and publish some of the most viral articles on the Internet?
Answer: Because they are go-getting business minds with laser-focused goals.
Linda Ikeji’s hustle started way early. She began modelling before she got admitted into the university. Before graduation, she had grown her modelling career into a modelling agency and made it into full-time business. After agency revenue plateaued, she decided to start a magazine publication called FM&B (Fashion, Modeling and Beauty). The venture was a bust as she never made any money from it.
She pivoted to blogging in 2006 and didn’t make any revenue from it either until four years later. Her blog is estimated to be worth N1.2 billion (about US$6 million), with an estimated market value of $3.3million. She ranks at 3905 globally on Alexa, with at least 42 million unique visitors a month. She’s gone on to pen a motivational book, It Takes You, and actively supports aspiring female entrepreneurs.
Compared to the Huffington Post…
Arianna Huffington started achieving early in her life as well. She aspired to be taken seriously as a writer but was constantly being rejected by publishing houses. She kept at it, and eventually published more than ten books. She launched the Huffington Post in 2005, with lessons learned from her first two websites, resignation.com and ariannaonline.com. Today, the HuffPo’s editorial staff numbers at least 50 and attracts over 100 million unique views a month, making it rank at 119 on Alexa.
The Huffington Post is estimated – by the New York Times no less – to be worth $1 billion.
E-commerce: Jumia & Amazon
Jumia is an e-commerce retail startup with an obvious goal to mimic Amazon’s business model by delivering a wide assortment of items, from toys to clothes and generators across the African continent. Jumia was launched in Nigeria in 2012, with funding from Rocket Internet company.
The next year, the company raised US$35 million follow-on funding from Millicom and became the first African company to win the World Retail Award. With an estimated total traffic net worth of $3 million, Jumia receives no lower than 1.4 million page views daily, and has warehouses in ten other countries, including: Egypt, Angola, Uganda, Côte d’Ivoire, Kenya, Tanzania, Cameroon, Morocco, Ghana and the United Kingdom.
Compared to Amazon…
Amazon is the most valuable e-commerce retailer in the world. The website ranks sixth globally on Alexa. Founded in 1994, the site is estimated to have total traffic net worth $401 million. Amazon receives at least 183 million page views daily, with 58 per cent of its total traffic coming from the United States alone.
Bitcoin payments: BitPesa & Coinbase
According to International Business Times, bitcoin payment is set to become the sixth largest global currency by the year 2030, with banks set to invest over US$1 billion in the industry in the next few years. The consensus is that bitcoin payments are set to become one of the major drivers of the finance industry in the near future.
Bitcoin remittance startup, BitPesa is a Kenyan company promising to help customers send money to Africa at a cheaper and faster rate. The service converts a sender’s bitcoin into physical currency, and disburses it to the recipient with a 3 per cent cut; which is cheap because traditional remittance companies charge on average 12 per cent of the funds being sent.
In February this year, BitPesa raised follow-on funding of US$1.1 million which takes their total investment so far to $1.7 million, within a year of launch. The young company is now focused on expanding to more African countries, starting with Ghana, Uganda and Tanzania.
Compared to Coinbase…
Coinbase, from the US, is one of the most prominent bitcoin companies. Early this year, it raised US$75 million in a single funding round, the largest ever for the industry. It has then gone on to launch the first US-based bitcoin exchange.
What do you think of the drastic differences in adaptation, recognition and revenue of these African versus United States companies? Most of the US companies were founded some time before the African companies, but do you think ours will be as successful as time passes? Share your thoughts at #TrueAfrica!