Silicon Valley is one of the most famous business places in the world. This is the home of legendary mammoths like Facebook, Google and Yahoo, who tread the earth and domineer wherever they go.
This part of the San Francisco Bay area is one of the wealthiest areas in the United States and is known for the many technology companies that have either started in the area or have offices there.
But what makes these companies so successful; and can Zimbabwe and the rest of Africa stand toe-to-toe with such companies and infrastructure given current challenges?
What does it take for a company to go from Start-up to Unicorn in our current environment?
A unicorn company, in the world of business as Investopedia has aptly summarised it, is a company, usually a start-up that does not have an established performance record, with a stock market valuation or estimated valuation of more than $1 billion.
To shoot a company into the unicorn stratosphere, however, usually needs an aggressive three-step tactic called the Push-Markup-Backfill strategy. In summary, the Push is a ridiculously ambitious growth plan outlined by companies with their investors, the mark-up is an enormous funding round that values the start-up at a valuation that assumes flawless execution of the growth plan outlined in the “Push” and the Backfill is the small period of time where the company needs to execute the plan and live up to the value they pledged to create.
This means there has to be an environment, economy and ecosystem that can participate in such risky strategies. Africa only saw the emergence of its first “Unicorn” company coming out of Lagos, Nigeria namely Jumia (formerly known as Africa Internet Group) during the second quarter of 2016.
The company, nicknamed Africa’s Amazon, was valued at $1,1 billion in its last round of funding which saw investment from Goldman Sachs, Rocket Internet (AIG’s parent company) and MTN Group.
The Africa innovation report by Liquid telecom released earlier this year claimed that unicorn companies will likely come from its five “Africa Kings” countries which are currently leading the continent in digital innovation, namely; Kenya, Ivory Coast, Nigeria, Ghana and South Africa.
Zimbabwe sadly did not make the list, but given the country’s repositioning to focus efforts on economic reformation, there may be a glimmer of hope for innovative start-ups looking to enter the investment funding rounds.
Realistically though, the environment is not yet as conducive as we would hope. We do not have a “Silicon Valley”, neither do we yet have similar financial and practical resources.
“Silicon valley will mentor you, finance you and support you from concept to market. If you are starting up here you have to understand the landscape otherwise you will make a good product for a wrong market.” said Chad Mhako (MBA), a Zimbabwean deal structuring, strategy and business development expert.
Entrepreneur, Douglas Mopao, is however, optimistic about the chances of starting a company that can reach unicorn status in Zimbabwe, “by building on existing projects and services offering an innovative angle and using a blue ocean strategy.”
A blue ocean exists where no firms currently operate, leaving the company to expand without competition. Companies can innovate or expand in the hope of finding what’s called a blue ocean.
Indeed Zimbabwe does present fertile ground for problem solving creating opportunities to develop innovative tech solutions and uncovering several blue oceans.
“People may say due to politics and the economy that it’s impossible – until it’s done. I believe that it is entrepreneurial business acumen and stamina rather that are lacking. I suggest we come out from behind these shields and think of start-up solutions that are made for this kind of environment” says Tendai Farai, a Zimbabwean media and fashion entrepreneur.
One of the major issues that have posed a threat to the fostering of innovation and effective investment in different sectors of the country is corruption. With fund money allocated by the government and other investors being misappropriated and externalised, there has been a serious haemorrhaging that not only hurts our local content creation, but also the faith of investors in how their investments are put to work.
This needs to be addressed effectively beyond the pen and paper. Established companies also need to get involved in the creation of a nurturing economy by actively participating in the development of innovative solutions to both old and new problems.
Regulatory Sandboxes provide opportunities for start-ups to develop technology than can revolutionise our finance and banking systems to meet 4th Industrial Revolution standards.
Innovation hubs should not exist in donor funded isolation but with the participation and support from established corporate and governing bodies.
From health and medicine, through experienced bodies like CIMAS, agriculture through giants like Seed Co and finance through elders like Old Mutual, there has to be an active investment by all capable establishments to see Zimbabwe take a place among the “Africa Kings” of Innovation and birth unicorns that swim effortlessly through blue oceans. After all, it takes a village and the guidance of a few elders to successfully raise a child.