Nigerian Internet Startup Challenges- What’s to blame?
1. Konga Raised $75M was reportedly sold for about $10M
2.Efritin shut down operations after only 16 months.
3.Jumia currently valued at $ 1 Billon yet not profitable after over 5 years
4. OLX closes office in Nigeria, Possibly Kenya and Ghana too
I Believe the challenges are combination of these 5 things.
1. Distrust- The pay- on -delievry model leads to several returns- It is highly unsustainable
2. Logistics- Amazon relies on postal services to deliver products. BUT ecommerce operators in Nigeria have to setup/ sortout thier own logistics- The unit economics is not great.
3.Low literacy rates- Not everyone is that internet savvy.
4. open markets- I can easily buy stuff from the security man or from the road side
5.High cost of broadband- Despite the rapid penetration of internet services in Nigeria- It is still expensive.
So What Should Startups With Internet Ideas and Businesses Do?
1. Understand your business model- Your competitor may just be that little guy that you are overlooking
2. Depth before height- I personally favor organic growth
3.Avoid the “Na we get am” syndrome- Your staff doesn’t have to be family- Hire great staff, make strategic partners.
4. Startup- Do Not seek equity funds until you have exhausted all other options like Bootstrapping, grant and Small business loans.
Do you need strategic advise/consulting on venture growth and capital selection ? email me us at firstname.lastname@example.org
find us on instagram @thebusinessoutliers.