Top 10 reasons why African tech start-ups struggle
Given Facebook’s turbulent entry onto the stock market (with shares recently falling 4% to $20,04 and Zuckerberg’sreported financial loss of $423 million, there are lessons to be learnt about dabbling in technology and establishing a business. The saying ‘be careful what you wish for’ comes to mind.
Business analysts would agree that there are risks to any venture, of any size and focus, and approach certainly matters – the question of where African tech start-ups fit into the bigger picture warrants closer inspection.
What does it really take to establish a credible, sustainable technology-focused start-up business in Africa? And, once established, can these businesses seriously compete for market share?
Before any attempt can be made to answer these questions, those behind business incubators or the business of building business, warn that it is critical to differentiate between the many forms that a tech start-up can take.
There are product-centric businesses that are designed to leverage off learning, science and factual reports to reduce product development cycles and source customer feedback. These are classified as ‘Lean Startups’. There are those that use technology extensively to get up and running, but are essentially squarely focused on other industries. These are startups, yes, but not strictly speaking tech startups.
“Tech startup’s take many forms and good reporting would be cognisant of this fact. Different types of tech businesses will experience different challenges so the question itself is broad,” explains Pavlo Phitidis, CEO of Aurik Business Incubator (Pty) Ltd.
Speaking from a formulations sector point of view, Colin Mkhonza from Chemin and Secretary General of SABTIA(The Southern African Business and Technology Incubation Association) identifies a lack of innovative ideas and seed funds as two of the main contributors towards the difficult situation small-to-medium sized businesses find themselves in.
From their responses below, we are able to deduce the real challenges African tech start-ups face in finding their feet and maintaining balance.