Executive Summary

The evidence is indisputable: high-growth scaling ventures are game changers. 

Scale-ups are the ventures that: 

• Create the vast majority of new jobs in an economy;

• Generate the most value in the form of financial, economic and social returns;

• Drive innovation and shape ecosystems;

• Incubate and develop talent pipelines; and

• Spawn the next generation of thriving scale-ups and the experienced entrepreneurs that create them.

Africa needs more startups that transition to scale. Many more. 

But scaling is rare. And difficult. All the more so in sub-Saharan Africa, where large populations do not equate to large addressable markets, necessitating very early (and risky) expansion into new markets in search of the critical mass of customers needed to raise funding and scale a business. 

Whilst there are some universal scaling principles that can and should be applied, there isn’t a formula for scaling. Because it isn’t pure science. On the contrary, scaling is predominantly an art: a unique blend of inputs, decisions and actions that is different for each scaling business. 

The African venture builder

Through our research, we have observed a range of common characteristics shared by most African venture builders:

1. Pioneering innovators: Adaptive wayfinders who are leading scaling expeditions without precedent or playbooks.

2. Early internationalists: Expanding across African borders at an early stage to increase consumer and market reach and drive growth. 

3. Infrastructure builders: Vertical and horizontal stack operators, laying the pathways which governments have failed to build, stimulating a new generation of startups that build on that infrastructure.

4. Long-game players: Scaling takes longer, for multiple factors. More gazelles and camels, less unicorns and exits.

5. Resilient bootstrappers: Under-capitalised, historically neglected by both traditional and institutional finance.

6. Institutionally detached: Driving change without the government or corporate support that characterises and catalyses more developed markets.

7. Ecosystem takers: Take as much as they can from the ecosystem - especially from accelerators, the operational value of which is questioned - with limited willingness to pay for value-adding services.  

8. Scaling novices: Limited experience in the operational mechanics of building a high-growth venture, which threatens both long-term sustainability and investment returns. 

9. Impact generators: Addressing deep social challenges by developing new markets with products consumers need, rather than want, even if impact obligations remain non-formalised.

10. Experience hunters: Constantly searching for affordable but experienced talent from a shallow pool.

These uniquely African characteristics demonstrate the extent to which successful entrepreneurs have had to adapt in order to survive and thrive in the incredibly challenging macro socio-economic contexts in which they operate. 

Conditions count 

Complex underlying structural barriers - legal, regulatory, political, cultural, institutional - not only make it much harder to scale, they also increase the cost of capital, the demand for which is much higher than its supply. Alternative financing models are embryonic. The African entrepreneurial ecosystem is highly dynamic. It’s organic and messy, and rapidly evolving. 

It has been said that “tomorrow belongs to those who can hear it coming”, which is why we have acknowledged in Figure 1 a number of prevailing trends and indicated some foresight factors. This is to help assess some key patterns and contextual factors relevant to ventures which are attempting to scale. We encourage greater cross-sector investment in scenario planning, technology visioning, and futures work, to predict and plan change in order to foresee (and mitigate) challenges on the horizon. After all, those inventing the future would benefit from a better understanding of what it might look like. 

More Rift Valley, less Silicon Valley 

It is little wonder then that Silicon Valley solutions rarely work in the African context, and certainly not at scale. Whilst the high-growth-at-any-cost ‘blitzscaling’ mindset has worked very successfully in other markets, it does not work as well in Africa, where conditions and needs are very, very different.

We have developed 15 goals to guide the evolution of African accelerators to better serve and nurture scale-ups. We believe that there is no ‘African model’ - there simply cannot be, in the context of Africa’s size and diversity - and that delivery models must be adapted and localised, guided by the goals we have articulated.

Towards a more supportive enabling environment for scale 

Stakeholders need to work together to define new pathways that are better suited to local contexts. Ecosystem-driven, inclusive, decentralised participatory models lead to breakthrough-thinking, and stand contrary to Africa’s dark legacy of colonisation.

There is a ripe opportunity for stakeholders to reflect on the lessons learnt from the evolution of the Big 3 markets (Nigeria, Kenya and South Africa), and approach ecosystem development in the ‘up-and-coming’ country markets in such a way that they are better positioned to generate the volume of successful scale-ups required to move the socio-economic impact needle.

Scarcity of data and research must be addressed. The ecosystem must build an accessible repository of data, knowledge and insights to ensure continuous learning and improved impact measurement. Without a dedicated effort such as this, efforts to understand and solve problems will have limited impact. 

In our view, a strategic response to the status quo is needed, ideally an agile solution that is co-created by the ecosystem for the ecosystem. We propose a dedicated commercial scaling community of practice and think-tank advisory entity, which:

• Mobilises and disseminates research;

• Develops policy against emerging technology;

• Tests and/or sandboxes ideas; 

• Develops case studies and best practice;

• Coordinates ecosystem interventions, especially in up-and-coming markets;

• Acts as a repository for information and guidance on entering new African markets;

• Performs an independent, objective ‘clearing house’ function;

• Drives ecosystem talent development initiatives; 

• Provides guidance to investors on ‘Capital Plus’ approaches to improve non-capital support to scale-ups; and

• Leverages and amplifies existing networks. 

Providing the right support at the right time to scaling ventures

At the individual venture level, our research indicates that ventures can improve their prospects of commercial success by understanding the mechanics of effective scaling (as described in this report) and applying and adapting these universal truths to their unique context. Priority intervention and support areas emerging from our research include the following: 

• Leadership and management coaching, support and mentorship for leadership teams, as well as ventures’ next generation leaders;

• Improved governance and more active engagement of coaching-style boards and advisory committees;

• Better risk management systems, including regulatory strategies;

• Increased adoption of well-understood business models, which fare better in poorly understood markets;

• Improved people capital management, from talent acquisition to systems to culture to learning & development;

• Integration of an innovation culture; 

• Continuously updated playbooks that document institutional memory, especially in high-risk areas like internationalisation strategies;

• Improved data management and results tracking through adoption of dashboards, key metric indicators and the like.

Our research indicates a disconnect between the support that scale-ups need and want, and what they receive. We have developed 7 innovative scaling mechanics to guide ecosystem support actors towards closing that gap.   

A comprehensive resource for the scaling community 

Our Scaling in Africa report is the most comprehensive analysis to date of the African scaling ecosystem. Designed as an applied research study (i.e. to identify pragmatic solutions to a set of specific problems rather than a theoretical academic inquiry), our goal is to see actionable results offering answers to key challenges, which can assist various actors to make better, more informed decisions about where to apply the right type of support for improved results at the macro, ecosystemic and venture levels. 

We applied a systems lens to ensure a holistic view of the challenges facing the scaling ecosystem, enabling us to explore complexity, identify inter-connectedness, and design actions in more systemic ways. 

We hope that this site will be used as an ongoing reference and resource, and have sought to ensure adequate signposting to facilitate this. 

At the start of each section, there is a content index to help signpost navigation, as indicated by the sitemap in Figure 2.