Market sizing for the africa startup


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A quick overview on market sizing tech in Africa. Startups should realize there are many ways to measure market sizes and they should not overly rely on top level macro economic data such as GDP figures and Africa generalizations. They should focus on emerging segments such as the middle class and watch important trends such as connectivity, urbanization and the role of women in tech when looking for opportunities. Go-to-market strategies, segmentation whilst relying on validating demand in the spirit of the lean startup approach are the important in convinging yourself and investors of the potential of the market. Always Be Learning.

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Market sizing for the africa startup

  1. Market Sizing for the Africa Tech StartupMbwana Alliy- Managing Partner, Savannah Fund @mbwana @savannahfund 30th January 2013
  2. Market Sizing & Why• How big is this and can we make money in the long Already outdated? term? Durable Companies• Is it worth your time (and investors)? Think opportunity cost.• Are we creating a market or disrupting one? Innovation• The difficulties tips in getting market data. Validate & adapt
  3. Growing or Not? • Have any of these economists been to Africa?• Why are they generalizing "Africa"?• Reminder: McKinseys SegmentationThe level of spending onmobile may reflectunaccounted income innational accounts (2-4%of income)
  4. Consumerization of ITStart with "mega trend" Urbanization App Economy SoLoMo "Social Local Mobile" Role of Women in Tech Connectivity + Internet of things
  5. Unpacking Urbanization • Middle class growth (higher GDP) will cling to urban areas • Best Access to Market, Distribution • Better connectivity and education levels for technology adoption • 10-20% middle class (conservative)Source: The fastest Billion, Renaissance Capital
  6. Luxury Components• Monetary value (dollars, shillings)• Geographical scope (Africa) Youth Mature Further steps...• Context and future growth rate• You the Startup/Investor: Affordable Addressable components (TAM)• Segmentation, Market Positioning, Go to Market• Feature & Usage Attributes, Moores law changes dynamic all the time. E.g. Intel Yolo
  7. iPad 1st Year Sales iSupply Piper Jaffray ForrestorKauffman Bros. 0M 2M 4M 6M 8M Analysts are often bad predictors of new products in a new market. iPad sold 15M in its first year...
  8. ...Product Market Fit• Marketplaces • Financial Services meets mobile • Communication evolves
  9. MarketPlace Ideas
  10. Some Africa Industries Tech Estimated Size Disruption Source Potential IFC: Business of Health $10 Billion Medium Health in Africa IFAD: Sending Remittance $40 Billion High Money Home to Africa. AfDB: Africa Retail $100 Billion Low/Medium Consumer Market Advertising $1B (East Africa) Medium Ipsos Synovate
  11. Total Addressable Market • Revenue Opportunity for the product/services. What does it actually mean to sell in this market?• Implies you have segmented out the market and chosen what fits your product/service offering "value proposition"• You figured out the growth prospects and positioned yourself against competitors• You begin to know your unit economics...
  12. Market/Geography/MegaTrend Market Development...Segment/Channel/Target Validate DemandWhat is the customerneed or pain point? Make what we sell, sell what we Is it scalable? make Value proposition based on our capabilities? Unit Economics Is it profitable? Go-To-Market?
  13. Data to Insight.... 5X data usage increase in 5 years
  14. Google Trends: Nigeria Phones
  15. Multifactorial Market Readiness Barriers Solutions Refine Value Proposition, Word of Mouth, Low Trust Online Education Low Payment technology Adoption Provide Incentives Fulfillment/Infrastructure Delivery Re-design, Vertically Integrate
  16. ... Jockey & Horse• "Give me a B idea with a huge market and I will find the best people. But give me the market first. Please..."- Don Valentine • "Good jockeys will do well on good horses, but not on broken down rags. Managers will never make progress whilst running on quicksand"... "the market, like The Lord, help those who help themselves"- Warren Buffet
  17. Closing Thoughts• Investor & Corporate Interest in Africa will spur more market research opportunities... Some spend more on research than investing currently (e.g. Impact Investors)• Its important to use a range of tools and sources to research markets vs relying too much on top level no.s (GDP, $ spend estimates). Bottom up also important• There is no substitute for validated research through customer discovery process within Startup...
  18. Startup Definition A startup company or startup is the search for a repeatable & scalable business model Lean Startup Movement