Chapter54: Creating African expansion success for your scaleup
You may be well-established in European markets or have broken into the US or Asia, but launching a business in Africa is an entirely different challenge. There are several ways for a European scaleup to approach African expansion and finding out which one fits your business is at best complex and at worst a near-insurmountable task.
The bigger picture: greenfield projects
Top-of-mind is a macro approach. Making the most of already established successes in Africa is no bad thing! For those with sufficient capital, acquiring or incorporating local subsidiaries and hiring the best local talents are sure-fire ways to launch successfully on African soil.
Glovo, the Spanish-born last-mile delivery company that now operates in 40 cities spread over six African countries, first set foot in Africa in 2018. Since then, the app has garnered over 300,000 users and onboarded 12,000 couriers on the continent.
On the other hand, its German counterpart Delivery Hero was storming the European, Asian and LatAm markets. With Africa being such an emerging and dynamic market, the next move of the Berlin-born company was clear: harness Glovo’s market knowledge and finesse.
By late 2020, Delivery Hero had acquired 44% ownership of Glovo, and little over a month ago in early 2022, it was reported it had signed documents to acquire an additional 39.4%. Slowly edging up its ownership of Glovo will serve Delivery hero extremely well in its quest for global market domination.
Another example of this technique is Bolt, the transportation network company first founded in Estonia and now worth over $8bn. It spotted Africa as a growth market and is now present in 96 African cities and boasts 700,000 drivers.
Partnerships with local players are solving this issue for Bolt. Partnering with both Metro Africa Xpress, a Nigerian lease-to-own company, and FlexClub, a vehicle subscriptions marketplace, Bolt has unlocked the key to success on African terrain.
What will certainly aid the mobility firm in the future will be its $24m raise from IFC, specifically carried out with a vision to further expand in Africa.
Zooming in on streamlined approaches
Some companies, however, benefit from a micro rather than a macro approach. The key here is not necessarily to open in five African countries in one fell swoop, but rather to streamline a legacy system.
This technique is three-fold, involving switching from opportunistic management of African assets to a more structured approach; following existing clients into the African geographies in which they operate; and switching from a reselling model to a directly operated one.
Africa has witnessed some admirable success stories of indirect distribution exactly like this.
Some businesses, often those that are less human labour-intensive, or where physical assets are not involved, see success with an indirect approach.
Take Acility for example, whose IoT connectivity solutions are widely distributed by duly selected local players. Or Moonbug, whose contents are distributed by Showmax, a pan-African subscription video-on-demand service.
African expansion: the options are limitless
Overall, considering the maturity (or rather, the youth!) of the African tech landscape, M&A techniques will be increasingly suitable options considered by European scaleups, particularly in regulated industries such as fintech or insurtech.
If all that sounds enticing but hopelessly complex, this is where Chapter54 can help. Chapter54 is the new accelerator powered by Partech Shaker, the innovation branch of global tech VC fund Partech.
The programme boasts a large and curated network of mentors and speakers, all C-levels hailing from some of Africa’s biggest names in tech such as Fawry, Jumia, Opay and Flutterwave, to name but a few. Each of these partners will harness their experience in the market to help selected companies refine their operational models, construct solid African expansion roadmaps, and align their plans with the local context.
With a selection of soft-landing solutions thanks to partnerships forged with innovation players on the continent, and a unique catalogue of perks selected to aid market entry, Chapter54 is perfectly poised to power the next generation of tech leaders to success.