music clef

5 Innovative African Startups Exciting Music Lovers and Musicians

In just one year (2014–15), music streaming subscriptions experienced a growth upwards of 50 percent in the United States alone. CD sales in that time period? Down 17 percent.

The reason is quite simple: most music enthusiasts would rather have an unlimited supply of tunes at the tap of a virtual button than pay for a single CD. Additionally, many music streaming services are available at no cost (albeit with ads). If this sounds like a losing proposition for record labels, that’s because it is.

As music streaming has found a following within the US, its popularity has increased around the world as well. Perhaps there is no place where this is more evident than in Africa, where music lovers and savvy entrepreneurs have fully embraced the evolution that is music streaming.

One way in which Africa’s music streaming market has differentiated itself is the proliferation of streaming startups. As opposed to the US and many other nations, the market is not nearly as saturated, thereby presenting a considerable opportunity for a number of ambitious entrepreneurs to stake their claim in a rapidly expanding market.

Here are five African music streaming startups that are making headlines:

  1. RadioVybe

radiovybe logoBased out of Johannesburg, South Africa, RadioVybe is a relatively new startup, with sizable potential. Launched in March 2016, founders of the company seek to make their iOS and Android app available on every handset throughout Africa.

The company interweaves streaming music capabilities with social media interaction—an innovative approach that the company hopes will translate to widespread reception and adoption.

To accomplish its goal, RadioVybe leverages the power of social media in three key ways.  First, an in-app feed permits users to observe their friends’ oft-visited radio stations, and then navigate to these stations themselves. Second, the app enhances interactivity between the user and radio station, allowing the consumer to post messages to the radio station’s social page(s). Third, the end-user can “connect” with their favorite artist or artists’ social networks and follow their work.

  1. Mozik

Launched in August 2016, Mozik, the newest startup on the list, is a streaming service based in Mozambique. Focusing its efforts on small-market artists, Mozik presents the opportunity for Mozambican artists to capitalize on their work.

Mozik LogoGuerte Geraldo Bambo, founder of Mozik, explains the rationale behind the company’s business model: “With three years of experience, something was clear: the Mozambican music ‘industry’ will never gain relevancy if musicians don’t make money out of their music.”

Bambo claims that around 90 percent of musicians are unable to escape poverty, even if they have an established fan base. It is believed that the undeveloped nature of Mozambique’s mobile networks, limited smartphone availability, and other economic factors greatly inhibit these artists’ ability to make a living.

Understanding these trends, Mozik offers musicians the opportunity to sell their works online. In doing so, Bambo and others hope to further develop the nation’s music industry, establish a means of income for artists, and allow for more widespread distribution of musical works.

  1. Mvelani

Similar to Mozik, Mvelani aims to rectify the disproportionate “play, but no-pay” activity mvelani logoprolific within the African music market. The startup’s mission is to “offer music fans a legitimate service capable of generating for artists the royalties that they deserve.”

In that vein, Mvelani has established a platform that allows artists to participate directly. After creating a Mvelani account, artists are able to upload their songs and make them available to users, at a modest cost.

The startup’s next goal is to develop and launch a mobile app that permits offline streaming. Currently based in the underdeveloped nation of Malawi, the company has plans to expand the popular service to neighboring countries. Nigeria is thought to be the first country, as development planning has reached the final stages.

  1. Mdundo

Mdundo logoLaunched in 2012, the Kenyan startup Mdundo has experienced remarkable growth. Now available in 17 nations, its business model emphasizes artist collaboration and egalitarian disbursement of profits. To date, this framework has been an enormous success.

Available on the “big three” platforms (iOS, Android, and online), music is available for both streaming and download. Following a series of investments from companies such as seed accelerator and Google partner 88mph, the company was able to enlist an additional 15,000 artists.

The startup now claims over 750,000 users across Africa.

  1. Zimbo Music

Startup Zimbo Music is a music streaming platform designed to engage local artists in Zimbabwe. Launched in 2014, the site acts as a web portal for artists, who can upload bios, music, and pictures, as well as actively promote their events.

According to sources, the startup has experienced significant growth. The founders, who are artists themselves, are planning to expand into Botswana, South Africa, and Zambia. As with Mozik, the minds behind Zimbo Music seek to empower artists. Co-founder Makhosini Mpofu stated, “We had first-hand experience of how hard it is to make name for yourself, grow your fan base and get exposure. A lot of talented artists find it very hard to make it to the big time and get their music out there. We saw the need to breach that gap.”

power lines

How Innovative Energy Startups Are Powering Africa

Lack of electricity in Africa remains one of the biggest barriers to the region’s development and prosperity, and continues to trap millions of people in extreme poverty.

– The ONE Campaign

Nowhere else in the world are energy problems are more ubiquitous than in Africa. In sub-Saharan parts of the continent, which has a population of more than 915 million, over 50 percent of the population lacks access to electricity. As a result, economic development is stifled, and quality of life is severely diminished. Sadly, many educational institutions and health care clinics are deprived of the means to deliver much-needed services, which further compounds the problem.

However, the continent’s energy prospects may be changing. Visionary entrepreneurs from across Africa, ranging from Tanzania to South Africa, are leveraging the power of renewable energy to help solve Africa’s widespread energy crisis. Many startups have made sizable progress by providing sustainable sources of energy to the masses.

While much work remains to be done, small and budding startups are providing a glimmer of hope to African citizens. Following is a discussion of five African startups that have made significant strides in solving the challenging and complex problem of powering Africa.

  1. Off Grid Electric – Tanzania

off grid electric logoResidents of Tanzania have traditionally relied upon antiquated means of energy, primarily fire, wood and kerosene. Of course, the use of such materials is extremely hazardous to the health and safety of those who use them as sources of energy. The World Bank reports that in 2010, only 14 percent of Tanzanians had access to electricity.

In order to provide Tanzanians with a sustainable energy solution, the founders of Off Grid Electric have focused their business efforts on prepaid solar power systems. Off Grid uses a proprietary solar hardware and software platform that is available for customers to finance through mobile payments. In order to maximize output efficiency, the company complements its energy products by installing energy-efficient lighting and appliances in homes. Appliances are also available through financing.

Founded in 2011, the startup immediately garnered significant attention from foreign investors, including the United States government.

  1. Strauss Energy – Kenya

Strauss EnergyIn 2012, the World Bank reports that only 23 percent of Kenyan citizens had access to electricity. Over a span of just under four years, the percentage of Kenyans with electricity is now closer to 60 percent. Such prolific expansion has primarily been the result of solar innovation and adaptation. Strauss Energy in Kenya is a primary example of these transformative efforts.

Strauss Energy designs building materials that utilize Building Integrated Photovoltaics (BIPV). BIPV differs from traditional solar panels in that it comprises entire building sections: windows, roof tiles, and walls. According to the company’s website, the technology replaces the need for a secondary energy source for households. Additionally, BIPV is associated with lower energy costs

Recently, the company received a prestigious innovation award from DEMO Africa. As a result, company officials were invited to Silicon Valley to demonstrate and pitch their business to potential investors.

  1. Solstice – Nigeria

solstice logoCollaborating with leading researchers and engineers from Stanford University in California, Solstice has developed a business model that prioritizes data-driven energy solutions. The company’s innovative, data-reliant approach is evident in its products.

Solstice’s products focus primarily on energy monitoring and management capabilities. Marketed as a low-cost energy monitoring solution, consumers can observe their energy consumption patterns and make subsequent energy production changes through the company’s proprietary software. For instance, the Solstice mobile app can be used to budget and track energy usage.

In an effort to penetrate the increasingly concentrated Nigerian energy market, Solstice developed the Solstice Alpha Project. Participants in the project can obtain early access to developing products and services, which are available at discounted prices.

  1. Shakti Energy – South Africa

Shakti Energy LogoWhile municipalities and other concentrated areas of the South Africa have access to abundant energy sources, little effort has been made to expand into rural areas. It is estimated that around 90 percent of South Africa’s off-grid residents light their homes using kerosene and candles, an expensive and potentially dangerous practice.

Recognizing these trends, Shakti Energy focuses its efforts on the production and distribution of cheap and clean energy products. An example of this is the Nuru LED light, a portable energy source that is capable of providing at least 20 hours of light on a full charge. Other innovations include the POWERCycle, the world’s first commercial pedal generator.

In order to reach a highly distributed rural population, Shakti enlists the local workforce to demonstrate, sell, and service the products.

  1. Ugesi Gold – South Africa

ugesi gold logoSimilar to Shakti Energy, Ugesi Gold focuses on “rural and informal settlement electrification.” What separates Ugesi Gold is its emphasis on female-only owned franchises, citing the nation’s lack of progress in ensuring and safeguarding women’s rights.

In addition to the company’s unique ownership perspective, Ugesi produces innovative energy products and solutions. Product-wise, Ugesi manufactures a micro-utility unit called the SolarTurtle, a small, convertible mobile power station. Ugesi also manages and oversees the corporate social responsibility and enterprise development needs of privately owned establishments. This is considered a priority for many, as South African laws require strict adherence to legislation pertaining to corporate responsibility and certain developmental criteria.

Nigeria

Mark Zuckerberg Aims to Boost Startups in Nigeria

“I’m excited to see what Nigerians build next!”

– Facebook Founder/CEO, Mark Zuckerberg

Mark Zuckerberg
Mark Zuckerberg | Kris Krüg | Flickr

Mark Zuckerberg is perhaps the epitome of entrepreneurial success. Having founded Facebook in his dormitory at Harvard University, Zuckerberg leads a company that is now worth around $362 billion. His personal net worth? In the neighborhood of $54 billion.

Despite his overwhelming success, “Zuck” is commonly praised for his modesty, along with an unrelenting focus on making the world better. Zuckerberg, along with his wife, Priscilla Chan, launched the Chan Zuckerberg Initiative in 2015. According to its website, the organization was launched with the mission to “advance human potential and promote equality.” To help fund the initiative’s ambitious framework, Zuckerberg locates, empowers, and supports talented visionaries wherever they may surface.

The motivation behind the Chan Zuckerberg Initiative is pivotal to understanding the couple’s vested interest in African countries and other developing nations around the world. In a video interview on the initiative’s website, Zuckerberg and his wife speak passionately about human potential. He stated, “The only way that we reach our full human potential is if we’re able to unlock the gifts of every person around the world.”

Perhaps there is nowhere else in the world where is talent more ubiquitous—and yet, untapped—than in the West African country of Nigeria. Educated, entrepreneurial, and driven are three phrases that aptly describe a large share of the country’s people.

This article discusses Andela—a promising Nigerian company—and the country’s capable workforce that have drawn Mark Zuckerberg’s involvement. In addition, the following details the inferences that can be made of Zuckerberg’s first major investment in a private company and why Andela—Nigeria as a whole—is deserving of such.

Andela and African Education

andelalogoNigerian startups appear to be of particular interest to Mark Zuckerberg. This is evident from the dollars invested in nonprofit causes. In June, Zuckerberg and his wife’s initiative led a round of Series B funding for Andela—a Nigerian company that trains and deploys software developers—helping to amass $24 million for the (then) startup. In a statement issued about his investment in Andela, Zuckerberg noted, “We live in a world where talent is evenly distributed, but opportunity is not. Andela’s mission is to close that gap.”

Zuckerberg’s investment in Andela is noteworthy for a couple reasons. First, this was the initiative’s first major investment in a private, for-profit company. It is telling that, out of the likely multitudes of entrepreneurs that sought funding, Chan and Zuckerberg invested in a Nigerian-based startup. Second, the venture falls in line with one of the initiative’s founding tenets: enhancing education and personalized learning. It appears that Zuckerberg’s stated mission in developing the initiative also pertains to the profit-seeking arena.

Investment in Andela may also support the third pillar of the Chan Zuckerberg Initiative: advancing opportunity. Nigeria is considered a nation ripe with human talent, particularly in the fields of information technology, software development, and computer science. However, this abundant talent pool is lacking in job opportunities. Approximately 45 percent of Nigeria’s college graduates are unemployed. This may help to explain Chan and Zuckerberg’s interest in Andela, as the company trains and places applicants into well-paying jobs.

On a related note, Zuckerberg seemingly devotes a considerable amount of his resources to training and education-related investments. In 2010, the Facebook CEO made headlines with a $100 million donation to public education in Newark, New Jersey. At the time, New Jersey public schools were facing drastic cuts to their budget, severely handicapping the system. Zuckerberg is a fierce advocate of education and training, whether in the public or private sphere.

In the area of information and education, Zuckerberg partnered with Nigeria’s largest mobile network with the goal increasing Nigerians’ access to the web. As a result, a number of Nigerians who previously lacked Internet access or any other means of information, were able to go online at no cost. The Free Basics program, as it’s called, is active in more than 40 countries, half of which are in Africa.

Future Developments

On August 30, Zuckerberg announced his visit to Lagos, Nigeria, on his Facebook page:

“Next stop: Lagos! This is my first trip to sub-Saharan Africa. I’ll be meeting with developers and entrepreneurs, and learning about the startup ecosystem in Nigeria. The energy here is amazing and I’m excited to learn as much as I can.” Nigeria is also home to Facebook’s largest African market, with over 16 million visitors to the social media site.

Co-Creation Hub NigeriaDuring his trip to Lagos, Zuckerberg visited the Co-Creation Hub Nigeria (CcHUB), where he met with young children attending a coding camp. CcHUB functions as a “tech lab” where hackers, impact investors, technologists, government, social entrepreneurs, and tech companies meet in an effort to create solutions to current social problems impacting the country.

At present, Zuckerberg is continuing his trek through Nigeria. Known his secretive nature, “Zuck” hasn’t produced his travel plans.

News sources in Nigeria speculate that he will visit Andela’s operations and meet with other promising entrepreneurs.

online commerce

How One Tech Startup is Pioneering Africa’s E-Commerce Industry

Jumia has created a sustainable ecosystem of digital services and infrastructures through online and mobile marketplaces and classifieds. With Jumia, Expand Your Horizons!

—From the Jumia Website

Jumia logoMany parts of Africa haven’t yet solved the problems that plague retail commerce. Specifically, areas of the continent have distribution problems—the result of undeveloped transportation and logistics networks. Currently, informal markets comprise many business transactions, which has led to problems like overcharging and theft. Some people resort to traveling abroad to find the goods they need, packing them in overstuffed suitcases to carry on the flight home.

However, talented entrepreneurs, investors, and innovators are working to solve many of these problems. The continent’s expanding middle class and ever-growing customer base are attracting investors to the African retail market.

The Jumia Group is an excellent example of this period of transition for African retail. Jumia recently became Africa’s first tech startup company to reach a $1 billion valuation. The company has achieved its massive success by focusing squarely on developing reliable e-commerce services.

On a macroeconomic level, the McKinsey Global Institute predicts that Africa’s largest economies will spend approximately $75 billion on e-commerce sales by 2025, or about 10 percent of total retail sales. With the continuing adoption of mobile technology and increasing Internet access, other startups are moving into the e-commerce space as well.

None have been more successful than Jumia, however.

History of Jumia

Jumia is a Nigerian retail and e-commerce site that sells a wide array of product types: fashion, electronics, appliances, furniture, children’s toys, and even food and alcohol. The company was founded in 2012 by entrepreneurs Tunde Kehinde and Raphael Afaedor, who subsequently obtained an investment of $35 million in Series B funding that buttressed the company’s initial scaling efforts. Other large investments followed.

produceUnderstanding the challenges in the African retail industry, including “poor infrastructures, bad traffic, limited choice, limited information, expensive products and services,” Kehinde and Afaedor decided to leverage the power of the Internet to meet consumers’ needs. The founders were well-attuned to the continent’s expanding middle class, and they also understood the common risks associated with e-commerce in Africa. Kehinde and Afaedor developed their business model with these factors in mind, and the result has been a resounding success.

Dubbed the “Amazon of Africa” by media outlets, Jumia appears to be on a sharp upward trajectory of growth. Indeed, many observers have commented on the company’s similarity to Amazon in many regards, including in the aesthetics of its website, delivery times, and low costs relative to other retailers. Jumia has also prioritized security, convenience, quality, and price to attract even more customers.

During the first nine months of 2015, Jumia recorded transactions totaling 206 million euros, or nearly $231 million USD—a 265% increase over the previous year. Such momentous growth has allowed the company to expand its operations to 23 African countries in four years. According to the company’s website, over 500,000 businesses are using Jumia to sell their products.

African Development and Jumia

The McKinsey Institute predicts that Africa’s “iGDP”—or the Internet commerce contribution to gross domestic product (GDP)—will be comparable to that of leading economies by 2025. A significant factor in the McKinsey estimations is Africa’s continuing adoption of mobile devices.

ComputerAnother overarching factor in the success of Jumia is the technological advancements occurring in major urban areas throughout Africa. Network infrastructure development—namely, mobile broadband and fiber-optic cable—is enabling millions of Africans to access the Internet for the first time. In addition, people who reside in major urban areas in Africa tend to have higher disposable incomes, providing e-commerce companies with a deep well of prospective customers.

The decreasing cost of smartphones has also contributed to Jumia’s customer base. Mobile network operators have begun to establish business relationships with device manufacturers to capitalize on the growth of Africa’s cell phone market, including in less-populated regions of the continent. This is a significant development, as expansion into the rural areas of Africa provides Jumia with another customer base to target.

Remaining Challenges

While Jumia has experienced success by mainstreaming e-commerce in Africa, there are still persistent barriers that make cross-border e-commerce difficult. Some of these challenges are familiar: poor infrastructure, underdeveloped logistical networks, fraud, and low credit card usage rates. In addition, many countries in Africa do not have a formal address system, which complicates delivery. Manuel Koser, a partner at a venture capital firm that worked with Jumia, summarized the company’s current position in an interview with The Guardian: “Jumia has been very successful at fundraising and it is a real success story, but it needs to move to a sustainable business model.”

In attempts to tap into the market of off-line citizens, which remains a disproportionate majority of Africa’s population, Jumia introduced a service that acts as an “online hub” where commissioned sales agents work with customers who lack Internet access. The company hopes that these outreach efforts will help bring more customers into its fold.

office

Evaluating African Startups from a Mainstream Perspective

Data from VC4Africa’s new Venture Finance in Africa 2016 report shows that venture capital funding and angel investments secured by the 462 African ventures tracked has more than doubled from $27 million last year to $73 million.  – Yomi Kazeem, Quartz Africa

It’s common knowledge to many that Africa is witnessing a revolution of sorts in entrepreneurial and startup activity. The continent has garnered the attention of businesspeople and techies alike for its vast – yet largely untapped – resources for innovation.

A rudimentary evaluation of African startup investment trends shows a rather drastic upward trend in funds invested. Initially, this seems to be a promising development for prospective entrepreneurs, even if certain unknowns remain.

This article evaluates African startups from an investor perspective by applying a sort of “litmus test” that many who hold the funds often insist upon, evaluating current investment activity while identifying and attempting to explain investment patterns.

An Investor’s Perspective

office workerOutside of charitable giving – which often has noble and selfless intentions – most investors are concerned with return on investment (ROI). Many financiers are businessmen and businesswomen who remain “neutral” in their approach and are ultimately concerned about profitability, both for themselves and the operations that seek their resources.

In order to make rational and profitable decisions, investors often apply a type of litmus test – an analysis evaluating both internal and external factors that every for-profit venture must contend with. Investment factors one may consider are numerous, but most frameworks of this type have four common denominators:

  1. State of marketplace: Is there enough demand to support operations?
  1. Entrepreneurial resources: Are entrepreneurs supported, and how?
  1. Economic stability: What is the state of the economy in the country or region?
  1. Risk/reward: Given the perceived amount of risk, what can we potentially gain?

By no means is this an exhaustive list, but one could reasonably make most investment decisions by carefully addressing such questions.

Africa’s Litmus Test

Africa is among the most diverse places on the globe in terms of economics, demographics, infrastructure, and so forth. Some countries in Africa (e.g. Nigeria, South Africa, Egypt) are quite advanced, while other African countries remain chronically underdeveloped.

It should come as no surprise, then, that the more-developed parts of Africa collect disproportionate amounts of startup funding. This analysis focuses exclusively on these areas. For reasons of simplicity, the aforementioned litmus test will be applied.

State of Marketplace

Africa is home to one of the fastest-growing middle classes in the world. Economics  suggests that when income rises, so does consumption – a vitally-important factor for potential investors.

Disposable income – funds available after meeting obligations – is necessary for purchasing non-essential goods and services. In the past, prior to the current economic shift, most Africans in underdeveloped areas had little to no disposable income. This trend is currently shifting as well, which makes investment in countries in Africa more realistic.

Entrepreneurial Resources

Many organizations seek to promote the startup culture in Africa, and they have been relatively successful in doing so in recent years. The more important question is whether or not these supportive factors will persist amidst the uncertainty surrounding the state of startups on the continent.

In this case, it is necessary to evaluate the source of startup capital – an important indicator in determining the level of available resources. Most startup capital in 2016 (57 percent) is being invested by the founder(s), while only 12 percent is invested by private sources. While these numbers may be construed as a negative, it is worth mentioning that startup capital investment is on a downward trend globally.

Economic Stability

moneyAs mentioned, a growing middle class means more disposable income for citizens of many African nations. When considering whether or not to invest, it is important to consider whether the middle class is expanding or contracting. Answering this question allows investors to project business growth or stagnation.

Evaluating the expansion or contraction of Africa’s middle class is complicated, and experts are divided on the subject. The consensus, if one could define it as such, is one of both optimism and caution. Historically, and almost without exception, all nations experience economic turbulence over time. Many countries in Africa, having experienced a positive economic stretch, are considered “due” by some to enter a period of stagnation.

Risk/Reward

African startup investment is no different from that in other areas of the world, in that it is a risk-laden endeavor. Investors that have traditionally seen sizeable returns in Africa have had a long-term approach that takes into account the uncertainty of the African marketplace.

The consensus is that many investments in African startups are deemed riskier than those in other areas of the world, but may yield significantly higher rewards. One predominant example is iROKOtv, a company that has been called the “Netflix of Africa,” where early investors made a 3000 percent profit on their initial capital investment.

The Future of Startups in Africa

African startups have yet to mature to levels seen in many areas of the developed world. Yet, the collective entrepreneurial spirit on the continent is filled with promise. No developed part of the world has thrived without subjecting itself to the unknown, and Africa is no different in this regard.

If savvy startups are willing and able to weather the storm of uncertainty surrounding the state of the region’s capabilities, they and others who take sizeable financial risks may be the beneficiaries of such vision.