The African startup ecosystem is growing at an unprecedented rate

There has never been a more exciting time to be in the African startup scene.

According to a recent BCG report, the number of local startups that received funding increased by 46 percent between 2015 and 2020, a growth rate six times faster than the global average.

The very nature of the startups in our ecosystem adds to the buzz surrounding this explosive growth rate, as many are bringing not only innovation to the market, but also a strong sense of purpose that drives everything they do.

The fintech sector has seen the most explosive growth in investment, with many startups in this space purposefully making financial services more accessible to people who have previously been excluded.

HearX is a purpose-driven healthcare startup that offers affordable, digital hearing health solutions and has recently expanded into the United States. SunXchange is a peer-to-peer solar leasing platform that is accelerating the transition to renewable energy in emerging markets.

Our mission at Kandua.com is to bridge the gap between having a skill and making a decent living from it. We accomplish this by assisting trusted small-service businesses and independent professionals in gaining more customers, as well as by developing simple tech tools to assist them in strengthening their marketing and operations.

The ability to combine profit and impact is critical to success.

It is hardly revolutionary to discuss profit and purpose. While there is a strong tradition of business philanthropy in Africa, using a company’s core strengths to address social issues and make purpose central to a company’s strategy is less common.

The latter approach is where this new breed of African startups shines, and there are reasons why.

Having a profitable business model as well as a social impact opens the door to blended finance models, where you can attract both impact investors and traditional venture capital.

For example, Kandua.com recently closed a funding round led by Knife Capital, but we also have the Agence Française de Développement (AFD) on our side. Donor funding does have stringent reporting requirements, which is one of the reasons we avoided impact investing in the past.

Certain aspects of a mission-driven business, however, will not be sustainable solely on a market basis, and if you are committed to your purpose, impact funding can assist you in realizing your goals and demonstrating your impact.

An audience looking to consume consciously

The second advantage of being a purpose-driven company is that it reflects global trends in consumer choice and investment. Regardless of the economic turbulence caused by the pandemic, or perhaps as a result of COVID-19, conscious consumerism is a trend that shows no signs of abating. This is reflected in our industry, where homeowners prefer to support small local businesses or restore or upcycle household goods and furniture rather than replace them. Environmental, social, and governance (ESG) criteria-driven investment is proving to be a sound strategy, with ESG funds frequently outperforming traditional ones.

A word of caution, however: purposefully retrofitting purpose in order to adapt to a trend is something that most would-be customers and investors would quickly spot. As a startup, purpose can be built into the business from the ground up, and a larger why is frequently the reason the company was founded in the first place. This is unquestionably true for us.

Purpose over paycheck

The impact on our employees is a third reason we believe being a mission-driven startup is powerful. People are looking for more than just a paycheck. Flexible and remote work models, which many people prefer and are quickly becoming the norm in the startup world, are nothing new.

We have an advantage because we have a goal. When you have a greater reason to come to work every day, you take more pride and ownership in your work and are more motivated to succeed. Seeing the real impact of your work on the lives of others is a powerful motivator.

Education, healthcare, financial services, decent employment, and small business growth are all examples of how technology has the potential to transform aspects of life that are critical to the prosperity of our continent and the well-being of its people.

However, without rigor and a dedication to excellence, it will remain merely potential. Being a mission-driven company does not preclude you from having a solid business model, a disciplined approach to priorities, or the courage to make difficult decisions.

The tough decisions you make and the discipline it requires are all in service of your driving purpose and ultimately your success as a startup.