Feyi Olubodun, chief executive officer of Open Squares Africa, a marketing and strategy consulting firm, has said that the best way for a startup to raise funds is through its customers.
Olubodun disclosed this in his keynote speech, ‘Conquering the African consumer market,’ at the TechPoint Africa Pitch Friday event. He noted that startup founders do not always look to consumers to raise funds.
Startup funding for African startups fell by 57 percent year-on-year to $780 million in the first half of 2024, exacerbating pressure on many startups.
“Money oftentimes is not the problem of startups. Many times, money problems arise because startups do not have customers who buy their products. The best source of capital for your business is from the consumer. When you get money from Venture Capitalists (VCs), whether debt or equity, you still have to repay them, which creates pressure for you as the founder,” he said.
Olubodun highlighted that startups that raise capital from their customers are not under pressure to pay back. “I always recommend that you start with the consumers and then move from there,” he emphasised.
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Commenting on conquering the African market, Olubodun stated that it is important to understand the market before entering it: “Understand your market, understand your consumers, understand them directly. Do not do YouTube understanding or treat them like Western consumers.
“We are not Westerners, and there is a lot of data to back that up. They tell you that generations are changing, and Gen Z is changing, but that is not true. We are dressing differently, but our core values, our core beliefs and all of that are not changing,” he said.
He explained that understanding the African market will reveal to any startup that while African youths are demonstrating digital behaviour, they are still analogue in their identity and motivations. “This is very important because some of your products will be digital, and some of your products will not be digital. It is not a bourgeois continent. If you want to win power in Africa, you must be able to mobilise at the grassroots level. Africans are modernising, and not necessarily westernising,” he said.
According to projections, Africa will represent 54 percent of the world’s population by 2050 and will be the only young continent. The CEO said, “The African population is extremely entrepreneurial and creative, and that is why they would be forming the workforce of the future. Africa remains the continent with the youngest population in the world. If you will win with business in the future, you have to win in Africa. You cannot run away from it.”
Commenting on winning the African market, he noted that winning the market lies within the 3Cs. “I always say the secret to winning in any market lies at the centre of commerce, culture, and the consumer.
“As a startup founder, it is important to have cultural competence. This is important to you because if you’re developing a product that is not necessarily going to be sold in Lagos, that will be sold outside Lagos or a regional product, you must pay attention to your cultural competence,” he added.
