Inside MTN’s plan to digitise Africa through start-ups
MTN Group, headquartered in South Africa, has been in the telecommunications industry for the last 24 years. It currently has thousands of millions of subscribers in over 20 countries it operates in across Africa.
As its revenue base continues to grow, the company has decided to channel some of its funds to escalate start-ups that tailor well with its mission, and in this article Herman Singh, MTN’s group chief digital officer details which start-ups they target, how they benefit and the company’s future plans.
MTN’s innovation shift from large to small
It’s now well accepted that small companies are agile, and large ones have scale efficiencies. Small innovates; large scales. Small disrupts; large sustains. Small incubates, but large accelerates.
MTN was itself a startup 25 years ago! The power of Entrepreneurship and a startup mentality in a smaller firm is what powered MTN’s growth to a R170 Bn revenue powerhouse.
As growth in its core business began to slow down around 2014, it became clear that MTN would need to seek new avenues for growth. Hence the emphasis on initiatives that could move the dial.
This was a great time to begin the conversations that can help Africa realise the Digital Dream while at the same time building large scale digital sustainable businesses. Digital holds the promise to allow Africa to enjoy a significant growth spurt because these solutions are asset light, low cost and easy to deploy and scale. As well, they address basic and key use cases, service the broadest part of the market and are customizable per region.
Realising the Digital Dream
These attributes apply to solutions as diverse as micro-insurance and music streaming, and replicate the prepaid airtime top up model. The now successful model of prepaid, off-grid domestic solar kits sold via airtime and on credit, for example, are a super example of unique African solutions addressing real African issues. In all of these spaces MTN has worked with a multitude of SME’s to achieve these successes, sustainably.
MTN has been a key enabler in uplifting technology adoption in Africa, and more importantly, in driving the adoption of new technology-based products and services for almost three decades. Entrepreneurship in startups has been a key driver of these successes.
MTN’s new business development and diversification strategy for the last five years has focused on large JV’s and mega start-ups. MTN has already invested over a half billion Euros in various start-ups and is now seen as a leader in this space for Africa and the Middle East. This has included Jumia (O2O m-commerce), aYo (micro-insurance), TravelStart (online Travel site), Wadi (ecommerce) and Snapp (Taxi hailing). We have already had one Unicorn (the first from Africa) emerge via Jumia and the second promising Unicorn is Snapp in Iran. We have also invested $70Mn in a private venture capital fund run by Amadeus Capital in Cambridge England where the Digital Prosperity fund has already made almost a dozen investments in late stage startups.
MTN dives deeper into the startup ecosystem
There is a clear understanding that the first wave of investments have chased known and well understood use cases — basically emulating Amazon, Uber, Booking.com, Expedia.com, Justeat, etc. Going forward the use cases and associated solutions will be a lot more nebulous and harder to find. The next Unicorn is going to involve a deeper set of engagements with the broad based startup ecosystem.
What is clear about the next phase of growth is that they were developed by smaller firms that adopted a lean startup approach, pivoting their solutions from a minimum viable product until they were able to hit a sweet spot before scale. In other words, lots of experimentation. This is not something that large firms are noted for. We need to scale this a few thousand times, and the engagements with smaller firms in startup mode will be a key part of this approach.
The MTN approach is to search for firms that are taking a uniquely African approach to addressing a broad-based need using digital technology where MTN’s assets in Network, customer base, brand, go to market capability, distribution, identity and payment capability van be leveraged to assist the start up to scale fast.
This is now taking on an even larger emphasis as MTN expands its presence in the start-up eco-system with a formal presence in the ideation, incubation, acceleration and scaling components of the disruption value chain.
All of this is underpinned by MTN’s willingness to invest, and its already wide- ranging and rather substantial corporate venture and M & A initiatives. A Pan-African presence with one of the largest customer bases in Africa provides fertile ground for partnerships, disruptions, startup acceleration and potential corporate investments. MTN’s dedicated teams are actively engaged with the community to provide an easy pathway for plugging into the MTN growing tech start-up network, and this will accelerate as our API and developer platforms are extended.
Startups will be able to join our soon-to-be-launched, Bright Ideas Innovation platform to signup, propose ideas, secure funding and sponsorship, progress to proof of product — proof of market — proof of scale and then finally be in a position to assess possible investments once its hit a series A or B funding round.
The access to our open API’s, micro-services and sandboxes will be enabled during the course of the next 12 months to further streamline the ease of working with MTN.
We are certainly looking forward to creating a rapidly expanding network of startups engaged in better serving the needs of our mutual clients going forward.
The article originally appeared on Medium under title MTN ramps up investment in African startup ecosystem