It is now well accepted that small companies are agile, and large ones have scale efficiencies. Small innovates – large scales. Small disrupts – large sustains. Small incubates – 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 $12bn 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 could 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 customisable 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 these spaces MTN has worked with a multitude of small and medium-sized enterprises to achieve these successes sustainably. For almost three decades, 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. Entrepreneurship in startups has been a key driver of these successes.
MTN’s new business development and diversification strategy for the past five years has focused on large joint ventures and mega-startups. MTN has already invested over €500m ($580m) in various startups and is now seen as a leader in this space for Africa and the Middle East. Investments have included online marketplace Jumia, micro-insurance company Ayo, travel website TravelStart, e-commerce company Wadi and ride-hailing service Snapp. We have already had one unicorn – a company worth at least $1bn, and the first from Africa – in Jumia, and a second promises in the form of Snapp in Iran. We have also invested $70m in a private venture capital fund run by UK-based Amadeus Capital, whose Digital Prosperity Fund has already made almost a dozen investments in late-stage startups.
MTN dives deeper into the startup ecosystem
The first wave of investments have followed known and well-understood examples – basically emulating Amazon, Uber, Booking.com, Expedia, and others. Going forward the use cases and associated solutions will be harder to find. The next unicorn is going to involve a deeper set of engagements with the startup ecosystem.
The next phase of growth is being fuelled by smaller firms that adopted a lean startup approach, pivoting 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 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 can be leveraged to assist the startup to scale fast.
This is now taking on an even larger emphasis as MTN expands its presence in the startup ecosystem with a formal presence in the ideation, incubation, acceleration and scaling components of the disruption value chain. All this is underpinned by MTN’s willingness to invest, and its already wide-ranging and 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.
Startups will be able to join our soon-to-be-launched Bright Ideas Innovation platform to propose ideas, secure funding and sponsorship, progress to proof of product, proof of market and proof of scale, and then finally be in a position to assess possible investments once it hits a series A or B funding round.
We are looking forward to creating a rapidly expanding network of startups engaged in serving the needs of our mutual clients better.