During the US-Africa Business Forum, we’re interviewing leaders of tech startups featured in the Sandbox about their experience with creating and growing a business in Africa. The Sandbox at the US-Africa Business Forum features a curated selection of young technology companies operating in Africa.
mPedigree is the global leader in the use of mobile and web technologies to secure products against fakes, counterfeiting and diversion. By allowing consumers to authenticate products via unique PINs on smartphones or SMS, mPedigree has helped launch a movement that is empowering corporations to protect their brands and governments to protect regulatory systems from the effects of fake and harmful products. This protects human security for all of these products including medicines and agricultural products like pesticides and seeds.
Founder: Bright Simons
What was your “a-ha” moment that led you to create this business/product?
With an activist background and a public-spirited bent, mPedigree’s founder Bright Simons found the idea of social entrepreneurship as a powerful way to blend activism with innovation and cause change instead of complaining about the status quo. He led a team of PhD students to design a system that helped farmers in Africa sell organic produce in global markets at superior prices and earn more income. The “a-ha” moment came when it was soon realized that with a little tweak in strategy and form, the solution could work even better as an effective check against counterfeit products including medicines. Counterfeit medicines claim millions of lives, devastate legitimate industries and lead to unemployment and loss in governmental revenue especially in developing countries.
What was one of the more challenging moments of operating a business in Ghana?
mPedigree operates across 12 countries today, all in the emerging world. In Ghana (and most developing countries), building a business requires more than effective management and leadership to gain results. One often has to build whole swathes of the ecosystem itself before the business can even begin to take off. When mPedigree started, it had to operate as a non-profit for a number of years because a lot of the activities it needed to undertake were simply unusual for a business. For instance, mPedigree had to work with telecom companies to draft a social innovation blueprint that would accommodate the idea of toll-free SMS hotlines, which did not exist at the time. Today, mPedigree works with multiple governments to design from the ground up how ‘digital regulatory systems’ ought to function absent clear legislation.
What would you tell investors outside of Africa about building and operating a startup in Africa?
Incomes are largely low, significant proportions of the population are rural and there are large gaps in the business ecosystem. That means solutions that will have significant impact and reach must be cost effective and prioritize scale and mass adoption. Such solutions need to include elements that can leapfrog some of the western mode of doing things and also overcome local barriers to value creation. For example, in a situation where neither the currency nor the power supply is stable, R&D can’t be considered an investment with a future payoff. Every step of business execution in Africa is R&D.
What has been your experience when it comes to raising funds? How do articulate the opportunity to investors?
Because exits are difficult to anticipate, fundraising in the private equity and venture capital space in or for Africa is entirely an “investors’ market.” This reduces the bargaining power of entrepreneurs and lengthens fundraising cycles. mPedigree therefore decided to keep away from venture capital and private equity until it had proven its market and management capacity. Instead, initial capitalization was achieved through R&D pacts with Fortune 100 companies and new contracts with well-heeled clients, including some US government agencies. Ashoka, the global social venture organization, was also very helpful.
What are your expansion plans? Will we be seeing you in any other African or international markets in the coming year?
We have already expanded into about 12 countries in Africa and Asia (including Nigeria, Kenya, Egypt, Uganda, Kenya, Tanzania, Rwanda, India and Pakistan) and across a dozen sectors and industries spanning medicines, textiles, cosmetics, auto products, agricultural inputs, electrical cables and household items. We intend to sustain our global expansion agenda in coming years, which means we’ll make further incursions into the rest of Africa and other key areas in Asia and beyond. We intend to roll out more platforms to harness our data and ‘intelligence systems’ more fully and profitably, all while deepening the social impact of our services.
Besides your company, what is another startup in sub-Saharan Africa that you think should be getting attention?
We are impressed by what Apopo is doing training rats to detect disease after successfully showing that they can be used to detect landmines. We see this as ‘heavy-lifting’ and a refreshing break from the ‘easy to digest’ startup efforts popping up of late.
Any advice for other emerging entrepreneurs in sub-Saharan Africa?
Be willing to patch up wide gaps in the ecosystem yourself and in alliance with other entrepreneurs. There are a very few ‘ready cooked’ opportunities just waiting for you to plug in your app. You need to be willing to plug and patch holes in the ecosystem for years without sweet margins before you can hit fertile ores. We like to call it “infrastructure hacking.”