Are African innovators playing the right game?

Much as I love a good success story, I’m a big follower of projects like Startup Graveyard Africa, which publishes sobering lessons from sunset African startups. It’s saddening to see its catalogue of companies grow, but going through the cases makes for interesting reading: the ambition is clear, the market fit seems right, the tech in many cases appears world-class, and yet many stall. This poignant, curious pattern of solid potential meeting sudden death is a puzzle facing the continent’s innovators.

Several clever Africans have turned their attention to this problem, questioning whether capital has become too scared to fund the uncertain, or if our economies are too broken to let good companies survive. Both theories carry troubling weight.

But certainly, a significant part of it is where we get our ideas from. We rightly stand on the shoulders of giants, but to adopt their ideas without deeply tailoring them to the unique dimensions of our own local infrastructure, our own historical contexts, our own socio-economic milieu, can only lead to subpar outcomes.

For the third year in a row, capital inflows into the continent are falling. The large flocks of tourist investors and high-risk optimists of the last bull run have grown sparse.

Detractors will say we chased scale when we should have built lean. But this new, toothless focus on capital efficiency may be the biggest threat of all, encouraging us to follow set playbooks rather than to critically question. It risks chipping away at the very sector-carving innovative grit that brought us to the world stage in the first place.

I fear we may turn to treating the mere symptoms of rot while the root disease festers, creating ‘sexy’ solutions – as President Tinubu humorously puts it – that fail to shift the needle on the bigger, scrappy problems that could unlock ecosystem-wide value.

It’s time we asked a harder question: Are we playing the right game?

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The scaling game that works (somewhere else)

The prevailing Silicon Valley playbook, popularised by venture capitalists like Reid Hoffman, is called ‘blitzscaling.’ The math is simple: lose money on nine startups, because the tenth could 100x your investment. The goal is speed and market domination above all else. Prioritise user acquisition, burn cash to grow and achieve a ‘winner-takes-allmost’ outcome.

This model is built on a crucial concept known as ‘network effects.’ The value of a service like X or Uber grows exponentially as more people join. This creates a powerful competitive moat, where a user’s decision to join is reinforced by the presence of others. It’s a game of strategic complements, with every new user making the platform more valuable.

The effectiveness of this Valley model, especially before 2022, can be attributed to what economists refer to as ‘pre-existing complementarities.’ American startups assume reliable electricity, widespread broadband, mature (and predictable) regulatory frameworks, and established financial systems. They’re building on top of infrastructure that took decades to develop. In most cases, they only need to build one thing: their product.

But African entrepreneurs face what Harvard Business School professors Tarun Khanna and Krishna Palepu dubbed ‘institutional voids’ – the absence of “specialised intermediaries, regulatory systems and contract-enforcing mechanisms’’ that developed markets take for granted. We have to create (or work around) the complementarities while coordinating, making it a much harder game to win, but potentially more defensible once achieved.

African companies chasing scale must play a multi-layer coordination game, building around contexual issues to create complimentaries.

This creates a fascinating ‘scaling asymmetry’.

A Western solution that is designed for a world of abundance often fails when imported into Africa because its foundational assumptions (like constant connectivity, universal credit history, single language) don’t hold.

This may also explain why African solutions struggle to export: they’re optimized for different coordination challenges that simply don’t exist, at least not to the same degree, in developed markets. Solutions become context-specific, reducing their transferability across global markets, other African countries, and sometimes even between neighbouring states/cities.

But where systems fall short, startups can step in

Forget how gloomy this all sounds – there’s lots of promise. Technology can fill the institutional voids in African markets, and some companies are already doing it.

Moove is an example I’m particularly fond of. They’re a mobility fintech company that took on the lack of access to credit and asset financing for informal economy workers. Moove created a new infrastructure for credit assessment using alternative data (like driving performance and platform earnings) to underwrite loans, effectively creating credit scores for the unbanked.

By providing the essential asset (the vehicle), Moove solves the coordination problem between drivers who need cars and the ride-hailing platforms that need them on the road.

This pattern repeats across Africa’s most successful tech companies.

Many successful African companies have thrived by pairing two-sided platforms with fundamental infrastructure & institutional solutions.

While their specific models differ, they share some common traits:

1. They leverage two-sided network effects on a platform that connects distinct user groups.
2. They take on core institutional/infrastructure problems that create a base for more people to be productive and prosperous.

These companies are building the market itself on two-sided platforms that become the new, trusted intermediaries for a rising economy.

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A new-ish focus on foundations

This infrastructure-first model is inarguably more difficult, as it rejects superficial fixes like merely localizing Western applications for niche segments. Instead, it tackles the foundational task of making local systems more efficient from the ground up – a nuance the continent’s most promising startups are already embracing.

They are abandoning the Silicon Valley blitzscaling playbook to augment existing informal networks rather than trying to replace them with repackaged, arbitraged versions.

Such a strategy requires a new definition of success. Instead of measuring growth by user acquisition, African companies must consider their impact on ecosystem development. Are they building foundational capabilities (connectivity, logistics, financial rails, etc.) that enable other businesses? Are they solving coordination problems that unlock productivity across multiple sectors?

Answering these questions requires a fundamental shift from isolated, vertical thinking towards a more holistic, systems-based view for entrepreneurs, investors, and policymakers alike.

To do this, we again need questions. Critical ones that aim to expose the rot at the centre of structural failures that demand innovation and invention. Questions like: What exactly are we solving for, and how are our customers finding value in our products, despite institutional voids?

I believe answering these questions puts us on the path to building solutions that endure.

By Jeremiah Nnadi

Jeremiah Nnadi is an MPhil candidate in Technology Policy at Cambridge University’s Judge Business School. He combines his academic work with practical experience gained as a product developer, analyst and investor for startups across the continent.

Thank you for reading this far. Feel free to email kenn[at]bigcabal.com, with your thoughts about this edition of NextWave. Or just click reply to share your thoughts and feedback.