Who Makes The Cut?
Last week, the question as to what defines an African Startup came up after Jumia’s filing went public on the New York Stock Exchange.
Jumia indeed runs inarguably the biggest e-commerce business across Africa with operations spanning about 14 countries. The company is incorporated in Germany and its headquarters located in Dubai. With a central tech team based in Portugal, it will be listed in New York, which according to its IPO filing shows.
Aly-Khan Satchu, a Nairobi-based financial and investment analyst believes that Jumia, being a “German stock corporation” ideally would mean that it pays the majority of its corporate taxes in Germany. Furthermore, its subsidiaries will also pay local taxes in most countries. Clarity on this matter hasn’t yet reached sufficiency. He is of the opinion that the underlying reason it is dubbed African is because the business resides in Africa but its ownership necessary infrastructure is not on the continent.
Another key issue is that of its founders. Jumia was co-founded by Jeremy Hodara and Sacha Poignonnec, in 2012. Both of them were of French descent and former McKinsey associates with the consulting firm. Both 38-years old they come from a traditional background of a lot of French executives through the Paris business schools. In Nigeria, they opened up a store, alongside Tunde Kehinde (Nigerian) and Raphael Kofi Afaedor (Ghanaian) who both took a break from the company in 2015.
Making up Jumia’s senior management, Antoine Maillet-Mezeray, a 49 year old who serves as chief financial officer, who unsurprisingly is also French. The new supervisory board is more inclusive of the African heritage with; Jonathan Klein, the South African-born co-founder of Getty Images, Blaise Judja-Sato, a Cameroonian-American and founder of VillageReach, Alioune Ndiaye, a Senegalese chief executive of Orange Middle East and Africa and.
With the above information, it’s somewhat glaring that Jumia’s identity as an African company is stemmed on the continent being its primary market. It’s an assortment that’s often shows the African tech space for long established tech businesses and even smaller startups
WeeTracker and Partech Ventures are two companies that produce annual reports. Of note is the fact that both include startups that have a primary market in Africa regardless of it they are headquartered on the continent. Nayantara Jha the co-founder of WeeTracker said that in compiling its reports it considers the question of being incorporated outside the continent but quickly dismissed the assertion because the money was raised for Africa and not only by Africans.
Victor Asemota, a Nigerian tech veteran and investor is of the opinion that the standard for measuring a startup as African is pretty simple, arguing that it is African if the idea is founded by an African, and originates from Africa.
Asemota argues that in some rare scenarios, companies that are incorporated outside of Africa or launched by non-Africans simply look to use the African affiliation as a prop, and their real ambition is to gain quick recognition whilst leveraging on the relative novelty of solving problems in Africa.
A counter argument is that several of the best known African startups with African founders are incorporated in places like Delaware in the US are there for a reason. But that’s not always the case as being incorporated outside Africa is also often also a pragmatic business choice given the regulatory uncertainty in several African markets.
Jumia has positioned itself as African dubbing itself as “the leading pan-African e-commerce platform”. According to the S1 filing Alibaba and Amazon’s foothold in the US and China means they most likely be referred to as being wholly foreign by local consumers. On the other hand, investors would more likely look for one of those (Amazon or Alibaba) to take a stake in the business.
Jumia has garnered approaching the $1 billion mark while operating for in its African markets. This represents the broader perspective the business will play in the industry in what many insiders believe to be the end goal for local e-commerce businesses.