Mary Meeker’s Internet Trends report is an institution. It’s worth a read if you’re in the venture capital industry and I find that it helps me make 1-2 good decisions as a product exec in a good year. However like all institutions of this nature, it’s a bit of a shortcut – she saves a lot of people some of the effort in doing their own original research.
In the spirit of all good shortcuts, I want to distill some of the things I learned from it, especially in relation to building tech businesses in Africa.
- Meeker does not really mention Africa directly at all in the Report – To be fair she focuses on mostly on countries and not regions, but when she does do a regionalization, Africa is often in ‘Rest of World’. Asia is mentioned liberally but mostly because of China. And India is mentioned quite a bit as a ‘ripe’ market.
- African countries get mentioned in detailed analysis about specific things – Like in the next set of developing Internet Markets. Nigeria gets top billing of all the African countries mostly because of population and mobile use/growth. Kenya is not mentioned as much as I expected; only in a slide about developing ‘big’ smartphone markets. South Africa is mentioned once too for established smartphone markets.
- Nigeria is making a move in the data – a)As a developing ‘big internet market’. Penetration, Access and Population are all growing well. Buying power trails but only relative to the west and is on par with India and half that of China. b) Nigeria is going online on mobile phones, a whopping 76% of all internet traffic is mobile and it seems like this is mostly through messaging platforms like WhatsApp, Facebook, etc. c) Smartphone growth is torrid – faster than India and with a higher penetration.
- Kenya is looking like an also ran from Mary’s sparse data on Africa – (which means don’t read too much into it, GIGO) Internet penetration is high, and growth is high but buying power is low and population is low. Kenya would need to grow much faster in these dimensions to match its bigger rivals which means public infrastructure investments that are perhaps not on the table.
- South Africa does not spike in any way – big growth in smartphones, significant mobile internet growth. Mature mobile market. The main thing in SA seems to be solid growth in smartphone access. Companies there should definitely lean into smartphone application strategy.
- Overall – The Trends report is not rich in Africa data but what it does have is useful if you combine it with other stuff. It does offer clues on what to track if you’re interested in keeping track of the macro trends fastidiously to help direct investing. Some I have compiled below:
- Internet penetration/growth
- Smartphone penetration/growth
- Ecommerce sale penetration/growth
- Mobile as %age of ecommerce
- Mobile wallets
Some loosely related conclusions from thinking about this data some more:
- There will be losers in VC in Africa so deal discrimination has to be high/good. Part of the reason is that growth is there but buying power is not there yet and will continue to lag for a while.
- IPO exits will be drawn out – Since it will be hard to find Super Unicorns, traditional exits will be drawn out and most of the action will be in acquisitions as Western companies fill in gaps in their African strategy.
- Meteoric growth will be few and far between, certainly not as hot a pace as the typical Silicon Valley style companies launching into big western markets. However some companies will be very dominant because they will dig deep to grow and will reward their investors as a result.
- Africa as a continent with 54 countries is a growth problem for commerce because of fragmentation of politics, rules and other issues. Venture Capitalist should be lobbying for some kind of trade or commercial union to increase growth. However there are many downsides for ordinary people in that kind of scenario – winners and losers. The biggest countries will benefit at the expense of the smaller ones in the absence of some kind of union, but at the same time, Investors will see fewer viable companies than would otherwise be available to invest in.