Hi there, Justin here. I'm astounded by the agribusiness Cargill. It's family-owned and the largest privately-owned company in the US. Per it's Wikipedia, "By 2019, twenty-three Cargill-MacMillan family members owned 88% of the family company, which earned $113.5 billion in revenue in 2019."
Despite how much we lionize venture capital, today I'm thinking about Cargill.
If you’re already subscribed, thank you! If you’d like to subscribe, please do so here:
The Flip Notes is sponsored by
Fincra gives you access to all of the features available on the merchant portal and allows you to extend them for use in your application with a simple API integration. As a developer/fintech, you can seamlessly integrate Fincra payment APIs into your web or mobile applications to incorporate reliable payment functionality such as accepting payments and making transfers across multiple regions.
Fincra’s APIs include: virtual accounts, payouts and transfers, quote generation, currency conversions, transactions management, and wallet management.
You can gain access to Fincra’s payment solutions through a merchant portal or simply integrate their payment API keys into your platform. Sign up for a quick demo in less than two minutes.
I wrote about disruption back in July 2020.
…what are we even disrupting? I think this question is especially pertinent at the current stage of development.
In other words, where are growth opportunities on the continent coming from? Surely, in an environment where millions are unbanked and/or are non-consumers, growth isn’t coming from disrupting incumbents or stealing market share.
In that piece, I made the argument that the disruption narrative was counterproductive, and has incumbents - who startups should be collaborating with - wary of working together with the tech ecosystem. But my thinking has evolved further since then.
It’s not even that today’s startups need corporates to collaborate with. It’s that many of today’s startups aren’t going to grow up to become Big Tech disruptors - there is much more to build than there is to disrupt. Instead, many of today’s startups are going to grow up to become big corporates themselves.
I've been hearing an increasing amount of Africa-focused VCs refer to a portfolio company not as a local version of [Big Tech co] but of [massive legacy corporate].— Justin Norman (@just_norm) March 31, 2022
Healthtech company can be Africa's Kaiser Permanente
Agritech → Cargill
Payroll/HR → ADP
Over the past few years, I’ve read a lot about the history of Silicon Valley. I’ve been reaching for an analog to help me better understand what the development of the African tech ecosystem might look like.
In learning, it becomes quite clear that this isn’t a good comparison. The Bay Area was home to military research and technology since the early 1900s. Shockley Semiconductor was producing transistors, giving Silicon Valley its name, since 1956. While local markets may draw inspiration from more developed ecosystems, it’s hard to compare, and often inappropriate to do so.
And yet, we often hear the term X for Africa. Stripe for Africa. Plaid for Africa. Affirm for Africa. Brex for Africa. But if we’re going to do X for Africa - a thing that I know a lot of founders don’t like, because the comparisons lack nuance - we should widen the aperture.
So what about Cargill for Africa? Back in Season One of The Flip, we interviewed Hello Tractor’s Jehiel Oliver. In discussing the company’s ambitions he asked rhetorically, “would you rather be Uber for tractors or Cargill?”
I think this is a better mental model because of how much startups in Africa have to interact with atoms more than bits. So African startups look nothing like U.S ones because the underlying companies haven't been built to layer the tech on top of. So startups are doing both.— Neto (@docneto) April 1, 2022
Right now, B2B commerce is having its moment. It’s a topic we explored in a podcast episode last year, and in TFN #93, we took a deep dive into the model with Wasoko, alongside their $125 million Series B. (Since then, Rest of World and TechCabal have explored, as well.)
These aren’t necessarily highly scalable, zero marginal cost software businesses, with commensurately high tech valuations (as indicated by Wasoko’s $625 million valuation). They’re unsexy - in the eyes of many VCs - yet tech-enabled. And they’re using technology to solve wide problems in offline and analog industries.
Likewise, as tech companies struggle in the public markets and as the macro environment has some speculating that we'll see a contraction in venture capital, we're seeing a renewed, sober discourse surrounding the venture-backed model, in general.
Last week, Sahara Ventures’ Jumanne Mtambalike published an editorial entitled A Sweet Big Lie Told to African Startups, in which he argues against the ecosystem’s outsized focus on VC funds raised and valuations and YC acceptances. He closes with,
If I were an African founder today, which I am, my focus would be to build a real business. I don't worry much about valuations and exits, but I care. If I can deliver value, there is always a chance of attracting capital or strategic partnerships that will accelerate my growth.
Perhaps African markets will benefit from more founders with the ambition to build Cargill for Africa.