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South Africa Has The Best Startup Ecosystem In Africa, Says New Ranking     |     New Findings Show Entrepreneurs Who Go Alone Survive More     |     Zipline In Ghana: What Is Left For African Entrepreneurs?     |     Zimbabwe’s Richest Man Takes Botswana’s Largest Telecom Operator Out On First IPO     |     New Survey Report Shows Manufacturing Rate In Nigeria Is On Increase     |     How Spotify Built a $36 Billion Music Business And Lessons To Learn     |     Uber’s First IPO Promises Each Driver $40,000 Worldwide     |     Inside Mauritius Where A Majority of South Africans Are Migrating To And Their Reasons     |     More Funds – Now Available For Nigerian Small And Medium Enterprises     |     Franchise Association of South Africa Reveals Why Franchises Are Now Choosing Shopping Centres Or Malls Locations.     |    
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Category: Report

South Africa Has The Best Startup Ecosystem In Africa, Says New Ranking

April 30, 2019

South Africa does not seem to be competing with any African country as far as the startup ecosystem is concerned. It remains the number one in Africa. This is according to a ranking developed by StartupBlink, a global map for startups worldwide, which has thousands of registered startups , co-working spaces and accelerators in its database.

South Africa does not seem to be competing with any African country as far as the startup ecosystem is concerned. It remains the number one in Africa. This is according to a ranking developed by StartupBlink, a global map for startups worldwide, which has thousands of registered startups , co-working spaces and accelerators in its database.

The ranking says South Africa is now the 50th in the world and the first in Africa, after it fell 13 places off from the previous ranking. Kenya is next, ranked 51, followed by Nigeria at 56, Egypt at 60, Rwanda at 64, Morocco at 65, Tunisia at 74, Ghana at 75, Uganda at 81, Cameroon at 84, Botswana at 90, Zambia at 92, Algeria at 99 and Ethiopia at 100.

Just Any Random Ranking From A Random Organisation?

The ranking is not one from a random organisation. StartupBlink, which works with notable global partners such as Crunchbase and SimilarWeb draws its data from what it claims is an algorithm that analyzes tens of thousands of data points on registered startups, accelerators and co-working spaces listed on the StartupBlink global startup ecosystem map, as well as data received from its partner organisations. 100 countries appeared on the ranking and 1000 cities from across the world were featured.

This feat by South Africa is remarkable because it may mean that, more businesses are finding it convenient to start up new ventures in South Africa than in Brazil, Russia, India, Russia, Kenya, the Philippines, Nigeria and Peru. However, the report still puts South Africa behind Malaysia, Slovakia, Slovenia and Croatia.

Russia on the fifteenth spot is the highest (15) ranked top emerging market country, closely followed by India (17). 

As expected, the US, the global startup hub is the most ranked country, trailed by the UK, Canada and Israel in that order.

Why South Africa Deserves the Top Position In Africa

South Africa is the number one spot in Africa in the startup ecosystem in Africa, according to the ranking, because it is doing things differently.

StartupBlink says despite the drop in ranking, South Africa has an extremely high potential. It adds that the country is still very much better positioned than its African counterparts to become a global startup hub. 

All the country needs to do is that:

“More active and positive government support is needed in order to reduce the difficulties facing startups and to simplify laws, helping entrepreneurs focus on what really matters — their business,”says the report authors.

However, StartupBlink says Kenya is Fast Closing This Gap 

“Since 2007, Kenya’s startup ecosystem has been revolutionising mobile payments with such startups as m-Pesa. Kenya’s government has been involved in startup ecosystem development since 2013, with the launch of Konzo Techno City, a tech park project built outside of Nairobi.

“Global tech giants like Google, Microsoft, Samsung, and Intel are also located in the capital city, ’’ the report says.

But Many More Things Are Still Left Undone:

”Despite being one of Africa’s well-established startup ecosystems, Kenya still has room to improve. The country receives far less global funding and investment, and has fewer helpful government initiatives, than are present in higher ranked countries,” the report said.

Lagos, Nigeria Remains The Top African Startup City

Cummulatively, South Africa wins, but city by city, its cities are shut out from the first 100 in the world. South Africa’s highest ranked city is Cape Town on the 157th position (down 17 places over 2017). Johannesburg climbed up to the 248th spot the world(up 22 places).

Lagos, Nigeria remains the city for African startups at 99, globally (up a massive 120 spots); Nairobi, Kenya is at 105th spot (up 86 places from 2017) and Cairo, Egypt hangs at 177th (up 27 spots). Kigali, Rwanda is ranked at 232 while Tunis, Tunisia at 223 is ahead of Accra, Ghana which is at 244th and Casablanca, Morocco which is shot down to the 284th startup city in the world.

US’ San Francisco is the global city for startups, says StartupBlink followed by New York, London, Los Angeles and Boston. Three emerging market cities are among the top 20 — Moscow at 10, Beijing at 17 and New Delhi at 18.

Charles Rapulu Udoh

Charles Rapulu Udoh a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organisations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution and data analytics both in Nigeria and across the world.

New Findings Show Entrepreneurs Who Go Alone Survive More

Entrepreneurs who slug it out alone appear to have the upper hand in running startups that survive than their counterparts who run startups as teams.

Jason Greenberg, assistant professor of management and organizations at New York University’s Leonard N. Stern School of Business, and Ethan Mollick, associate professor of management at the Wharton School at the University of Pennsylvania in their recent working paper, once again brought to light a strongly debated question among academics and entrepreneurs over which approach is more suited for long-term success. Solo-founded companies or team-led ventures?

The Research Took Seven Years To Arrive At This Conclusion

Jason Greenberg and Ethan Mollick found over the course of seven years during which the study lasted, that solo-founded ventures were more than 2.6 times more likely to remain in business than companies with three or more founders.

The researchers also found that solo founders were 54% less likely than teams of three or more to dissolve or suspend business functions without actually closing, and about 41% less likely to do so than two-person teams.

Also See: Best Ways To Carry Out Market Research As A Startup


The study also found that the solo ventures generated more average revenue than ventures with two founders—and they brought in at least as much revenue, and often more, than those with three or more.

Key Highlights of The Findings

  • The researchers focused on a group of 3,526 companies that crowdfunded using the Kickstarter platform. 
  • Collectively, these companies raised $151 million in crowdfunding cash and generated about $358 million in total revenue between 2009 and 2015.
  • Dr. Greenberg notes that the solo-run companies, as a group, raised less money initially—even though they often went on to generate more revenue and last longer than their counterparts.

Reasons For Reaching This Conclusion

Although the findings needed more testing, according to Dr. Greenberg. The data shows that:

“The more cooks you put into the kitchen, the more likely there is to be disagreement about what ingredients you should use and so forth,” 

“It’s too early to form conclusions about the extended data. But preliminary analyses suggest that the solo ventures in this group are also more successful in terms of revenue and long-term survival than team-built businesses.

Single entrepreneurs remain the ultimate decision makers and bring in help only when they need it. By contrast, with team-led companies, decision-making holds the possibility of becoming contentious.’’ Dr Greengberg says.

Consequently, the research team has expanded its research to include a variety of sources, including the Crunchbase business database, the Panel Study of Entrepreneurial Dynamics II startup survey and a proprietary survey of more than 1,500 high-potential Wharton graduates, according to Dr. Greenberg.

The Disagreement And The Argument

A case would be made for why a high number of highly successful companies that started out as teams, such as Microsoft ,Apple , Google, eBay , Netflix , and Facebook

Also See: How International Organisations Are Helping Startups In Africa


But Alden Zecha, executive in residence at the Center for the Advancement of Social Entrepreneurship at Duke University’s Fuqua School of Business, was quick to point out that the reason may not be far-fetched: these team-founded startups survived and ended up more successful because there was the presence of that single dominant team member.

However, critics say both methods have their respective pros and cons, and that there’s no easy answer to the question. Rather, they say, the long-term success of a business can depend on factors such as:

  •  The size of the venture
  •  The industry
  • Founder experience
  • The number of collaborators 
  • The dynamics of the founding team, if there is one.

The Research Is Already Changing The Way Things Are Done.

It seems Dr. Greenberg is not readily buying into any further tests, even if there has to be one. He has, consequently, adjusted his classroom approach. Instead of allowing students to work in groups to develop business concepts, he has shifted to teaching them the skills they need to be successful on their own, such as how to hire the right people to balance their skill set and hire quickly, if necessary. 

“Given the choice, many students are opting to go the solo route,
Indeed, for some entrepreneurs, the solo approach may be prudent,” he says.

“While teams might be great once a venture is established and off the ground, starting a company requires decision-making speed and the authority to take chances, which can be harder with a team,” says John Bly, chief executive officer of LBA Haynes Strand, a provider of accounting, audit and advisory services.

Charles Rapulu Udoh

Charles Rapulu Udoh a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organisations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution and data analytics both in Nigeria and across the world.

Zipline In Ghana: What Is Left For African Entrepreneurs?

New drones would soon be buzzing around in Ghana’s airspace in desperate moves to deliver blood, or blood products or vaccines or anything related to emergency medicine. In so doing Zipline, the San Fransisco-based drone delivery company, expects to meet its target with the Ghanaian government.

Ghanaian Vice President,Mahamudu Bawumia, said a deal has been signed with Zipline to use drones to cover over 2,000 health facilities in Ghana which serve 12 million Ghanaians (out of a population of just 30 million) . Zipline is expected to begin operations from small community clinics and vaccination centers and then reach out to larger general hospitals.

The Terms Of The Deal, In Part, Are As Follows:

  • Zipline is to make 600 deliveries a day (150 deliveries from each of the four centers it would be operating from) for the next four years and they will be paid per successful delivery.
  • For that to happen, Ghana has been billed $12.5 million by Zipline to cover the period.
  • The hope of Ghana’s health policymakers is that the drone delivery system which has faster drop-off rate will improve its health outcomes including reducing its maternal and infant mortality rates.
  • The delivery program, if successful, will also help to reduce the incidence of wastage of medical products, as a result of overstocking at hospitals.
  • According to the World Health Organization, “severe bleeding during delivery or after childbirth is the commonest cause of maternal mortality and contributes to around 34% of maternal deaths in Africa.” The timely access to safe blood could save many lives.

Critics Say This Is A Big Hoax

Although Zipline is describing the Ghana operation as the world’s largest drone delivery service, Ghanaian naysayers are calling out the government for wasting such amount of money, which should have been spent on more important and simpler things the health sector really needs such as the critical shortage of hospital beds, gloves, consistent supply of water and the improvement of hospital buildings.

Zipline appears to be all out for business and does not seem to be buying into any of the stories. It plans to make Ghana the base for training future Zipline flight operators and prepares further to expand into more countries in the coming years. Already, Uganda, Senegal and some states in Nigeria are expressing interests in the drone delivery system. Zipline’s operations in Rwanda in 2016, delivering blood and blood products during emergencies, were largely successful.

The company is targeting the “last mile delivery” challenge which many logistics operators face in African cities and rural area where road networks are either underdeveloped or poorly maintained. The focus of last mile logistics is to deliver items to the end user as fast as possible.

From Delivering Blood to Delivering Pizza, Drones Have To Inspire New Generations of African Logistics Startups or Drone Manufacturers

According to a research report from Radiant Insight, “Unmanned aerial systems(UAS) markets (mostly dominated by drones) stood at $609 million in 2014. They are also expected to grow to $4.8 billion dollars, worldwide by 2021. The leading markets for drone use and sales include oil and gas mapping, utility line inspection, package delivery, and agricultural applications

Auterion Set to Announce Its Open Source Drone Control Program This Week

Should this happen, the Swiss technology firm Auterion which is working with General Electric Aviation and the Defense Innovation Unit of the U.S. Department of Defense would be allowing more consumer, commercial, and government drone manufacturers access to basic information on how drones are designed and programmed. This would also help small drone players to penetrate the drone market which is currently dominated by Chinese drone manufacturers, including DJI, by minimizing a complicated development road block: the operating system. 

Google

Just last week Tuesday, April 23, 2019, the United States’ Federal Aviation Administration’s gave the first ever certification for drone deliveries to Google’s Wing Project. Wing will now start delivering commercial packages weighing up to three pounds using drones.

Amazon

With Amazon Prime Air, Amazon.com is already delivering packages using drones in just 30 minutes. The U.S. Patent and Trademark office has already published Amazon’s patent application for its drone delivery system (US Patent 20150120094). Amazon is thinking beyond just home delivery. It already has design for features like“Bring it to Me”,which would capture a customer’s location by GPS data received through mobile devices.

UPS

In 2013, sources familiar with the company’s plans said it has been testing and evaluating different approaches to drone delivery. UPS is today partnering with Matternet under the first America’s Federal Aviation Administration-sanctioned commercial drone service to deliver medical samples in North Carolina.

DHL

DHL Express has already launched its “parcelcopter”, a helicopter-style drone which will deliver medications and other urgently needed goods to the remote North Sea island of Juist.

The Drone Manufacturing Market Is Still Very Much Open

Although the manufacturing of drones usually requires a lot of money, risk-taking investors, who are willing to stay longer in the market would have a field day of success. A few drone manufacturing companies have already taken strategic positions around the world.

Drone Current Market Leaders:

Matternet a drone start­up has been able to raise $16 million in seed capital from investors.They have successfully partnered with organization like Swiss Post to conduct pilots to deliver post by drones. This is a classic case of last mile delivery success.

Other manufacturers such as the Chinese DJI founded in 2006 by Frank Wang and headquartered in Shenzhen, Guangdong province, China is not focused on last­ mile deliveries but on other applications like photography and amateur applications.The number of players in this segment just depicts how familiar and aware people are getting with drones. DJI is the leader in civil­ drone industry. A privately held company, it has been able to raise 0.5 billion USD in revenue in 2014.

South African drone startups such as Aerial Monitoring Solutions (AMS) founded in 2013, UDS and HAEVIC also occupy a niche in the market for low cost, customised drones.

Also See: Ghanaian Startup mPharma Acquires Kenyan Second-Largest Pharmacy Chain

The Era of Drones Is Inevitable and Smart Startups Who Can Take The Risk Would Win Big

Drones are already business models to these industries:

  1. Global courier and delivery service companies using drones for last ­mile delivery​:
  2. Logistics companies have been experimenting with drones for delivery. According to Business Insider:

“Drone deliveries will translate to instant cost savings, part of which will be passed onto consumers.It costs far less to operate a fleet of unmanned aerial vehicles than it does a fleet of ground vehicles.It costs 10 cents to deliver a 4.4 pound(2kilo) package over six miles(9.7kilometers)using a drone,according to Raffaello D’Andrea,who co­ founded Kiva Systems (the warehouse robots used by Amazon) . That’s far cheaper than the $2 to $8 per package that it costs Amazon today using ground transportation for deliveries over this “last mile.”

Offering 30 ­minute delivery at such a low cost to consumers could boost Amazon’s eCommerce and retail market share.That’s because “high­ than expected shipping costs” are the top reason why consumers abandon a shopping cart online. The retailer achieving the most significant reductions in shipping fees will likely win consumer loyalty and market share.

3. Companies providing drone operations and management:​

The drone era will also benefit companies that offer service drones for flight and management console or software. Matternet still is exploring subscription based leasing of drones.

Motivation to adopt Drones:

Main factors that could motivate online retailers to adopt drones are:

●Cost 

●Value of fast delivery

●Convenience

Last Miles Delivery Drones Are Finally Coming To Stay

This is why for Ghanaian nurses like Gladys Tetteh, the use of drones are very much a case of what’s not to like?

“It makes us work faster and the mothers will not stay too long here trying to vaccinate their children,” she said.

Charles Rapulu Udoh

Charles Rapulu Udoh a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organisations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution and data analytics both in Nigeria and across the world.

Zimbabwe’s Richest Man Takes Botswana’s Largest Telecom Operator Out On First IPO

April 29, 2019

Interested investors should get their funds ready as Mascom, Botswana’s largest mobile operator with over 1.7 million subscribers is about to have its Initial Public Offering (IPO) on the floor of the Botswana Stock Exchange. However, only a portion of the shares held by Strive Masiyiwa’s Econet, which has 60% of Mascom’s stocks, would be offered to the public for subscription. Mascom’s offer is for 100 pula ($9.36) per share and trading is due by October of this year. 

Mr. Strive Masiyiwa

Zimbabwe’s richest man Mr. Strive Masiyiwa, who owns Econet which is also the largest mobile operator in Zimbabwe said last week that he intends to list some of Econet’s shares in Mascom on the Botswana Stock Exchange in what he believes will be one of the biggest flotations on Botswana’s Stock Exchange.


“This is what I have always wanted to do …I have never held enough shareholding to push it through,” he told reporters.

Mr. Masiyiwa is Zimbabwe’s Richest Man And He Owns Both Mascom and Econet

Mr. Strive Masiyiwa founded Mascom in 1998 in Botswana, months before he established Econet Wireless in Zimbabwe. Both telecom mobile operators are now the largest in the two countries.

Earlier in March 2019, Econet Group spent $300 million acquiring a 53% stake in Mascom from MTN Group. This increased Econet’s stake in Mascom from 7% to 60%. The remainder of 40% is held by the Botswana Public Officers Pension Fund. The deal is expected to be concluded anytime soon as regulatory approval is at its final stages.

Also See: MTN Nigeria Prepares To List On The Nigerian Stock Exchange, Converts To Public Company

Mr. Strive Masiyiwa, aged 57, is the 8th richest man in Africa with a net worth of $1.9 billion, according to Forbes 2019 estimates. His wealth comes mostly from the telecom industry.

Masiyiwa also owns just over half of private company Liquid Telecom, which provides fiber optic and satellite services to telecom firms across Africa. His other assets include stakes in mobile phone networks in Burundi and Lesotho, and investments in fintech and power distribution firms in Africa. He and his wife Tsitsi founded the Higherlife Foundation, which supports orphaned and poor children in Zimbabwe, South Africa, Burundi and Lesotho.

Botswana’s biggest IPO was in 2016, when Botswana Telecommunications Corporation listed after a 462 million-pula ($43-million) offering.

Charles Rapulu Udoh

Charles Rapulu Udoh a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organisations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution and data analytics both in Nigeria and across the world.

New Survey Report Shows Manufacturing Rate In Nigeria Is On Increase

April 27, 2019

A new PMI Survey Report shows a better performance for the Nigerian Manufacturing Sector in April. This is for the 25th consecutive time in a row. The PMI Survey Report is contained in a report released by Central Bank of Nigeria (CBN) for the month of April 2019. The report shows the manufacturing sector in Nigeria improved more during the period under review.

Key Analysis From The Figures:

The report shows expansion in the manufacturing sector for the twenty-fifth consecutive month and at the quickest rate since January.

Faster Rises Were Seen As:

  • Production output (increased to 58.8 from 58.3 in March),
  •  Total new orders (increased to 57.2 from 56.7), 
  • Employment in the manufacturing sector (increased to 57.0 from 56.9); 
  • Raw materials available to manufacturing companies (increased to 57.5 from 57.1). 

The Red Light:

  • The report shows that fewer export orders were made, as total export order fell more deeply (to 37.4 from 47.9)
  • Inflation also hit input prices for most factories as input price inflation accelerated (to 60.2 from 57.6)
  • Total stocks of finished goods went up at a slower pace (to54.4 from 60.7).
  • Inflation, however, lessened on output charge for most factories (to 52.4 from 62.3) 
  • Overall, Manufacturing PMI in Nigeria averaged 51.70 from 2014 until 2019, reaching an all time high of 61.10 in December of 2018 and a record low of 41.90 in June of 2016.
Forecast Data Chart

Growing Sectors:

All the 17 sub-sectors surveyed recorded growth. Among others are management of companies; real estate rental & leasing; construction; wholesale/retail trade; agriculture; health care & social assistance; finance & insurance; professional, scientific, & technical services and educational services.

What Rising PMI Means For Every Economy:

 International investors coming into every country usually study the PMI (Purchasing Managers’ Index) to determine the most current economic situation in the country.  

PMI is usually the most closely observed business surveys in the world. It’s relied on by most countries’ central banks, including the US Federal Reserve, European Central Bank and Bank of England for providing the most accurate advance signals of changing economic growth and inflation.

Essentially, in predicting GDP growth, a sustained reading of higher than 42.0 PMI is considered to be the benchmark for economic expansion, while a sustained reading of below 42.0 could indicate that an economy is heading into a recession.

The Composite Manufacturing PMI measures the performance of the manufacturing sector and is derived from a survey of purchasing and supply executives from 13 locations in Nigeria. The survey shows the change, if any, in the current month compared with the previous month

Click here to download the full report.

Also See: Nigerian Bank of Agriculture is Open For New Investors

Charles Rapulu Udoh

Charles Rapulu Udoh a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organisations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution and data analytics both in Nigeria and across the world.

How Spotify Built a $36 Billion Music Business And Lessons To Learn

Spotify’s founders Daniel Ek and Martin Lorentzon could have had a big dream of building the biggest music streaming experience in the world, but not to the degree with which the dream has succeeded. It could still have come like a big surprise to them. Indeed, they were even more surprised, when on 3 April, 2018, the Company shares opened on the floors of the New York Exchange at the price of $165.90 per share, the cost of about 13 physical CDs then.

The music streaming company traded 30 million outstanding shares of its 178 million total, bringing the company’s market value to stand at $27 billion, and on the next day, Wednesday, after the first day trading, Daniel Ek’s shares (about 9 percent of the company) were worth $2.3 billion.

In fact, Spotify has become so popular a streaming music service that today it can boast of more than 96M paid subscribers. Why would something as less significant as listening to music in a very busy world suddenly acquire billions of dollars worth of value. Here is why Spotify made a difference.

Spotify’s Revenue/Loss Analysis as at 2018

Spotify Focused on Breaking Away From The Conventional Ways of Streaming Music

Daniel Ek and Lorentzon were not the only people in the world with the idea of changing the world’s music space. Sean Parker’s peer-to-peer music sharing service, Napster, had already become so popular with music fans, although playing some illegal games for profit. Apple’s iTunes already sold songs for as much as $2 per track. Daniel EK and Lorentzon’s plan was to find a space between Napster’s illegality and Apple’s great iTunes.

Daniel Ek put it this way then:

“I just really believe that if we create the right product, which is better than piracy, that people will come.” — Daniel Ek

And then, the solution was born:

  • First, Spotify would deliver instant music, with high-quality audio, no downloads, in ways that are completely legal. 
  • To make this happen, Ek and Lorentzon would have to invest heavily in technology to make every aspect of Spotify’s user experience memorable. 
  • With the broader music industry in decline and a strong understanding of the market, Spotify’s timing was perfect. The company was able to leverage this timing and market knowledge to negotiate its crucial early licensing deals.

Spotify spent the first few years of its existence growing the business by developing a strong product, instead of rushing for profit. In fact, it restricted how many invites users could give away to their friends. This gave it the chance to focus on continuous product development as well as plan for and manage steady, gradual user growth. It also manage the image of the product by making it seem as if it were only available to some select people. Users would therefore think it was really a privilege to have the Spotify App.


Spotify’s Early Negotiation With Record Labels Changed its Course Forever

Spotify made the best move linking the music streaming company with the best of celebrity bloggers. These bloggers not only danced to the music but spread the good news.The result: they kept coming back for more of the music. In just one year, Spotify had built a product that music bloggers were already excited about.

“Even today, Spotify’s traditional music player is better than everything I’ve tested on this side of Winamp / iTunes and a really good Direct Connect hub.” — Henrik Torstensson, CEO and Co-founder of digital health company, Lifesum, who worked at Spotify for three years, holding major roles such as Head of Premium Sales said of that era.

This was followed by negotiations with record labels.With sales falling, negotiation with the American “Big Four” record labels — EMI, Sony, Universal, and Warner Music — became an option. A couple of smaller labels also agreed to make their entire back catalogs available to Spotify for use outside the U.S. on a limited basis. The price of this deal is that the Big Four record labels would become Spotify’s biggest shareholders, pocketing almost one-fifth of Spotify’s stock for just $112,000.

Indeed, this was a game-changing deal. In fact, Spotify needed the labels — and their back catalogs — as much as the labels needed a new way to reach young music fans.

Another game changer also came, this time from Napster’s Sean Parker who was so surprised that Spotify has grown so fast and fat that he quickly took up his pen and wrote what WIRED described as a “1,700-word love letter” to Spotify. He followed up on the love affairs by introducing Facebook founder, Mark Zuckerberg, who was even more fascinated that the introduction lead to the official integration of Spotify into Facebook — a partnership that would propel Spotify to new heights of growth when it launched in the United States.

Spotify’s Freemium Model Helped the Company To Set Its Foot Right in a Crowded and Strongly Competitive Market

Spotify was already the best bet by 2011. It had earned almost over 10 million tracks in its catalog, accumulated over 1M music fans across seven European countries. The Freemium has made this growth possible.

Freemium users could get access to millions of songs, share playlists with friends, and play local music files using Spotify. Spotify’s Premium subscription, on the other hand, eliminated the friction of the Freemium app. Not only were there no ads on Spotify Premium, there were no listening limits, either. Premium users could listen to music in Offline Mode, a feature that was introduced shortly before Spotify’s launch in the U.S., and play tracks on their mobile devices — a significant differentiator at that time.

Also See: Uber’s First IPO Promises Each Driver $40, 000 Worldwide

Relying on this Freemium features, Spotify expanded to the U.S., where it partnered with some of America’s biggest brands, including Chevrolet, Coca-Cola, Motorola, Reebok, and Sprite, among others. Spotify ran display ads for its American launch partners on its freemium product. In exchange, the American partners gave away exclusive Spotify invitations to their social audiences. This drove traffic and brand awareness for the advertising partners.

Staying Ahead of the Competition Ensures Spotify Keeps Winning

How Spotify compared with Apple as at 2018

Spotify has kept the momentum and stayed ahead since then. The company has since launched a series of new features that would enhance user experience, such as, Discover Weekly, Release Radar, Time Capsule among others. This shows just how focused Spotify is on the core underlying technology behind its products.

Spotify’s greatest challenge is achieving profitability. Spotify revealed it currently has more than 207 million monthly active users worldwide, of whom 96M are paying subscribers. Fourth quarter financial results of 2018, showed the company making operating profit for the first time of €94 million ($107 million).

“Spotify’s done that as well,” says David Brickley, host of Entrepreneur Wrap and CEO/owner of STN Digital.

“ Sit down and think about the problems in an industry you know well, then brainstorm solutions. You have enough coffees with people, [and] you start to hear the same problem over and over again in the industry,” Brickley says.

The world is moving so fast and the next big thing, apart from Spotify, is indeed still yet to come.

Charles Rapulu Udoh

Charles Rapulu Udoh a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organisations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution and data analytics both in Nigeria and across the world.

Uber’s First IPO Promises Each Driver $40,000 Worldwide

April 26, 2019

Uber IPO is going to happen soon but the company has posed a loss of over $1 billion in the first three months of 2019 alone. However, one group of people who are going to benefit the most are the ride-hailing company’s drivers. Uber said each driver could get up to $40,000 each as a “driver appreciation reward” ahead of the company’s initial public offering. With its first IPO due earlier in May, the ride-hailing company is aiming for a valuation of $91.5 billion. If this becomes successful, Uber would become among the top ten US company with the largest U.S. listing in years. Plus: this is also a test of investor appetite for a high-growth but highly unprofitable business.

Here is How Everything Is Going To Play Out

  • To qualify for the reward, drivers must have completed at least 2,500 trips, including one this year, as of April 7, and have an account in good standing. Uber said payouts to non-US drivers would be adjusted to reflect different average hourly earnings across regions.
  • For US drivers, Uber said eligible US drivers would receive one of six cash rewards based on the number of Uber trips they’ve completed: $100 for making at least 2,500 trips, $500 for at least 5,000 trips, $1,000 for at least 10,000 trips, $10,000 for at least 20,000 trips, $20,000 for at least 30,000 trips, and the largest, $40,000, for at least 40,000 trips.
  • About $300 million has been budgeted by the company for more than 1.1 million drivers worldwide for payment on or around Saturday
  • In a regulatory filing on April 26, 2019, Uber is going to sell every share on its first day of trading at a price range of $44 to $50. This is not a big deal anyway.
  • The company will sell 180 million shares in the offering to raise up to $9 billion.
  • Existing shareholders in Uber, holding over 27 million are ready to raise as much as $1.35 billion from those shares. This is going to make them instant multimillionaires if this happens.
  • Of the stock being sold in the IPO by existing Uber investors, 6.86 million shares are from Uber co-founders Travis Kalanick and Garrett Camp, meaning the two men could jointly pocket $343 million if the IPO prices at the top end of its current range.
  • Already, PayPal, an American online payment solution, is making the first move by agreeing to purchase $500 million of stock in a private placement at the price the IPO eventually settles at.
  • Uber management is gearing up for what is going to be the hardest and the most stressful roadshow ever, as they would begin a difficult task of pitching Uber to public markets investors. 
  • Uber expects to price the IPO on May 9 and then begin trading on the New York Stock Exchange the following day, people familiar with the matter have said.
  • A valuation of $91.5 billion is already a handwriting on the wall. In 2018, Uber’s underwriters or investment bankers told Uber they would raise $120 billion when the IPO is ready to go, but then, this sudden adjustment in the valuation brings the company closer to the $76 billion valuation it attained in its last private fundraising round in 2018.
  • This adjustment of valuation expectations reflects the poor stock performance of its smaller rival Lyft Inc following its IPO last month. Lyft shares ended trading on Thursday down more than 20 percent from their IPO price amid investor skepticism over its path to profitability. The most probable guess, of course, why Uber’s IPO would be more successful would be that Uber has more market share than Lyft, and would definitely perform better than Lyft.
  • Uber’s projected $91.5 billion market capitalization would make it bigger than General Motors (GM), Ford (F), Fiat Chrysler (FCAU), Tesla (TSLA), Honda(HMC), Volkswagen (VOW.Germany), Continental (CON.Germany), the entire U.S. rental car industry, and most of the aftermarket car-parts business. Only Toyota (TM), with a market capitalization of $200 billion, is larger.

Related: Is Uber Really Not A Profit Making Organisation?

The Loss, The Scandal, The Public Outrage

Uber Founders, Garret Camp and Travis Kalanick

When the road show begins, Uber expects to find a lot of answers to provide to questions posed by potential investors. Such questions would include:

  • When will Uber ever make profit? This question is going to be quite depressing for the company. The company reported in the filing, a net loss attributable to the company for the first quarter of 2019 of around $1 billion on sales of roughly $3 billion. 
  • How will Uber navigate the gradual movement to self-driving vehicles; would Uber’s business model support higher driver costs from minimum wage rules?
  • How will Uber handle sexual harassment allegations, a massive data breach that was concealed from regulators, use of illicit software to evade authorities and allegations of bribery overseas, going forward?

    “When it comes to Uber, we believe there are still questions over the current car-sharing model, the economics of which are not immediately or obviously attractive for sustainable, long-term investment,” Mark Hargraves, head of Framlington Global Equities, wrote in a note.
Charles Rapulu Udoh

Charles Rapulu Udoh a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organisations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution and data analytics both in Nigeria and across the world.

Inside Mauritius Where A Majority of South Africans Are Migrating To And Their Reasons

The island of Mauritius, with a population of just 1.2 million people is not only good for business, but is almost crime free. This is probably why a majority of high net worth of South Africans are migrating there. Below, we examine the reasons for this migration.

Foreigners Can Own Landed Property In Mauritius And Get Automatic Residence Permit

Following the passage of the the Non-Citizen (Property) Restriction Act into law by the Mauritian government, any non-citizen (whether individual, corporate or trust) of Mauritius can purchase immovable property (such as land for commercial purposes) subject to obtaining the approval of the Prime Minister’s Office, channeled through the Board of Investment of Mauritius. Prior to this law, only non-citizens of Mauritius who have permits to invest, work or live in Mauritius could purchase specific types of immovable property in Mauritius.

Even when the non-citizen is not yet in Mauritius, but in South Africa, the purchase of a residential unit acquired under the Mauritian Property Development Scheme (PDS)or Smart City Scheme can give the non-citizen an automatic right to residence in Mauritius without applying for any further permit to reside, provided that the property’s purchase price is above USD 500,000.

Other Ways of Getting Automatic Residence Permit Are:

Occupation Permit (OP) :

  • When you plan to work in Mauritius, you would also get an automatic residence permit, provided that you make an Initial investment of $100,000 in a business activity that should generate an annual turnover of at least MUR2 million ( $58,000) for the first year and cumulative turnover of at least MUR10 million for the subsequent two years.

Permanent Residence Scheme (PRS)

  • Foreign nationals investing more than $500,000 into the Permanent Resident Investment Fund (PRIF) for a period of 10 years are eligible for permanent residence, along with their spouse and children under 18 years of age. For children over 18, an additional deposit of $100,000 per person is required.
  • Other means of entering the country include a retirement non-citizen permit, and a foreign investor permit.
  • This has made the island country become highly sought-after by South African property buyers, some for residency purposes, but mostly for holiday/second homes, retirement and relocation.

Lending Rate

Banks in Mauritius peg their lending interest rate at 8.50 percent as of February, 2019. The average Lending Rate in Mauritius from 1998 to 2019 is 9.78 percent, meaning that lending rate in Mauritius has never gone beyond 9 percent over more than a twenty-year period and is not likely to ever go beyond that in the coming years. 

Aside lending rate, the country also boasts of top-class infrastructure including an excellent banking sector, strong economic growth and a favourable investment and tax climate and is regarded as one of the easiest places to do business in.

Doing Business In Mauritius

It takes just 2 days to register a business in Mauritius. All you have to do is provide the following the information:Name of the company/commercial partnership;Company file number/Commercial partnership files number;The Business name (if any);The general nature of business and its location; Date or proposed date of commencement of business; Address of the principal place of business; Postal address; Workforce of the applicant; Telephone number, fax number and email address and pay as low as 100 Rupees ($1.43) and you are good to go.

Other business reasons of moving to Mauritius include, economic growth, good schooling, low crime rates, and is politically stable, and has an unemployment rate of 6.80%.

Taxes:

Unlike South Africa, the business environment is tax-effective. Under the Mauritian Global Business sector, a foreign company can fall in either one of two categories: GBC1 or GBC2.

Also See: Franchise Association of South Africa Reveals Why Franchises Are Now Choosing Shopping Centres Or Mall Locations

A Global Business Company (GBC 2)

A Global Business Company (GBC 2) is a company that has its office in Mauritius, but does business outside Mauritius. At all times, the company has the Management Company acting as Registered Agent in Mauritius. The GBC 2 is non-resident for tax purposes and therefore is a tax exempt entity and cannot avail itself of the relief under the Double Taxation Treaty in force in Mauritius. Thus, a GBC2 company pays no corporate tax; no withholding tax on dividends; no interest and royalties; no Capital Gains tax; and has no access to Double Taxation Avoidance Treaty.

A Global Business Company 1(GBC 1)

A Global Business Company 1(GBC 1) can be in the form of a Trust, Sociéty and Partnership. This includes small and medium scale businesses. A GBC 1 is considered to be tax resident in Mauritius and is subject to corporate tax at 15%. Tax advantages for GBC 1 in Mauritius are that there is no capital gains tax and also no withholding tax on dividends, interest and royalties paid or estate duties.

The expanding network of Double Taxation Treaties has further reinforced Mauritius as a tax efficient jurisdiction and is also one of the prime reasons explaining the growing investment in GBC 1. Activities commonly undertaken by a GBC 1 requiring no specialized license are Investment Holding, Trading and International Consultancy and it normally takes an average of 3–4 weeks to incorporate a GBC 1 with such standard activities.

Theo Pietersen, MD of South African Real Estate company, Seeff in Mauritius, gave an insight that more South Africans may be on their way to the island of Mauritius for the singular reason that the property on the island is regarded as an excellent investment and if you invest early, you can generally benefit from excellent capital growth.

Mauritius is made up of an ethnically and religiously diverse mix of people of Indians, Africans, French and Chinese heritage. The business people of Mauritius today are predominantly from Europe, South Africa, India and China.

Charles Rapulu Udoh

Charles Rapulu Udoh a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organisations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution and data analytics both in Nigeria and across the world.

More Funds – Now Available For Nigerian Small And Medium Enterprises

April 25, 2019

The Central Bank of Nigeria has again released the sum of $210,000 million on the Nigerian Interbank Market in continuation of its mediation in the inter-bank foreign exchange market, to sustain the availability of cash in that segment of the market.

Fashion Designer In Studio

From the figures released by the CBN:

  1. Authorized dealers in the wholesale segment of the market, as in previous deals, were offered the sum of $100million. 
  2. Those in the Small and Medium Enterprises (SMEs) segment got a boost of $55 million. 
  3. Customers purchasing foreign exchange for invisibles such as tuition fees, medical payments and Basic Travel Allowance (BTA), among others, were also allotted a total of $55 million.
Related: Nigerian Forex Market Gets $210m CBN Boost

This has not in any way, however, changed the exchange rate of the Naira as it is still on N360/$1 in the BDC segment of the market, Thursday morning.

Charles Rapulu Udoh

Charles Rapulu Udoh a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organisations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution and data analytics both in Nigeria and across the world.

Franchise Association of South Africa Reveals Why Franchises Are Now Choosing Shopping Centres Or Malls Locations.

Location determines the life of every business. According to the latest Franchise Association of South African survey, more franchises are choosing to be located at a shopping centre or mall.


Morne Cronje, Head of Franchising at FNB Business says:

“Before choosing a location, you should first consider the nature of your business and the ideal strategy for attracting customers. Doing your homework and research before choosing a location can determine the success or failure of your business,”

Cronje goes ahead to state that more franchises are now being located at shopping centres or malls in South Africa, because of the following reasons:

Also See: South African Real Estate Startups Shock Other African Startups With This New Move
  • Load shedding: Power outages form part of the main issues faced by businesses in our economy. Given that most shopping centres have invested in power generators, one of the benefits of having your franchise at a mall is that it shields your business operations from power cuts.In fact, during these past few weeks of power outages, we have seen an increase in people visiting food courts to dine at various malls around the country.
  • More foot traffic: With your franchise being located at a mall, you immediately attract more customers and also gain their trust in your products and services.
  • Security: Your franchise has 24/7 security supplied. As a result, this attracts and also makes customers feel safer. The cost of security will also be shared amongst all the stores in the mall, which means it is not all on you like a stand-alone store.
  • Good infrastructure: Shopping centres or malls generally have great infrastructure and the buildings are thoroughly maintained. The franchise doesn’t have to stress about maintaining the premises. Furthermore, shops are required to adhere to certain quality standard which benefits the brand.
  • Landlord relationship: During economic tough times, having a good relationship with a landlord is very important because it will enable you to have an honest conversation to negotiate leases and payment terms.
  • Facilities: Shopping centres and malls provide a number of public services and facilities which provide convenience for consumers while shopping, such as parking space, restrooms, baby changing stations and facilities for people living with disabilities. Although renting space at an upmarket mall or shopping centre can initially be costly, businesses tend to benefit in the long term due to the advantage of a superior location and value-added benefits afforded to both consumers and businesses,” says Cronje.
Charles Rapulu Udoh

Charles Rapulu Udoh a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organisations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution and data analytics both in Nigeria and across the world.

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