Africa Is Not Silicon Valley — And SaaS Alone Won’t Work

Let’s get one thing straight: SaaS is not a silver bullet for Africa.

Too many founders come into this market armed with a clean software playbook, expecting recurring revenue, low CAC, and global scalability. And too many walk away stunned, bruised, or burned out—realizing far too late that the rules here are different. Not worse. Just different.

The issue isn’t with the tech. It’s not about lack of talent. It’s that the soil is different, so the seed must change.

In Silicon Valley, SaaS thrives on subscriptions, self-serve onboarding, and network effects. But in African markets, software alone rarely gets the job done. Most startups that survive — and a few that thrive — end up building four businesses in one:

1. A software platform

2. A marketplace

3. A fintech layer

4. A physical operations network

If you think you’re just building an app, you’re not paying attention.

This isn’t pessimism. It’s the reality we’ve lived, studied, and built through. I’ve seen this play out across our portfolio and within the broader ecosystem. SaaS in Africa doesn’t die because the code is bad—it dies because it can’t stand alone. Let’s unpack why.

Why SaaS Struggles in Africa: Structural Reality Check

SaaS depends on one thing: people willing and able to pay for software. That simple assumption breaks down in most African markets.

1. Low Willingness to Pay Many consumers and businesses simply can’t justify recurring payments for software—especially when free alternatives or manual labor are readily available. Efficiency gains? Theoretical. People want impact they can see today: drive sales, cut costs, solve a pain point. If your product can’t do that immediately, you’ll lose them.

2. Weak Digital Infrastructure Try running a SaaS company in a region with patchy internet, unstable power, and limited device access. Even when users are online, many have never used enterprise tools. This means your “self-serve” model becomes a “hands-on” one—manual onboarding, customer education, in-person training. CAC shoots through the roof.

3. Global Competition, Local Distrust Enterprise clients in Africa default to trusted global brands — Microsoft, Oracle, SAP — even when local solutions are better suited. You’re not just selling your product; you’re trying to earn legitimacy from customers conditioned to think global equals better. And to top it off, you’re competing against billion-dollar companies entering your market… remotely.

4. High Churn, Low ARPU Let’s talk numbers. ARPU is low because customers pay in local currency, but your costs (AWS, salaries, tools) are in dollars. If you don’t blow them away early, they churn. Fast. The software may be scalable, but the economics rarely are.

5. Long, Painful Sales Cycles The decision-making process in African corporates is slow. There’s a deep aversion to risk. “Nobody gets fired for buying IBM,” right? So startups spend months chasing deals that never close—burning through capital without results.

The outcome? Most SaaS-only startups in Africa either pivot or perish. Those that survive figure out, painfully, that they must embed themselves deeper into the problem. That means owning more of the value chain — not less.

Silicon Valley Metrics vs. African Market Truths

Silicon Valley loves the “Rule of 40”: if your revenue growth rate plus profit margin hits 40%, you’re golden. But in African markets, that metric is fantasy.

Growth is slow because the market is fragmented. Profitability is delayed because you have to build infrastructure just to function. You’re not selling a tool—you’re building rails so that the tool can run.

Globally, only a third of SaaS firms ever hit the Rule of 40. In Africa, where you’re financing customers, training users, and covering for infrastructure failures, it’s near impossible—at least in the early stages.

Let’s not romanticize the struggle. The data speaks. Between 2023 and 2024, several high-profile B2B SaaS and marketplace startups in Africa faltered:

MarketForce (Kenya): Shut down its B2B retail marketplace arm after raising $40M. Razor-thin margins and high ops costs made it unsustainable.

Sendy (Kenya): Pivoted, then shut down. Their logistics model couldn’t survive without continuous VC funding.

Kobo360 (Nigeria) and Lori Systems (Kenya): Both launched as asset-light logistics platforms but got pulled into credit and ops just to keep the wheels turning.

These weren’t bad companies. They were brilliant teams trying to run Silicon Valley plays on a pitch full of potholes. The game was rigged—and they paid the price.

Before we get to solutions, I need to give flowers.

Back in 2022, Stephen Deng of DFS Lab wrote one of the most insightful essays I’ve read on African tech: “Build Cyborgs, Not Androids.” It wasn’t just timely — it was prophetic. Stephen laid out the core dilemma African founders face: do you build clean, digital-only systems (androids) that ignore context, or messy, resilient, tech-enabled hybrids (cyborgs) that actually work?

He said what many were thinking but hadn’t framed clearly yet. I’ve read that piece again and again — and if you’re building in Africa, so should you.

And speaking of cyborg builders, Tosin Eniolorunda and the Moniepoint team have consistently taken a context-first approach — building for reality, not fantasy. Their growth has been nothing short of remarkable, and I believe Moniepoint will need to — and will — build a commercial bank. It’s the natural evolution of their cyborg strategy.

DFS Lab, by the way, was founded by my friend Jake Kendall. I first met Jake in 2019. They’ve been at the forefront of thinking deeply about Africa’s digital economy, long before it was trendy. Respect.

What Works: Full-Stack, Not Pure-Play

The companies still standing are the ones that didn’t stop at software. They added layers to control delivery, reduce friction, and capture more value across the chain.

Let’s break down some examples:

Twiga Foods (Kenya) Twiga Started as a marketplace linking farmers to vendors. But the real-world issues — crop inconsistency, quality, logistics — couldn’t be fixed with code alone. So Twiga built:

Its own commercial farms

A logistics network (and later exited ops to focus on orchestration)

A fintech layer to handle payments

They went from app to agribusiness. Because to move bananas, you sometimes have to own the farm.

MarketForce (Kenya) MarketForce began with a SaaS product for FMCG field sales, then added RejaReja — a marketplace + inventory credit platform. The model worked… until the economics didn’t. High ops costs and low margins killed it when funding dried up. They’ve since pivoted toward social commerce.

Lori Systems & Kobo360 Both tried to be Uber for trucks. But the reality of late payments and capital-starved drivers forced them into becoming lenders. Kobo lost its credit line. Lori had to find bank partnerships to stay afloat. Platform-only just didn’t cut it.

VGG’s EduTech (Nigeria) Venture Garden Group’s subsidiary, EduTech, started as a SaaS platform to digitize higher education. But success required full-stack commitment:

SaaS platform for learning

Marketplace for student admissions

Fintech for tuition payment

Operations for content creation and student support

That’s how we helped launch Nigeria’s first online MBA and Nursing degrees. Not because the tech was enough—but because we did the hard stuff too.

The 4-Layer Model: What African Startups Actually Build

Now, let me geek out a bit. I’m a science fiction head. The only TV show I remember watching religiously as a kid was Voltron. Five robotic lions. Each is strong alone. But when they combine, they become unstoppable.

That’s the metaphor for African venture building today. One startup layer isn’t enough.

But if we combine SaaS + marketplace + fintech + infrastructure — with the right cofounders, capital, and execution — we form Voltron.

And yes — shout out to my dear friend Olumide Soyombo, founder of Voltron Capital. Real recognizes real.

Across sectors—logistics, agri, retail, edtech—we keep seeing the same structure emerge. The startups that create real value build four interlocking layers:

Software – The digital core. The platform.

Marketplace – Aggregates fragmented supply and demand.

Fintech – Facilitates transactions, solves payment friction, provides credit.

Physical Infrastructure – Warehouses, fleets, field agents — the offline engine.

I'm excited by tech-enabled brick-and-mortar models that smartly integrate the informal sector to achieve breakthrough unit economics. But to realize Africa's potential, we must adopt a holistic approach, simultaneously developing the foundational '4 companies.' A Venture Studio Partner becomes indispensable in orchestrating this ambitious vision.

The Ubuntu Blueprint: Why We Must Build Together

Here’s the real takeaway: African founders should not be doing this alone. Building four companies just to get one product to market is madness.

There’s a better way. A more African way. The Ubuntu way.

“I am because we are.”

Collaboration isn’t charity—it’s survival. And it’s the new competitive advantage.

1. Strategic Partnerships Plug into existing rails. Don’t build what someone else has already done. Use APIs. Share distribution. Collaborate on logistics. If another startup already solved Layer 3 or 4—partner.

2. Venture Studios Studios like Venture Garden Group create shared infrastructure: talent, capital, tech, ops. One founder’s foundation becomes another’s springboard. We don’t need more solo builders. We need interconnected ecosystems.

3. Investor Evolution VCs need to stop expecting 80% gross margins in year two. These aren’t SaaS unicorns. They’re ecosystem architects. If you want defensibility, bet on the founders laying track—not just those writing code. Blend equity, debt, and grant capital. And be patient.

Conclusion: Africa’s Playbook Must Be Written Here

SaaS isn’t dead in Africa. But pure SaaS? It’s a mirage.

If you’re a founder here, understand this: You’re not just building software. You’re building trust. Distribution. Infrastructure. And sometimes, the entire market.

That’s not a burden. It’s an opportunity.

Because the hard markets — the ones that force you to do everything — are the ones that create the most resilient, most defensible businesses. But only if we stop working in silos.

The new playbook isn’t about repeating Silicon Valley. It’s about reimagining what’s possible when we build together.

UBUNTU isn’t philosophy. It’s the blueprint. Let’s rise — and rise together.