"Persistence is not just about effort, but also strategy. Don't merely try harder, try differently."
Are you considering a startup pivot for your Nigerian company but are torn about the possible outcomes? Imagine PayPal, Slack, and Instagram facing that very dilemma. These giants pivoted, and look at how they're soaring today.
Pivoting means redefining your startup – its offerings, purpose, and identity. It's about making the bold decision to adjust when the market evolves, customers demand shifts, or new challenges knock at your door.
In Africa's vibrant startup world, we have hundreds of success stories. Taeillo, a Nigerian startup, pivoted from B2B to embrace the direct-to-consumer model during a pandemic-driven shift. Then there's OurPass, which pivoted from a one-click checkout to empowering businesses with banking services. These successful pivot stories prove pivoting isn't waving the white flag, it's adapting smartly.
Eager to learn whether a startup pivot is right for you? Or, how to execute it to increase your chances of success? Keep reading.
Let's check out the different startup pivots for you to explore:
A product pivot happens when startups realise a gap in the product-market fit. That's when they decide to change the core product or service offered to meet customer needs better.
Consider the pivot journey of MVX. Once known as MVXchange, the company focused on facilitating vessel bookings. Then, in March 2020, prompted by rollercoaster oil prices and pandemic disruptions, it restructured its core business. The startup rebranded itself as MVXtransit, a digital platform for freight booking. The brand aimed to help cargo owners discover favourable deals while efficiently moving containers across Nigeria.
Building on this, it introduced MVXpay in April 2021—an ingenious finance and payment solution for freight operators. Today, these two brands proudly unite under the banner of MVX.
A customer segment pivot occurs when startups reorient their target audience to serve a different group of customers.
DrugStoc is an excellent example of this. The Nigerian e-pharmacy company started as a tech-based platform aiming to connect manufacturers and distributors. However, after gaining insights during its incubation at Stanford's Institute for Innovation in Developing Economies, it pivoted towards becoming a distributor. DrugStoc's strategic shift helped the company grow significantly. In 2021, less than 5 years following this pivot, DrugStoc connected 400 manufacturers with a network of 3 200 doctors, hospitals, and pharmacies.
DrugStoc is today's leading tech-enabled procurement partner for Nigerian pharma and health companies.
This happens when startups recalibrate their target market focus. For example, the Nigerian e-commerce grocery service company Gloo.ng pivoted to become Gloopro, a B2B e-procurement platform serving corporate accounts. Its decision to shift from B2C to B2B was influenced by Nigeria's 2016 economic slump and a client's request for an e-procurement solution.
The recession negatively affected consumer e-commerce. During that time, Unilever, one of Gloo.ng's clients, requested an e-procurement solution. The startup realised that the unit economics in B2B is higher than in B2C and decided to pivot. Gloopro now supplies medium and large corporations, generating revenue through subscription models and delivery percentages.
A business model pivot takes place when startups change their business models, or in other words, how they create, deliver, and capture value.
Let's take a look at OurPass. Once a one-click checkout platform, OurPass pivoted to business banking in April 2023, recognizing a need for end-to-end solutions for businesses. Initially aiming to simplify online purchases, OurPass required app downloads and wallet usage. Yet, with market dynamics changing post-COVID, the startup realised its approach needed to be revised.
Now, OurPass provides merchants with free business bank accounts, access to loans, and payment links. It utilises a microfinance banking licence and aims to serve 200 000 active businesses by the end of 2023.
Recognising the right moment to pivot is both an art and a science. Here are key indicators that could show you it's time for a startup pivot:
Let's take a look at Ugandan asset-financing startup Asaak's strategic pivot.
In 2019, Asaak pivoted into motorcycle financing from its initial lending focus on farmers and SMEs. Asaak pivoted after noticing a demand-supply gap in the market. The startup began its operations in 2016 by providing farmers and small and medium-sized enterprises (SMEs) loans. However, after observing the challenges motorcycle taxi (bodaboda) operators face in accessing financing, Asaak recognised an opportunity to impact the economy and the livelihoods of individuals significantly.
This shift aligned Asaak's services with bodaboda operators’ vital role in African communities, serving not just as transportation providers but also as essential service providers. The startup facilitates motorcycle ownership for operators who struggle to meet traditional banks' strict requirements. It collaborates with mobility and e-commerce platforms to make motorcycle ownership accessible to bodaboda operators.
In January 2022, Asaak raised $30m in pre-Series A equity and debt financing. Prior to that, the company helped finance the purchase of 5 000 motorcycles and provided smartphone and fuel financing facilities to motorcycle operators.
Successful pivots are grounded in a deep understanding of the market conditions, the business's unique strengths, and a thorough assessment of how the changes align with long-term goals. Every business faces its share of obstacles. If you think pivoting is a clever way to avoid challenges or skip the hard work, think again. Overcoming obstacles is an integral part of business growth. Taking a detour through a pivot might lead to missed opportunities for learning and innovation.
Beware of the shiny object syndrome. As entrepreneurs, it's natural to be attracted to the newest trends and opportunities. However, long-term success often comes from consistency, focus, and resilience. Going after every new opportunity squanders your time, energy, and resources that you could use to execute a single well-thought-out plan.
Entrepreneurs often find themselves so deeply entrenched in their businesses that they can overlook underlying flaws. A diverse advisory group can address these blind spots, providing fresh, objective insights that might go unnoticed. When navigating a startup pivot to address weaknesses, it's crucial to harness your existing strengths to ensure a successful transition. The key lies in leveraging the power of what you already excel at.
Open and transparent communication with all stakeholders is paramount. This fosters trust and ensures a seamless process throughout the pivot. To guarantee a smooth execution, initiate training for your teams as soon as you finalise the pivot decision. Cultivating a company culture that champions experimentation and adaptability creates fertile ground for innovation to flourish.
Consider the example of Taeillo, a Lagos-based startup that initially catered to businesses as a furniture manufacturer and seller. However, when the pandemic hit and retail furniture stores closed, Taeillo heeded its stakeholders' advice and intelligently pivoted to a direct-to-consumer model. The transition was perfectly timed, capitalising on the growing trend of consumers shopping online. Throughout this shift, Taeillo remained steadfast in its core strength of infusing cultural elements into its products and enhancing its authentic Afrocentric identity.
This pivot propelled the company's growth trajectory to new levels. Before the pivot, Taeillo had managed to sell only 200 units in Nigeria. Post pivoting, the company expanded into 10 new product categories, expanded its business to Kenya, and shipped over 10 000 pieces of furniture to 5 000 customers.
Once you've decided to pivot, here's what to do next:
Navigating startup pivots can be challenging, especially regarding investor perception. Investors often approach startups that have undergone pivots with caution, particularly if the pivot involves venturing into a new industry. Pivoting to a new direction may expose investors to heightened risks, making them more cautious. However, there are effective ways to manage investor concerns.
Consider the Zambian fintech startup Zazu, which transitioned from an agritech platform connecting farmers to markets to a digital banking platform. Foreseeing potential investor reservations, Zazu strategically executed its pivot even before securing its last funding round of $1.4m. By the time Zazu sought funding, it actively engaged over 1.1m users with its fintech platform. This substantial user base instilled investor confidence and helped Zazu secure the essential funding to propel its growth.
You might need to decide if your startup pivot idea is a good fit for venture capital (VC) funding. Not all businesses need or should try to get VC funding. VC investors prefer ideas that have the potential to make a significant profit or, in other words, 'high-margin' ideas. If your idea involves innovative technology and has the potential to expand rapidly, then VC investors might find it more attractive.
Remember that getting VC funding means you may have to give up some control over your business. VC investors become part of your business and have a say in decisions. So, it's essential to consider whether this kind of partnership aligns with your plans for your business.
A critical post-pivot aspect includes aligning your brand with the new direction, which is crucial to convey the changes effectively. For example, before its pivot, Nigeria-based Crowdyvest was a crowdfunding platform associated with Farmcrowdy. It used to provide individuals and businesses with financial solutions. It helped users to sponsor high-impact opportunities with potentially large returns.
After securing new investments and rolling out as an independent entity, Crowdyvest pivoted to become a digital savings model. It quickly introduced the Crowdyvest Savings Platform that offers tailored savings options to its subscribers. Post pivot, Crowdyvest swiftly introduced new products including Flex Savings, Vault Savings, Pace Savings, and Flex Dollar Savings.
In cases where a business pivot leads to entry into a new industry requiring a different operational licence, startups may need to undergo a complete name change. For example, after expanding into fintech and obtaining a licence, Ugandan ride-hailing startup Safeboda adopted a new name for its fintech arm, Guinness Tech Uganda Limited.
Pivoting is not a sign of giving up. It's a proactive strategy you should consider when circumstances shift. Instead of rigidly sticking to a path that no longer fits, pivoting involves thoughtful choice-making.
Consider your passion for what you do, listen to the direct and indirect feedback you receive from stakeholders and experts, and evaluate the practicality of your current direction. When you pivot, you're adapting and evolving. Pivoting is a calculated decision that balances your emotional connection to your work and the practical realities of the market.
When you decide to pivot, it's crucial to fully commit, as half-hearted efforts can lead to chaos and subpar results. You should put all your effort into making the pivot successful. Extensive research, analysis, and dialogue are essential before a business pivot, as rushing without proper planning can result in poor decisions.
Finally, frequent changes without a clear strategy can erode focus and leave stakeholders bewildered. A well-thought-out and researched approach to pivoting ensures a smoother transition and better outcomes for your business.
Startup pivots are opportunities for growth and adaptation. The aforementioned African case studies demonstrate how pivoting can be crucial for growth. But remember, solid data and constructive feedback must back your decision.
If you're considering a startup pivot in Nigeria, you can gain the assistance you need from Founders Factory Africa. We're here to guide and serve you in all areas of business development, including funding, tech, product, and partnership-related matters.
The next step is yours to take.
Apply today for the support, funding, and expertise to turn your pivot into a success story.