Partnering with a mobile network operator (MNO) has the potential to propel your startup to the next level in much less time, but be warned: it is a time-consuming process.
Panellists at last week’s AHUB event in Cape Town – representatives from mobile operators and startups alike – discussed the mutual benefits of such partnerships and how the process of establishing them can be made easier.
Lilian Makoi is co-founder and chief executive officer (CEO) of Tanzanian mobile health insurance startup Jamii Africa, which has a partnership with Vodacom Tanzania to distribute its product via the operator’s network. She said selling the Jamii service as a Vodacom product had helped her startup overcome issues with consumer trust many new businesses face.
“To us that was very important. If we had invested in building our brand from scratch it would have taken years for people to trust Jamii. We are piggybacking on their trusted brand,” Makoi said.
“They have solved trust for us. And we collect payments via mobile money, and they give us additional benefits like KYC. They have only done this for two companies. If we didn’t have the partnership we would have to build that from scratch.”
“Leveraging on their network of customers can help you grow more quickly.”
Arnauld Blondet, innovation director for AMEA at Orange, agreed that startups stood to benefit substantially from partnering with MNOs.
“We are the infrastructure of digital. If you want to do digital in Africa you have to do it with us,” he said.
However, it is not as simple as that. Makoi said the road to signing the deal with Vodacom was a long one, encompassing around 25 meetings and taking about three years to form.
“We had to build relationships from scratch with about three teams. Telecoms have a big turnover, when you think you have sold the idea to someone, they leave. And if you think you want to launch tomorrow, you can’t do that. It was a case of finding a way through. I had been in the telecoms world for six years before so it was a little bit easier,” she said.
Fellow panellist Manny Teixeira, group head of digital media and services at MTN, explained why there were challenges in getting such arrangements off the ground.
“A mobile operator is not one company. You don’t have a single place there that is the entry point into MTN. It depends on what you can offer. You need to find the right person,” he said.
Blondet said mobile operators had realised the benefits of working with innovative tech startups, and said there was an awareness things needed to be done to make establishing partnerships easier and less time-consuming.
“We want to change and we want to work with you,” he said. “We know startups live on short term revenue. If we ask you to come back in three years, we kill you. This should not happen. We need to shift this.”
Makoi, however, has seen some progress, but she warned startups to be adequately prepared should the day come when an operator partnership is on the table.
“The situation is better now with APIs and telecoms encouraging partnerships. But don’t sit back and wait. When we got to the moment we had numbers to back us up,” she said.