Start-ups along with small and medium-sized enterprises (SMEs) are a key force in the innovation ecosystem worldwide, and in emerging markets in particular. They understand local customers’ needs and can develop solutions to their problems in very agile ways, sometimes bringing disruption to century-old businesses. Some have made incredible breakthroughs in the past few years and changed the lives of many. Like M-KOPA Solar who have equipped hundreds of thousands of African homes with pay-as-you-go solar systems, or ride-sharing platform Ola providing extra livelihood to hundreds of thousands of drivers in India. However, such success stories should not conceal the fact that for the majority of them, reaching scale is a real struggle.
Mobile operators on the other hand have touched the lives of billions in low- and middle-income countries in the past couple decades. Mobile phones are ubiquitous and the main way to access the internet and other important services. They are a vital lifeline in the case of disasters. They provide communication channels – like voice, SMS, or USSD – that are easy to use and accessible to anyone who owns a mobile. With mobile money services, they have offered a payment solution with over 400 million accounts worldwide, that addresses the shortcomings of many local banking systems. On the ground, they have deployed powerful distribution networks that employ millions. Nevertheless, they face challenges that make it hard for them to keep up with the accelerating pace of innovation.
On paper, this is a perfect match: mobile operators can help start-ups and SMEs unlock scale, and in return stay on top of the game when it comes to innovation. Unfortunately, the reality is that this type of collaboration does not always happen naturally. That being said, there are some very encouraging signs that mobile operators are taking significant steps. Here are a few examples:
- Access to finance is still limited for local tech start-ups. In 2015 in Africa they raised a mere USD185m. Mobile operators are using Corporate Venture Capital (CVC) activities to help bridge this funding gap. Safaricom for instance set up its spark venture fund to support local start-ups in Kenya, while some groups have adopted a more global approach, like Orange with their Orange Digital Ventures fund.
- Mobile operators hold the key to channels they should open through APIs: voice, SMS, USSD, career billing, mobile money etc. Enabling technical integration is a vital first step, and it needs to be coupled with outreach and support to the local developer community, like Dialog is undertaking in Sri Lanka with Ideamart or Orange with their Entrepreneur Club. Mobile operators as a community can also work together to standardise their APIs and facilitate interoperability, which they are currently doing on mobile money with the support of GSMA.
- There are many types of synergies to be explored. As stated above, mobile operators in emerging markets usually have one of the strongest local distribution networks, payment solutions, brand, marketing power etc.,that a start-up can leverage to build its reach and credibility. The collaboration between MTN and Jumia in Nigeria for example spans most of these dimensions and has been mutually beneficial to both parties.
- Mobile operators are also being inclusive of the broader ecosystem. For instance, we found that 13% of tech hubs across Africa and Asia have formed a partnership with a mobile operator, such as Vodafone with MEST in Ghana. Some operators might also chose to launch their own structure (e.g. Telenor Velocity in Pakistan) or team up to run challenges (e.g. Singtel/Airtel Accelerator Challenge) to support new talent. In other cases they work with local governments on ambitious projects such as the Connecting Start-ups Bangladesh initiative in which banglalink is actively involved.
Even though more still needs to be done to realise the full potential of collaboration, the examples above are very positive indications that mobile operators are taking concrete actions to address the challenges local start-ups and SMEs face, and to create mutual trust. The GSMA Ecosystem Accelerator is committed to working with all stakeholders in the ecosystem to ensure more partnerships are built, and as a result more products and services are able to bring positive socio-economic impact to local citizens at scale. And we’re looking forward to discussing some of the ways in which we can make that happen with a whole range of stakeholders in the B2B Dialogue on Harnessing Disruptive Innovation at ITU Telecom World 2016 in Bangkok this November.