A Deep Dive Into What Flourish Ventures Is Doing For Cornershops
We caught up with Ameya Upadhyay, the lead investment and venture partner at Flourish Ventures. He shared what the situation has been for corner shops, and what they have been doing to make things better.
Here’s how he responded to our questions.
How would you describe Flourish Ventures and what do you deal with? (Explain to a 2-year-old)
We support people who help other people manage their money better
What is your position at Flourish Ventures and what are your roles and responsibilities at the firm?
I am a Venture Partner and lead our investments in Africa. I also help shape the overall strategic direction of the firm.
What inspired you to take this career path?
After spending several years in a corporate set up, I craved more meaning in my work. I wanted to be part of something bigger than my narrow self-interest. In my own, humble way, I wanted to serve others and help improve the lives of billions who did not have the same privileges I did. Flourish provides the perfect platform for backing great founders who share the same aspirations.
What effect has the pandemic had on e-commerce in Africa?
On the one hand the pandemic accelerated the move to digital and powered the growth of digital payments, work and shopping. On the other, it wreaked havoc on household finances, especially in several African countries where a significant portion of the population is engaged in ‘gig work’ and does not have access to a stable job and income. We did some work on this in 2020 (see here) and found that in South Africa, India, Brazil and Indonesia, gig workers saw their incomes decline between 60-80 . The blended effect of these two opposing forces is yet to play out, but I think it is fair to say that e-commerce in Africa is still in its nascency. Jumia, one of the larger players in Sub Saharan Africa has just 3m active customers.
With the fast-paced growth of e-commerce in the continent, are physical corner shops at risk?
No, despite repeated predictions of the demise of the corner shop, our primary research across four emerging market countries indicates corner stores are here to stay and may become even more important to their communities. Across Brazil, Egypt, India, and Indonesia, 30% of consumers plan to buy more at their local corner shop, and 64% plan to continue to buy as much as they do today. In Egypt, our survey found that 93% consumers plan to use their corners stores more.
How can corner shops embrace digitalization to stay relevant today and in the future even as e-commerce is growing?
Technology start-ups are emerging to serve corner shops across the retail value chain, developing low-cost, online tools for sourcing and logistics, business management, sales, and embedded financial services. When implemented at scale, these tech solutions can unlock a 60-100%+ increase in corner shop earnings. Specifically we have seen shopkeepers using digital platforms to order inventory, pay for it and manage shop finances. One example is MaxAB a company we invested in 2020, which helps corner shops across Egypt buy inventory reliably and cheaply.
How has the growth of financial technology (fintech)m in Africa impacted physical corner shops?
We believe Fintech has been a net positive for corner stores in Africa. As mentioned above, they can help shop keepers manage their finances better. Examples are companies like Kippa that help store owners record transactions. Other firms like Flutterwave help them accept payments digitally.
What advantages do corner shops have over big-box and online stores in emerging markets?
Their big advantage is trust in local community that is generated over several years of face-to-face engagement. That is very hard for big box and online retailers to replace. 75% of Egyptian consumers in our survey said that they believe the corners store is vital tot their community.
What are the risks that corner shops are facing in the world today, apart from digitalization?
Corner shops struggle with supply chain inefficiencies, paper-based business processes, minimal online sales, and limited access to finance and other banking services. At the same time, shopkeepers are increasingly digitally savvy, using smartphone, web, and messaging apps to support their business operations—a trend accelerated by the Covid-19 pandemic. Across the countries we surveyed, 55% of shop owners use messaging apps to run their business today, and 75% plan to increase their digital usage in the next 1–2 years.
What are the opportunities that corner shops can take on in this world that is experiencing fast-tracked digital transformation?
What’s your opinion on technology adoption in Africa so far?
Its accelerating at an extremely fast pace, however it is still very early. As a proxy, venture capital in Africa jumped to about $5b in 2021 – more than thrice the amount in the year before. However, that still amounts to less than 1% of global VC.
There are reports of African tech talent being poached to developed markets. How can Africa maintain its talent?
By creating more economic opportunities. One of the many ways that can happen is through a thriving entrepreneurial ecosystem and that is Flourish’s mission.