What challenges does Base of the Pyramid ventures meet in the start-up phase?
Frederik Pétursson MadsenCo-founder AfricaPace
At the Danish BOP Learning lab we held a workshop in Spring 2011, which included leading companies from Denmark. The workshop facilitated sharing of experiences on doing business with low-income consumers.

The participating companies at the workshop were categorised according to the phase of their project, i.e. Idea Phase, Start-up Phase and Scale Phase.

The companies in the Start-up Phase identified 3 key challenges.

1. Iteration of business model: When launching the idea in the market it often becomes obvious that the business model and product needs adjustments which are obtained by learning through an iteration process. The emphasis of this aspect underpins the importance of an explorative process, as the projects typically are of an innovative nature. Whether the company applies a trial-and-error approach or uses more resources than usual on research depends on the strategy and nature of the product.

2. Finance: Securing finance while profitability of business model is uncertain was also highlighted as a major challenge for BOP venturing. This requires a lot of risk-willing capital, which in the midst of the financial crisis is at a minimum at most companies.

3. Project management: Managing the business and iteration process in a distant unknown market with a different culture is difficult. This has become clear as the project period has tended to be extended comprehensively. The companies that have gone into the start-up phase and initiated scaling of the business model, admit that it has taken longer time that initially planned to arrive at a stage that makes it attractive to scale the model. This aspect is a barrier to develop BOP projects and should not be underestimated.

Companies who were focusing on scaling their business and had completed the start-up phase recommended:

1. Flexibility and iteration: Companies need to be flexible and open in order to adjust plans based on the learning’s from pilots during the iteration process. It is necessary to include flexibility in relation to time, finance and culture.
Aug 23, 2011
 
 
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