While raising funds to put farms in Zimbabwe and the rest of Africa under irrigation, Prosper on Farms has had to tell some investors that it wants to try and test a number of different business models. In the end, every investor wants to invest in a business that has a tried and tested business model. However, before we get there, it seems some investors expect that a startup must have settled on one particular business model. I think that investment approach is dangerous sometimes, especially for novel and underserved markets whose market characteristics are mixed. Prosper on Farms is very ready, willing, and driven to adapt to the environment and to change things given the circumstances.
Here is one interesting example. It used to be the revealed wisdom that for ecommerce to work in Africa, a high payment card penetration was a prerequisite, because that is what drove payments in the US, the dominant ecommerce market. Yet we see in Europe that Zalando succeeded by adapting its payment methods to the markets it served. For instance, in Italy Zalando had to accept cash on delivery, while in France it accepted cheques. If an investor had used card payments penetration as the only yardstick to invest in Zalando’s European expansion, that investor would have left a lot of money on the table. If Zalando insisted on card payments only, it would not have succeeded in France and Italy.
Sometimes you may meet prospective investors who only believe that a startup must already have figured out everything, including the business model. So those investors believe that multiple business models is somewhat a sign of confusion. LOL. The truth is, startups start with assumptions, then they execute and have to adjust their models to the realities they meet in their operating environment.
Maybe it depends what people call a business model and at what level it is. The Coca Cola Company, a very successful business, sells Coca Cola via independent bottlers and its own businesses. You can get a Coke over the counter in a store or even from a vending machine. The Coca cola Company does not just do one thing that was successful. Originally, Coca Cola was not sold in a bottle.
In the software industry, I know some companies that used to sell software licences on a compact disk (CD) per installation or computer, and then they changed that model to software-as-a-service, they moved to the cloud, now you pay subscriptions to access the software online instead of installing it on your computer or server.
Bank accounts used to be paper-based. That model is now dead. Bank accounts are now electronic, but there was a time when electronic banking did not have a competitive edge against paper-based banking.
Prosper on Farms is also trying and testing various models with its farmers. Our success may actually come from various business models and not just one. So we do everything.
And who said you must have just one business model? Even Microsoft, Stripe, and Tesla have various business models. The path to business success is not linear and straightforward. So Prosper on Farms is open-minded and open to trying various business models to find the best one(s).
Prosper on Farms does not necessarily have to do what works elsewhere or has worked before. Some business models that failed in the past may also work today. Past failure is not a predictor of failure in the future. There were many social networks that failed before Facebook came along, and there were some online video startups that failed before YouTube came along, yet YouTube is a massive success today! How? It is not because YouTube was bought by Google. It is because prior to YouTube, starting a website like YouTube was very expensive. YouTube succeeded as computing power increased while the price of computing hardware fell, and secondly, the massive expansion of broadband capacity, increase in access to broadband internet, and fall in the price of broadband internet. That’s how YouTube was able to succeed where other online video startups had failed in the past. So, what was tried and tested and failed, may succeed this time round depending on various factors. We will keep our minds open.
When you go out raising money, you will meet all kinds of investors, just as investors will meet all kinds of businesses.