All startups experience challenges getting their companies off the ground, but imagine trying to launch a company in the fourth poorest country in the world; Madagascar.
That's exactly what Tim McCollum, cofounder of the fair trade chocolate company Madécasse did when he started the made-in-Madagascar product line in 2008. "You have all the headaches that a normal startup has multiplied by 10 because of trying to do something in Africa," says McCollum.
McCollum and his cofounder, Brett Beach, fell in love with Madagascar and its people while working as Peace Corps volunteers from 1999 to 2001. While there, they realized that the country had a lot of resources—including the last remaining cocoa in the world that hasn't been modified. "It's genetically identical to cocoa that was found in Mesoamerica 300 years ago," says McCollum.
Although 70% of the world's cocoa comes from West Africa, less than 1% of the world's chocolate is made there. McCollum and Beach sought to change this by using chocolate’s raw material, cocoa, to keep economic benefit within the island nation. Madécasse partners with cocoa farmers who pick the beans and a factory in Antananarivo, Madagascar, to produce the bars which are then sold in internationally.
But starting a company in Africa wasn't an easy venture. Finding an investor who was willing to take the risk on a made-in-Madagascar product was the first challenge. "Anything is possible in Africa if you're not in a hurry, but [the problem is] the typical investment culture is always in a hurry," says McCollum.
Instability was another factor that made it difficult to attract investor dollars. "If someone Googled Madagascar, they'd realize there was a military coup, there's been an illegitimate government for four years [that caused the country to] lose all of its foreign aid and the economy's in a spiral. Any of those events is an enormous red flag and all of those combined sends people running," says McCollum.
Still, he and Beach saw an economic opportunity in the country. It took nearly four years before they found an investor who was patient enough and could overlook the political and economic risks and who shared the same vision and values as the Madécasse team. While four years of bootstrapping the company might have broken many startups, McCollum says developing the company slowly during that time was actually a blessing, as it gave he and Beach, who knew nothing about the chocolate industry, time to learn their business and have more leverage when finally reaching out to the right investor to make the ask for funding.
The second challenge with building a company in Africa was the scarce talent pool. "Africa suffers from a brain drain. Everyone who's educated there is educated abroad and they usually don't come back because there are no jobs," says McCollum. Relying on local connections and the expat community to alert them to when potential talent becomes available has been key to Madécasse's success at recruiting.
"If we get word of someone we think is going to be a good fit, we go after them and don't let go," says McCollum. Madécasse has had to create opportunities for talented individuals even when there isn't a position available simply to hold on to them. "The people are so few and far between that we'll create that opportunity," says McCollum, admitting this strategy adds an element of HR that wouldn't normally exist in a U.S.-based country where there's an endless pool of talent.
Overcoming obstacles is innate to Africa, and is something this made-in-Madagascar chocolate company is proud to say they have done too.
[Image: Flickr user Eli Duke]