💸 A Wave of New Ways to Generate Revenue…

Plus: Springbok stakes, startup events and how to find new revenue streams.
Newsletter
March 12, 2024

Time to recharge? Watch these security researchers show you how to hack your own Tesla. Using a simple free Wi-Fi phishing trick — crazy!

In this Open Letter:

  • New wave: This will change so many revenue models.
  • A bakkie called Bok, Springbok stakes and Elon’s busiest week.
  • Make more: 4 Ways to find additional startup revenue streams.
  • And everyone’s favourite hobby is: The results are in.
  • Share this: And get free business tools.

A New Way to Generate Revenue

Entire business models could change because of this…

Before Tesla (2003), it was super hard to make your “green” project seem sexy.

Environmental gigs were stuck relying on donor funding, grants and the goodwill of a select few who believed it was “the right thing to do”. 

It kinda worked. But it didn’t scale.

So when Tesla mixed desirability with a competitive price point, it kicked off the whole Electric Vehicle (EV) revolution – and it’s growing in popularity even in South Africa

And we can’t help wondering if you can’t give the whole green sector the “sexy” treatment by using economic drivers (saving/making people more money) to change people's behaviour for the better…

But, this time, think big. Think global. 

Think carbon credits.

What are carbon credits and why should anyone care?

You’ve heard the words a million times. 

If only in the context of a Swedish girl making politicians and CEOs soil themselves.

She might just fly over on her private jet and give you a staredown.

But carbon credits are a big deal – Yes, but what are they?

A carbon credit is an instrument (token) generated when you reduce, avoid, or sequestrate 1 metric ton of carbon emissions. They are used to “compensate” for an equal amount of carbon emissions elsewhere — if you create a carbon credit through a green project, a polluting company can pay you to buy your carbon credits to offset their polluting ways.

They are like green points (of sorts) that entities (companies, countries, people etc.) can earn by cutting down on their carbon emissions. Or sell to those who don’t. Either way, there’s money to be made.

Basically:

  • if you are a person, company, industry or government
  • global authorities say you should ideally only produce a certain amount of emissions per year
  • produce more, and regulators will go after you and force you to buy carbon credits to atone for your sins
  • produce less, or invest in green projects, and they will give you carbon credits as a reward (which you can sell to the naughty companies like Eskom).
Gonna cost you an arm and a leg, though.

But now, here’s the thing: Carbon credits are fungible and very much tradable. And it’s a big market that’s about to explode…

In 2020, the global voluntary carbon market value was around R7.4 billion per year. But current growth rates suggest it’ll be worth anywhere between R186bn and R466bn by 2030.

So you can imagine that there’s money to be made by developing great green projects that generate carbon credits as revenue (if only to sell to corporates). And what’s more, the supporting applications around this industry is set to become big.

But does it matter in Africa?

Environmental matters aside, any cost saving is attractive to African markets, and that’s where major opportunities lie. Add carbon credits as a revenue stream and entire new business models are possible. 

SA’s glorious carbon credit-fueled future, says AI.

Here’s what some of the local players are doing:

A significant step forward was the launch of the JSE Ventures Carbon Market in collaboration with Xpansiv in February 2023. This platform allows participants to buy and sell carbon credits and renewable energy certificates. What this could eventually do is serve as a marketplace for startups to monetise the carbon credits they generate through their initiatives. 

And that’s where a startup like Tweak comes in. Tweak takes carbon credits from the domain of companies and brings them to the individual. Using bank statements to identify your carbon footprint, Tweak tells you how to reduce it and aims to pay you in carbon credits for your reduction. (They’re also working on generating carbon credits for solar in private homes, to help make solar even more affordable.) 

Another interesting SA startup was Toco, which used carbon credits as a reserve currency and then tokenises it to allow users to transact with this reserve currency at a select number of merchants. It’s money for the environmentally conscious. (Unfortunately due to SA’s greylisting they relaunched as “Carbon is Money” in Europe, but an interesting concept nonetheless.)

Green or not, the carbon credits are changing up the game and business models for modern businesses. This is just the start, but if someone gets it right, we might see a Tesla-sized opportunity born right here in Africa. We’re watching this space.

IN SHORT

🛰️ Space Lenses. Belgian-based satellite camera maker Simera Sense, which up till now makes all of its product in Somerset West outside Cape Town, has just raised $15m to expand production and scale from 25 payloads per year to 200.

🚙 Rent to own. Naspers backed Planet42, which has raised US$150-million to date, got R300-million of funding from Standard Bank to replace some of its Euro-denominated loans. They claim there is a healthy demand for their rent-to-buy cars, getting 60’000 applications per month.

💰 Retail Giants. Leading SA retailer the Shoprite Group makes nearly R5 billion each week or R600 million per day for the owners of Checkers, House & Home, OK, Uniq and Computicket. The group’s popular on-demand delivery service, Checkers Sixty60 is estimated to be making around R10 billion annually.

🦌 Bok Cash. Seattle-based private equity firm Ackerley Sports Group has set its sights on a 20% stake in the back-to-back World Cup Winning Springboks. The group has owned stakes in several sports franchises including the Seattle-based basketball, soccer and hockey teams, as well as a minority stake in England’s Leeds United Football Club.

✖️ Busy X. It’s gonna be a busy week for Elon Musk and his teams. His startup, xAI, will open-source its chatbot Grok this week. And X is launching a TV app for Samsung and Apple users to deliver long-format videos hosted on X directly to your smart TV screens in a move seen to compete with YouTube.

👋 Meet us! If you are in Cape Town this week, see if you can get yourself to StartupClubs’s event on Wednesday featuring Shola Akinlade co-founder of Paystack or Specno’s Founder’s Den event on Thursday evening. Both are going to be great for learning and meeting industry peers. See you there.

BUILDER’S CORNER

4 Ways to Identify Additional Revenue Streams

Once you’ve got a product and some growth, you’re always able to use Paul Graham’s default dead/alive exercise to see when you’ll be profitable (and whether you need more time, funding etc. to get you there).

But let’s not forget that your startup’s not static. You can diversify and hunt for more revenue if your growth is a bit slow, or you’re unsure about your market adoption rate.

Always be hustling.

Sometimes we get so caught up in building and executing the model the way we envisioned it, that we forget that just by operating for a while, we create opportunities everywhere we touch.

Here’s how to take a step back and…

Identify Your “Hidden” Revenue Streams

1. Unpack your existing model

Take a few moments to map out your existing revenue model – focusing on identifying ALL stakeholders, not just your customers.

Now do 2 things:

  1. Look for places where you have congregations of unconverted users/customers. They didn’t buy into your product, OK, but what will they buy?
  2. Also, look at ALL your stakeholders. Are there any who, just as a group (database), would offer value to some other business?

Just the other day, I sat with a founder whose product connects consumers with his database of qualified professionals. And we realised that corporates were willing to pay for access to those same professionals, too. 

Building a quick (POPI-compliant) solution to give them visibility within the database unlocked a whole new stream of revenue.

2. Have any unique IP the industry could use?

Amazon does this quite often – AWS started as an internal hosting solution that worked so well, they could open it up to the broader market.

Ask yourself: What internal tech/methodologies/systems did we build that we could potentially roll out to the entire industry to make money off our competitors?

3. Re-engage your customers

Netflix is pretty famous for changing its business model on the fly – from DVD rental service to digital streaming to film production etc. But it's not because they’re crazy; those are their direct responses to evolving user needs, which they pick up by constantly engaging with their converted users.

You’ve already solved some problems for your customers. How about going back to them and finding out what other problems you can help them with? Chances are you’ll find some good opportunities to diversify in your existing niche.

4. Try different models on the same product

If all else fails, simply apply different revenue models to your product.

Currently selling subscriptions? Try offering it at a big once-off licensing fee.

Got a freemium-based funnel? Try selling the product outright in a different market.

Chances are you’ll learn a great deal and likely unlock some previously hidden revenue streams.

Got a startup revenue hack to share? Hit reply and let us know (and maybe you get featured here, too).

Today’s Builder’s Corner was written by Elvorne Palmer, who is an expert in Audience Development and pretty experienced in “iterating till his startups make money”.

You can connect with him on Linkedin right here.

THE RESULTS

We asked what your number 1 sports hobby would be, and just look at Padel go…

🟨🟨🟨🟨⬜️⬜️ ⚽ Fives Football (18%)

🟨🟨🟨🟨🟨⬜️ 🚴🏾‍♀️ Mountain Biking (25%)

🟨🟨⬜️⬜️⬜️⬜️ 💪🏾 Crossfit (12%)

🟨🟨⬜️⬜️⬜️⬜️ 👊🏼 Any Mixed Martial Art (12%)

🟩🟩🟩🟩🟩🟩 🎾 Padel (27%)

🟨⬜️⬜️⬜️⬜️⬜️ 🕹️ Fortnite (6%)

Your 2 cents…

Lekke, Ric, now you got us hankering to hit the court with some friends…

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