Dear reader,
Welcome to the RO Espresso.
You’re familiar with how things work here by now. In these Tuesday emails, we pick a common theme we’ve noticed among the startups we’ve covered. We introduce the theme, unpack it, and give you various founders' take on it as well as our own.
Last week’s theme was an afterthought. We wrote about startups building seemingly unrelated infrastructure that eventually became a moat.
This week’s theme is a premonition. One that can prevent accounts from getting frozen, licenses from being revoked, and operations from grinding to a halt. This week’s theme is about how startups deal with regulators.
In some cases, the Silicon Valley adage of “move fast and break things” is societally nefarious. It can also be disastrous for the startup following it.
The startups we profile below, instead, adopt the virtue of patience. For founders with a long-term vision, painstakingly obtaining permission can generate more ROI than gauchely begging for forgiveness.
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The regulatory dance.
In an ideal world, regulatory approval is a downstream concern. Startups launch, test demand, iterate quickly, and only later optimize for compliance. The assumption is that regulators will adapt to innovation over time.
Sometimes, that may happen. It may even be necessary, if one is severely disrupting what they deem an unjust status quo (think: crypto). Outrunning the regulator, however, is rarely a winning gambit. The regulator always wins.
A regulator can freeze accounts, revoke licenses, or shut down operations overnight. Political cycles can stall sectors for months. Banking partners wait for regulatory signals before extending credit. In this environment, speed without permission is reckless and ultimately counter-productive.
For some founders, the solution is deliberate patience. Secure legitimacy before scale. Build institutional trust before deploying capital. Treat regulatory buy-in as a prerequisite, not a nice-to-have.
Here’s how three startups The Realistic Optimist has covered (in Senegal, Venezuela, and Tunisia) have gone about this topic.
Mbay Mobility (Senegal)
Senegal is a growing economy, but regulatory frameworks for sectors like electric vehicles (EVs) are still nascent. EV startups cannot assume what the regulator is thinking. If the regulator's reflection is still in gestation, founders can gain from actively participating in that reflective process.
Germane to this topic is Mbay Mobility, a Senegalese EV-financing startup.
Mbay’s approach has been to build legitimacy ahead of scaling operations. They focus on legislative buy-in, which itself is necessary to secure the financing the startup needs. Advocating for seemingly small changes such as EV-specific license plates significantly moves the needle.
Mathew Sellar, the co-founder of Mbay Mobility, told us:
“What’s tricky with credit is that it isn’t only a matter of us raising enough equity as collateral. It’s also a matter of legislative buy-in and stability. Local lenders will lend to EV companies once they see that the sector is taken seriously by the government. One of our big wins has been to get the Ministry of Transport to issue official license plates for EVs.”
In that regulatory quest, patience is paramount during election season.
“Senegal went through a large governmental change last year, when Macky Sall lost the elections and was replaced by Diomaye Faye as President. That froze many governmental initiatives on EVs for a while, but the wheels are starting to turn again since Faye’s party won an overwhelming majority at the National Assembly.
We’re expecting a comprehensive, regulatory framework for EVs to come out in the coming months. Hopefully, this should yield tax exemptions on taxes that currently eat into our margins. For example, we pay a 62% tax on the vehicles we import.”
Excerpt from Mbay Mobility: EV financing in Senegal, originally published in The Realistic Optimist (September 2025).
RO Insights: institutional conviction beats speed
Mbay Mobility’s objective is to foment institutional conviction, given the nascency of the market it operates in (Senegalese EVs).
In a capital-intensive sector like EV financing, legislative buy-in strongly determines whether local banks are willing to extend credit lines. Small regulatory milestones, such as EV-specific license plates, function as macro signals to lenders that the sector has state backing.
By prioritizing regulatory validation over rapid fleet expansion, Mbay reduces long-term financing risk. Moving faster without that validation could result in stranded assets or expensive debt.
Whether one sees this as cautious capital discipline or delayed scaling depends on perspective. In markets where regulatory frameworks are still forming, patience can lower the cost of capital, which ultimately determines how fast scale can occur.
Cashea (Venezuela)
Venezuela is one a difficult business environments in the world, to say the least. Over the past decade, the country's credit ecosystem was effectively decimated by a catastrophic bout of hyper-inflation.
Venezuelan banks thus restricted their remit to the wealthiest customers, deemed lower-risk. As a result, the vast majority of Venezuelans were underserved by credit solutions. This opened the market for new entrants, but came with its fair dose of risk.
This is exactly the market Cashea, a Venezuelan buy-now-pay-later (BNPL) startup, operates in.
Cashea was mindful in how it approached the regulator. Especially if the "only" reward for not doing so is early, ultimately futile, traction. Cashea’s co-founder and CEO, Pedro Vallenilla, previously started an e-commerce site in the country and ran into regulatory problems. He vowed that his next startup would “get the regulatory aspect right.”
He explains:
“Silicon Valley lore encourages founders to “ask for forgiveness, not permission”. In our markets, it is nonsensical. If the regulator can close your business overnight, you better ask for permission.
So we did, accepting the additional time that would incur. Our proposal was 1,500 pages long. It was rejected by the regulator four times. Our 5th iteration was the lucky one and we got the green light to launch. The whole process took around 8 months.
It was worth it a thousand times over. I’ve seen other local startups launch quickly but run into a lethal regulatory wall once they gain traction. We’d rather be alive than quick.”
Excerpt from Cashea: BNPL in Venezuela, originally published in The Realistic Optimist (August 2024).
RO Insights: first-mover advantage for regulated startups
Cashea’s moat isn't its BNPL product, per se.
It is being one of the first to get regulatory clearance for their type of product.
Pedro Vallenilla chose to align with the regulators before pursuing traction. The eight-month approval process and repeated proposal rejections slowed initial launch but reduced existential shutdown risk.
Launching quickly in such an environment may generate early volume, but also increases the probability of hitting what Pedro describes as a “lethal regulatory wall” once traction becomes visible.
In other words: probably not worth it.
Konnect (Tunisia)
Tunisia’s banking ecosystem is conservative. The movement of the Tunisian dinar is tightly controlled. That makes online payments both structurally difficult and regulatorily sensitive. Especially for businesses and freelancers.
Serving these two customer categories is Konnect, a Tunisian fintech startup. Konnect's founder, Amin Ben Abderrahman, operates on the premise that legitimacy with regulators determines whether his startup could exist at all.
At a minimum, Konnect had to work directly with the approved banks and payment providers in Tunisia. But beyond this, Konnect had to take extra measures to make sure they were always compliant.
Amin said:
“We took our time, regulatorily-speaking. We banned betting platforms from using our product (although they could’ve been an easy solution for quick traction). We sent the central bank constant updates as we were building the MVP. Although we rarely got responses, I knew our updates were being read (I’d meet people from the central bank at events and they’d tell me). These efforts paid off, as we were recently awarded a PayFac license, the first of its kind in the country.”
Being regulatory-compliant from the get-go has downstream advantages.
“It’s important to nuance: yes, regulation is difficult but counter-intuitively, we’re riding a regulatory tailwind. The Tunisian government wants to transition the country from cash to digital (they have an evident fiscal reason to do so). Konnect is immersing itself within that governmental enthusiasm.
There is also a valid reason for us to be heavily regulated. In practice, we cash-in payments from the payer and then disburse them to the payee. What this looks like from afar is a bank account with a ton of money coming in and a ton of money coming out in quick succession. In other words, a potential Ponzi scheme. It makes sense that we spend a lot of time proving that we are not, in fact, a Ponzi scheme.”
Excerpt from Konnect: Stripe for North Africa, originally published in The Realistic Optimist (March 2025).
RO Insights: "disruptive" isn't necessarily smart positioning
Amin understood that a fintech’s survival depends on being perceived as system-stabilizing rather than system-threatening.
Continuous updates to the central bank and voluntary avoidance of high-risk clients signaled compliance discipline.
Konnect’s moat lies in institutional trust. Its positioning allowed it to align itself with the government’s broader push toward digital payments. A competitor might replicate the payment gateway technology, but replicating accumulated regulatory credibility is slower and more uncertain.
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Aakash (COO, The Realistic Optimist)