Just this week the CrowdFunding South Africa site was launched (look for them at SXSW this week in Austin), working off the theory that, “South Africa cannot compete in the global online sector if it isnâ€™t funding start-ups at the beginning stage.” Their plan is to do this by getting:
“1000 people get together investing R1,000+ each by pooling the money into the Crowdfund.”
Seed funding is risky, and the idea of Crowdfund is to distribute that risk over a number of people thereby reducing it for everyone. Their goal is to invest 50,000-100,000 Rand in 10-20 “excellent ideas”, and also provide legal advice and contracts, designers, specialized developers, bandwidth, hosting, office space and running costs, mentorship and time saved.
This idea is similar to what Ben White at VC4Africa is thinking about, basically a “Kiva on steroids” as Bill Zimmerman puts it. A way for you to invest in people and projects with larger sums of money and greater risk and returns than on the microfinance investing sites.
Finding the Real Tech Entrepreneurs
Both the Crowdfund and VC4Africa initiatives are excellent steps in the right direction, as they both provide platforms that allow less-knowledgeable investors (of tech in Africa), and deeply involved African tech investors alike, to get involved without too much risk at one time. There remains one issue to be solved though, and that is finding the entrepreneurs to invest in.
Any VC worth their salt will tell you that they invest in the people behind good ideas, not just the product/service that the entrepreneur is trying to create. So, how do you find these individuals? It’s generally through your network, people you trust, that serve as a filter to guide you towards the promising ones. That’s the same in Africa as it is anywhere else, yet here in Africa, there are fewer of these trusted intermediaries who act as filters (especially for international capital), than there are in the US or Europe.
In a meeting this last week of the people behind Limbe Labs (Cameroon), Appfrica Labs (Uganda), the iHub and the iLAB (Kenya) we discussed how these spaces could act as that type of a filter for investors and funds. Each of us sees more young tech entrepreneurs every day, and sees these individuals consistently, than most any other single person could by themselves.
Could these labs, which are now showing up all over Africa, be a way for entrepreneurs to make themselves known, show their stuff, then be introduced to the funds and investors with a greater level of confidence than normal?
iHub – Nairobi’s Innovation Hub for the technology community – is here! It’s an open space for the technologists, investors, tech companies and hackers in the area. This space is a tech community facility with a focus on young entrepreneurs, web and mobile phone programmers and designers. It is part open community workspace (co-working), part investor and VC hub and part incubator.
A number of us in the Nairobi tech community have been discussing the need for a physical nexus for the tech community here for a couple years, so it’s great to finally be so close to uncorking the bottles and celebrating a big step forward for all of us.
iHub opens on March 3, 2010!
Here’s a rough video of the iHub. A first-look at the space, before any design or wiring is done:
[Note: my apologies for the video quality, it was taken with my phone.]
Background and Info
The iHub will have a redundant 10Mbs connection, hardwired and WiFi, and it’s freely available to any tech person in Nairobi to use once they become members. Membership is free, our only requirement is that you are indeed involved in the tech space as a programmer, web designer or mobile application developer.
Data connectivity is the most important aspect of the iHub, but after that comes a fresh design and an atmosphere that is conducive to techies getting cool stuff done.
Finally, we’re putting our networks into place to give special access to the entrepreneurs and startups who need space to meet with VCs, seed funders and local businesses. We’re trying to create the place where seeds are planted and are easily found by the people with money to help them grow.
A Blank Canvas
The iHub is what we as a tech community make it. It is a blank canvas, a big open room with a great view and wonderful location, but still an empty room that needs some input from people within the community to design, and create a culture around.
What part are you going to play?
Want to have bragging rights on being the logo designer for the iHub? There’s $500 (38,000 Ksh) up for grabs at the iHub logo contest!
Have a penchant for design, want to help layout the floor plan, pick the wall colors or design the signage?
We’re wiring this place with the latest and best data connections in Kenya. Can you help us make sure the network is sound?
Good at creating intranets for fast and easy file sharing of 1gb+ downloads like the Android SDK? Want to help us build that?
Maybe you’ve got great business connections. Will you help us connect the iHub and the people in it to the business community?
The new iHub’s location is going to be on the 4th floor of the new Bishop Magua Centre on Ngong Road (directly opposite the Uchumi Hyper). It’s an amazing location, with quick access to public transportation, food and the rest of town.
I’ve been working closely with a couple of people from the community to find a place and get some basic items squared away. This advisory group is made up of individuals with a long standing presence in tech locally, including:
Riyaz Bachani, CTO of Wananchi
Josiah Mugambi, Co-Founder of Skunkworks
Rebeccah Wanjiku, Tech reporter and entrepreneur
Conrad Akunga, Blogger and Software Manager
Erik Hersman (me), Tech blogger, Founder of AfriGadget and co-Founder of Ushahidi
As mentioned earlier, there are a number of things still to be done, and we all need to band together in order to make this space what we hope it will become. Your ideas and drive will make the iHub into the space to be in all of East Africa for tech-related activities.
If you would like be involved, leave a comment below.
Morris Mbetsa is a 19 year old Kenyan with a lot of good ideas. If that was all, he wouldn’t be that special, however, he actually builds prototypes of his ideas and they end up being quite extraordinary. The first time we covered his “Block and Track” SMS-based vehicle security system on AfriGadget. This time he’s come up with a web application – the “Wakenya” system for tracking Kenyan citizens virtually via mobile and web.
The frustrations of tech entrepreneurship in Africa
Morris and I got together shortly after his first system was created. He shared a couple other ideas beyond that first invention with me.
He had received a lot of attention due to the Kenyan TV coverage, but it hadn’t turned into any real money for him. No one within Kenya was interested, either as a business partner or funder. There were a couple international groups that were trying to angle in on him, but when I spoke to him he didn’t know or trust them. What he had was all the makings of a sad story of inventiveness leading to… nothing.
This is our story in Africa isn’t it? How so?
We’re continually fighting to get our own money people interested in what we’re doing. We lack seed capital and no one locally cares.
We need business mentors that we can trust, ones that we’re not always worried about being fleeced by overnight. Ones that aren’t just looking out for how they can either steal the idea, the IP or the equity.
Lacking any local funding or business partners, we hope that an international funder will notice us.
If we’re able to get international attention, the next trick is trying to figure out if any of these people are real, honest or legitimate.
It’s frustrating. Why won’t anyone locally come in and fund an idea? Not just an idea, as in the case of Morris Mbetsa and others like Steve Mutinda, but real prototypes. These are working models. (I could go off on a tangent talking about all of the great software developers in Africa who talk a lot about good ideas but never build them – but that’s another post). No, these kinds of guys actually build the prototype first, then try to find someone to fund it. Basically, they’re doing it the right way.
Does the government have a role?
It should, but only in so much as they create a system which limits the hurdles that entrepreneurs need to overcome to create a business, get funding and bring their ideas to market (not just for tech, but for everything). Private investment should be the lion’s share of this type of growth for the country, but in Morris’ case, he’s created a system for Government, so there should be some government funding for just this type of activity.
In fact, Kenya went so far as to create the ICT Board a couple years ago for this express reason:
“To rapidly and innovatively transform Kenya through promotion of ICT for socio-economic enrichment of our society.”
Here we have a young Kenyan with (many) good ideas and prototypes. He needs some structural support though, and we hope he gets it before the vultures descend. I know Paul Kukubo, Al Kags and a couple others within this group – they’re good people and have big ideas themselves. I know that they’re trying to come up with big structural ways for Kenyans to access ICT services and for Kenya to become an global ICT hub.
My question is this: How will that ever be the case if guys like Morris Mbetsa don’t have the requisite government structures in place to allow them to succeed?
3 groups and food for thought
We have a foundational investment-in-innovation problem in many parts of sub-Saharan Africa. If Kenya is one of the top 5 African hubs for technology, then we know that the rest of the countries are in similar or worse conditions than this. What is it going to take for us to truly setup an ecosystem of entrepreneurship and the structures that support innovation, especially in the tech sphere?
1. Outside investment as catalyst
I’m starting to wonder if it will take a concerted effort by investors in the international space who can inject large amounts of capital into business ideas that have potential. Why international, isn’t local good enough? Normally it would be, but international investment comes with some benefits that local investment doesn’t. As anyone who lives in places like Nairobi knows, almost any money you take locally comes with two problems. First, it’s usually a small amount given for an excessive demand on equity. Second, it comes with political ramifications that tend to compromise the receiver of the funds.
Is what we really need a shakeup? A wake-up call for the local investor to realize that they will miss out on the big ideas and products if they don’t create a local system that allows real innovation to flourish, grow and enrich the inventors.
2. Government mechanisms for entrepreneurs
Outside investment as a catalyst for change in this space is one possible idea, but it’s not enough. As mentioned earlier we also need someone within our highly-bureaucratic government system to create a channel for entrepreneurs and investors to act. This could be accelerated business entity creation, and it would likely include lowering certain licensing terms and restrictions. My guess is it would also mean a structure for low-interest business loans as well.
3. A united technology community
Lastly, we need the technology community itself to band together. This is coming into being in a few countries, places where we have techies networking and creating relationships with business people and government. We’re starting to see when an investor comes into town, people okay with sharing the names of other entrepreneurs that have good ideas, and not trying to just tie that investor down with their own stuff.
While there will always be competition, lets put aside the tendency to pull someone else down when they’ve achieved some modicum of success. Instead, trumpet the small wins and help each other get ahead. Goodwill pays off so much better in the long run.
You can see this is something that I’ve been thinking about a great deal, and it bothers me to no end. For, if we don’t fix this we’ll continue to have the best and brightest head to other parts of the world – there is no industry where this is easier to do than the digital one. With them goes all the intellectual capital, inspiration and revenue that would further enrich our own continent.
I’m determined to play my part in seeing change happen. I want to see real technology powerhouses grow within Africa – ultimately with African investors and with solutions that will take the world by storm.
Jon Gosier runs Appfrica Labs. He’s been hard at work over the last year promoting technology all over Africa on his blog, and at the same time building a base for the technology incubator Appfrica Labs that he launched late last year with some external funding from European VC firm Kuv Capital. Jon is one of the most capable, energetic and social programmers that I know. He is entrepreneurial, understands the business side of things as well as the nuts and bolts of developing. In short, he’s about the perfect person to put your money behind if you’re going to invest in the African startup tech space.
Innovation in Uganda, by Ugandans, for Uganda
There’s something very powerful about the focus that Jon is applying to Appfrica Labs. I’m sure that there are opportunities and applications that he will incubate that stretch beyond Uganda, but he’s taking a measured approach. There’s enough low-hanging fruit in Uganda for him work on, so he’s starting there.
“The mission is to offer opportunities and work experience for East African software entrepreneurs so that they can then use their talents to bolster the growing local markets by creating their own products and companies. We pick up where local colleges like Makerere University leave off by offering hand-on experience in Java, C++, C#, Ruby on Rails, Django and Python, PHP, Perl, Kannel and various other programming languages that often canâ€™t be taught in-depth in classes due to budget restraints.”
Jon notes that there are over 60,000 Facebook users in Kampala, and instead of creating yet another social network, he has decided to focus a fair bit of early development into this platform. He doesn’t focus on Twitter or other “hot Web 2.0 apps” which aren’t being used there by enough people yet.
Proof is in the development
A good example of this local Uganda focus is the apps and tools that are being developed right now. Here are just a couple examples, and I know first-hand that there are more on the way shortly:
Status.ug – an inexpensive, and efficient, mobile gateway for Ugandans to update Facebook via their mobile phone.
Answer Bird – Uses Facebook Connect to allow questions to be asked and answered in a Twitter-like interface more here).
OhmSMS – Get an SMS when your power is off at home or at the office, simply by keeping a cheap mobile phone plugged into an outlet.
Why this works
Appfrica Labs is not only a great idea, but it’s a blueprint for a new way for technologists to band together and create something in the face of a lot of difficulties in Africa. We all know of the problems faced when trying to get seed capital, or of the lack of traction when trying to sell ideas to the government or big businesses within a country.
What Jon has been able to do is create a brand which others can rally around and push their efforts forward as a collective. It’s about marketing, messaging and communication. He’s made a lot of headway for not just himself, but the other entrepreneurs in Uganda due in no small part to the hard work and late nights put into his blog, creating his own code, and promoting his message at conferences.
We have yet to see the final outcome of all this labor, but it’s an extremely strong start that leaves me optimistic about the future of Appfrica Labs and any other innovation hubs that pop up around Africa. Rebecca Wanjiku is right, Africans should stop whining and work smart, collectively to get new technology built, released and adopted throughout the continent.