The Lagos Innovation Hotspots is an initiative of the Co-creation Hub aimed at mapping hotspots representing clusters of emerging high growth and competitive businesses across Lagos. The current map, which has more than 170 listed businesses provides information on each cluster, businesses and location-based support services and illustrates exciting developments now underway in Lagos.
As the local community of entrepreneurs grows, a growing number of organizations and investors are looking to engage them. This was highlighted by the announcement of EchoVC, a Silicon Valley-based venture capital firm. The new fund aims to invest $30 Million into Sub-Saharan Africa Start-ups and the team is comprised of former Intel Capital director, Eghosa Omoigui, early-stage technology investor, Shadi Mehraein and former VC Finance at Founders Fund, Amber Fowler.
This news was followed by the recent launch of the ‘Lagos Angel Network,’ a platform that brings together individuals and organisations seeking to invest in and mentor Nigerian technology start-ups. LAN is an initiative of Wennovation Hub. Founding Partners include the World Bank, InfoDev, Tony Elumelu Foundation and Alitheia Capital. The initiative is headed by VC4Africa member Tomi Davies and currently counts 15 Angel investors. Members of the network are expected to commit at least $6,000 a year to a common investment pool.
The time to start a new technology venture in Nigeria couldn’t be better!
Today we are pleased to welcome 9 new members to the AfriLabs network and announce that we are hiring a director. These are the next steps in our effort to build a strong association and to support the continued growth and development of innovation hubs across the continent.
Moving forward, we look to establish AfriLabs as a catalyst for African borne innovation in areas such as mobile/web, design, fabrication, architecture and renewable resources/energy to name but a few. The aim of this effort is to create success stories and decent work for young Africans by focusing on technology and innovation as platforms for entrepreneurship, both as a means of self-employment and as job creation for others.
Here is an overview of the participating hubs.
» Nailab Incubation in Nairobi, Kenya
» HiveColab in Kampala, Uganda
» iHub in Nairobi, Kenya
» ActivSpaces in Buea, Cameroon
» BantaLabs in Saint Louis, Senegal
» mLab EA, Kenya
» Wennovation Hub in Lagos, Nigeria
» RLabs in Cape Town, South Africa
» Malagasy i-Hub in Antananarivo, Madagascar
» ICE Addis in Addis, Ethiopia
» Meltwater in Accra, Ghana
» CCHub in Lagos, Nigeria
» BongoHive in Lusaka, Zambia
» iLab in Monrovia, Liberia
Hiring a director:
The director is asked to lead the continued development of AfriLabs as a network-based organization. Key to this position is to establish strategic partnerships needed to grow the organization and allow for the implementation of programs.
Additionally, the director has the following responsibilities:
» Preserve the founding principles of the AfriLabs charter;
» Establish a work plan for 2012 – 2014;
» Manage programs and engage AfriLab members in their deployment;
» Facilitate outreach and applications of new labs;
» Manage relations with strategic partners and establish new partnerships;
» Lead fundraising efforts for AfriLabs and its members;
» Responsible for any and all reporting to stakeholders;
» Coordinate the annual AfriLabs meeting, host quarterly meetings with the board of directors and facilitate monthly calls with member labs;
» Manage the AfriLabs website and related social media channels;
» Generate, share and promote success stories;
» Support the continued development of the AfriLabs network in any way possible.
AfriLabs is a network organization that supports innovation hubs in Africa. A few details on the organization:
» Non-profit registered;
» Consortium of independent African innovation hubs, co-working spaces, accelerators and incubators;
» Individually, each hub serves as a nexus for innovators, entrepreneurs and investors;
» Goal is to support the growth of the hubs, their respective members and surrounding communities.
When Bill Zimmerman (my co-founder at VC4Africa) approached me with the idea for the Cameroon Startup Challenge, it took me about 3 second to make my decision….this is just something we just have to do! The competition offers a cash prize of USD $5,000 for the most innovative web, mobile or hardware-based business venture in Cameroon. Sanaga Ventures, a joint seed stage investment company between Bill and myself, puts up the prize money.
My first trip to Cameroon was about a year ago. Bill and I were working intensively on the launch of VC4Africa and had decided to build most of the site with colleagues in Buea, a student town at the base of Mount Cameroon (or what the local techies like to call Silicon Mountain).
The trip was a chance to meet people like Helen, Valery, Fua, Mohamed, Fritz, Al, Churchill and many others in person. Much of this community was connected through ActivSpaces, an upcoming tech hub that is now the country’s leading platform for tech entrepreneurship. On this trip we facilitated a business model workshop with some of the ActivSpaces members and hosted VC4Africa meetups in Buea and Douala. Needless to say, my time in Cameroon convinced me there is talent capable of innovating on a continental (Njorku is widely claimed as the continent’s first Job search engine) and global level. See a video for an impression.
Since this trip we have only increased our activities. Now VC4Africa is for the most part developed and maintained by Zinger Systems, a local software firm. We have also developed other projects including the VC4Africa mobile website with two developers Mohamed and Ebot. And as a community (people like Al Banda, Valery, Fua, Rebecca, Bill, myself and many others) we work to support the development of ActivSpaces as the leading platform for tech entrepreneurs in the country. Finding support hasn’t always been easy as Cameroon is not often ‘on the list’ in the same way support is channeled to Kenya, Uganda or Ghana. Exceptions are enterprising organizations like Indigo Trust. But step by step, these various pieces are coming together and a lot of progress is being made. We learn of new projects and promising ventures every day. Now we have a chance to build on these foundations and to extend our efforts to new networks of entrepreneurs in the country. If anything this challenge is a precursor to what is possible and to show the world what kind of innovations are coming from this space.
See the details for the competition and we look forward to announcing the winner in July.
Why do banks have a hard time supporting entrepreneurs? What kind of innovations are underway and what might we expect in the future? It’s time to close the missing middle and there are some promising efforts underway.
Jason Wendle, a Dalberg Associate, makes the point to VC4Africa during a recent filming, ‘The lack of collateral is the biggest challenge. Banks see the SME market as attractive, but they have difficulty assessing the risk and there are few assets in place needed to secure the investment. SMEs on the other hand need fast loans to fill big orders.’ Gerry Monteiro, the Vice President of the Small Business Banking Network, expands, ‘Interest rates are high for SMEs. We have to look beyond lending products and look deeper at financial (and non financial) needs. Banks don’t necessarily appreciate the SME profit drivers.’ This lack of insight on the part of banks hinders the development of appropriate banking solutions. What they do offer doesn’t always meet the needs of the entrepreneurs. The lack of track record, credit history, or tangible assets that can serve as collateral, further hinder the process. As a result, the cost of lending is high, SMEs run the risk of over leveraging their accounts, and there is a need for alternative financing solutions.
There is more innovation needed if we are to close the gap. It is encouraging to see high profile organizations like GroFin continue their drive to serve a smaller business segment. With 10 offices in 9 countries they have been able to reach out to countless SMEs and offer their support. We are also seeing innovative partnerships between larger players like Safaricom and Ecobank in Kenya. Reaching out to the small saver, brings the bank closer to small business. For example, Ecobank Zambia says it now targets 50 percent of its loan portfolio to Small and Medium Enterprises (SMEs) this year. Now the job is to see if partnerships like this can be replicated in other countries. We want to see more big banks willing to service small businesses and expect these trends to continue.
Banking and finance institutions aside, we also see more organizations working to address the issue of due diligence. From research with the investor network at VC4Africa, we know that finding good entrepreneurs with qualified business ideas remains a major barrier to investing into small business. One of the reasons VC4Africa launched its own due diligence and matchmaking service that looks to help both VC4A entrepreneurs and investors. Our online profiles are becoming rich sources of information and we see an increasing number of matches being made across the network. At the same time we see organizations like Open Capital Advisors, whom we have invited for an interview, doing great work in Nairobi. They are building in invaluable service for both entrepreneurs and investors in the area.
The Harvard Finance Lab (EFL) is another organization making efforts to address this gap. They have introduced psychometric screening tools that measure future upside potential, rather than traditional risk management tools used by banks for debt contracts, which only measure downside risk. Recently they announced that Standard Bank, Africa’s largest bank, has signed an exclusive two year deal with EFL which guarantees at least 100,000 EFL credit-applications equaling an estimated $US 500-$700 million in new loan origination across the continent. This adds to their already $US 60 million lent to 22,000 applications in + 18 countries.
There are a lot of encouraging developments in the space and we expect to see more come online soon. Bottom line, small business is the engine of our economy and it is in all of our interest to service this segment. More entrepreneurs getting funding means more jobs and more taxes. We need more of both!
Africa is set to become the developing world’s next success story. In 2008, Africa’s combined GDP reached $1.5 trillion – more than India or Brazil – and GDP growth rates averaged 5 percent per year between 2002 and 2009. The IMF expects this outperformance of markets like Brazil, Russia and Eastern Europe to continue in the future. Foreign direct investment into Africa stood at $62 billion in 2008, seven times more than in the year 2000. Already per capita GDP is higher in Africa than in India, as is the number of middle-class households.
Africa hosts 10 percent of the world’s reserves of oil, 40 percent of its gold, and 80 to 90 percent of chromium and platinum metals. Yet, only a quarter of the economic growth is driven by the resource sector. Retail, agriculture, transport, and telecommunication all contribute significantly to the economic rise. McKinsey expects a 35% increase in spending power and 221 million extra basic-needs consumers by 2015. The continent has more than 500 million people of working age today. By 2040, their number will exceed 1.1 billion. A quarter of the world’s arable land lies in Africa. Infrastructure investments on the continent have quadrupled in the past decade to a total of $12 billion in 2008. And the mobile phone, of which there are more than 450 million in use today, is only the prelude to a fundamental ICT revolution underway.
These opportunities can be translated into revenues and profits. Publicly traded companies in Africa achieve an annual return on capital that is on average 65% higher than that of their counterparts in China, India, Vietnam, or Indonesia, according to economist Paul Collier. Globally, Asia has been the main benefactor. The combined share of Africa’s exports to the European Union and the United States fell to 49 percent, from 73 percent in 1990, while Chinese imports from sub-Saharan Africa increased to over $13 billion, from $64 million. Now is the time for Europe to break that trend by becoming a valuable partner for the continent.
Interested in joining the discussion and attending this event?