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?
I have spent several days at the Department of Software Development and Innovations (DSDI) at the Makerere Faculty of Computing and ICT. The DSDI is a recent establishment of FCIT’s engagement in applied Software Research and the application of ICT in Education in Uganda. DISD focuses on the growth of software conception, design and development capacity at the Faculty of Computing and Information Technology. This is out of the belief that ICT plays an important role in development, and that local capacity to build and exploit ICT innovations is critical. Software, as a key foundation of ICT, is a critical part of any ICT growth plans.
Young developers have been recruited to work as interns with the current core team of full-time employees who have considerable experience in their areas. The department is working to deliver the infrastructure and talent needed to foster software innovations. Subsequent Projects have been identified; these are both internal and external projects.
This program builds on the foundations of the ‘National Software Incubation Centre’ (NSIC). This larger center aims to provide an opportunity to young graduates (software engineers) to give birth to their dream software projects and nurture them carefully in the initial critical phase. The centre has been set up to provide a training environment for prospective software engineers and is open to graduates of recognized Universities working on software development for both national use and export purposes. The NSIC has started and it is at its early stages. It has got 100 students and these were divided into 25 groups with 25 projects.
What is Software Factory all about?
Raymond studied engineering in the UK but always fostered a background in software. After university, and 20 years of work in the UK and Denmark, he decided to return to his home country. He returned to Uganda for two reasons:
1) He wanted to keep a link with Uganda and Africa in general. He wanted to be part of stimulating a knowledge based industry and make his personal contribution to changing peoples lives.
2) On a personal level, he also wanted his children to know what life was like in Uganda and to appreciate this background.
He started doing consultancy for European companies (mostly Danish). Initially it was a lot of ‘remote’ work i.e. logging into a system in Europe to do work. Establishing a development center for MYC4 in Kampala was his first major project. Mads Kjaer, the founder of MyC4, initially had the idea to develop the MyC4 platform in Africa and Raymond was living in Kampala. Originally he started with three guys (now 12 on the MyC4 account) and has grown his company to 26 employees. The company now works on a number of projects for both European and American companies.
In the past few years the growth has been exponential. Recently he had a European client who was unable to pay their bills. This was a major set back but has made his company stronger in the end. The ongoing financial crisis has proved to be another challenge in that many of his western clients have postponed projects and launch dates i.e. a start up that goes for another round of financing and doesn’t get it. As a result they have had to scale back some of their planning which impacts his project pipeline. The result is that he now needs to diversify. What this means is that he is actually interested in taking on African projects which has opened completely new and exciting opportunities.
What is the power of Mobile?
Mobile is attractive because you can actually measure the response. You can get a feeling for the audience and facilitate interaction with the user. This is more attractive than the Internet because there are still so few internet users here, actually less than 300,000 regular internet users compared to 8 million mobile subsribers. At the same time, media companies in Kampala know that they need to test new platforms and technologies that have already shown their success in Europe and elsewhere. There is a real interest to start integrating campaigns i.e. a billboard with a mobile phone based content that links to radio, television, print, etc… Nation Media Group is an example of a company that already has access to these different channels and is one example of an organization that could benefit from the rise of new platforms and services.
What is SMS Market Place?
One of his exciting projects is a Craig’s list for mobile phones. Individual users can submit ‘buy’ or ‘sell’ messages via sms or mms. Users can subscribe to the service and receive updates when information is posted that is interesting or relevant to their user profile. This is the beginnings of a virtual marketplace that exists entirely on the mobile phone. The major advantage of such a platform is the ability to connect people. Someone who needs something might not know that the man around the corner is the answer. Till now, many trading networks depend on personal relationships. Although this isn’t a good/bad thing, it might mean that someone is looking for something and simply doesn’t have the network needed to know its standing next to him.
People in rural parts of the country also travel long distances to buy certain products. With this service they might find something closer to home or can at least be sure the product is there when they arrive. Currently, the only classified can be found in the national, regional and local newspapers. But newspapers can still be prohibitively expensive. And although one paper is usually read by many different people, the circulation remains limited. The mobile phone is quickly becoming the ubiquitous tool that connects an entire population. The future of classifieds is on mobile!
Challenges Launching SMS Based Services
Launching an SMS based service in the country has proven to be a challenge. The SMS Market (as of three years ago) has been controlled by only a few companies. Powerful inndividuals in the telecoms have indirect stakes in these two companies and they block out alternative services. Luckily, the market is starting to change as more companies get involved in the SMS aggregation market i.e. content providers / sms aggregators (collecting content from multiple sources). There are now 8-10 aggregators. This increased level of competition helps to bring down the prices and liberalize the market.
An example: I-mode is a Japenese example that takes very little revenue compared to the Uganda sms content aggreagrors. This has been their success as they take only 10%. In Uganda the aggregators can still ask as much as 50% revenue share. This will need to change if there is to be more innovation in the mobile space.
The mobile world is not democratic
With the coming of broadband new opportunities emerge. Because they (the major players in the telecom) don’t control the end points anymore. Internet offers more opportunity for development than mobile, because with Internet technology the playing field is equal to everyone. Telecoms control the entry points, the traffic to the end points ( the mobile devices and ultimately the mobile users) . This hinders innovation i.e. why Mobile Money is an MTN system as opposed to a service from a third party provider. With the coming of the sea cable, and the development in mobile technology, it will become easier and easier to pass these gatekeepers.
Was great to join the Akvo team in Istanbul for the World Water Forum. They did a great job putting together a format that really starts to push the edges of the traditional water box. It was great for them to bring in outside organization that could illustrate some new ways forward. As Africa Interactive, it was great to be able to bring the AI network of photographers, film makers and reporters into the picture. To actually show some of the projects we have been working on and to illustrate some of the ways that we as media can contribute to this process.
I look forward to seeing how their format evolves. Can see some great ideas being brainstormed for the future.
Keep it up!
Some additional background:
Akvo has been asked by Netherlands Water Partnership to assist in organising a 4-hour session called ‘thinking outside the water box’, that will take place on the morning of Friday 20th March. The water sector can be quite ‘inward’ looking, so the basic idea was to ‘open it up’ and fuel a creative atmosphere where new ideas, concepts and approaches that stimulate breakthroughs can be experienced. This animation will probably be used to kick it off.
I can now announce the key presenters and members of the panel – namely Alix Zwane from Google, Djeevan Schiferli from IBM, Thomas Bjelkeman Pettersson from Akvo and Joke Witteveen, who represents the computer gaming industry. Djeevan shared initial ideas about using footage from the animation movie, Madagascar, to back up his story, which sets the scene for what we have in mind.
So, why did these organisations step into the water sector? What is their vision for the future and their role in it? What are the possibilities that social networks and new IT and communication tools offer? How will business change in the years to come?
Additional input in the shape of short pitches will be prepared by Ben White representing Africa Interactive (a citizen network of local African reporters), Becky Straw from Charity Water (think Twestival and tweeting for water), and Gurdal Ertek, who will highlight open source software tools to save water in chemical industries. Representatives of the consortium Helixer talked about doing a sketch (lets wait and see) and the rap star BangBang has a video message to explain his initiative ‘fighting for water‘, where rappers and kick-boxers raise funds to provide water for poor people in Bangladesh. And yes, there is more to come.
During the session, participants will be able to send SMS messages to a big screen (if Rik Fleuren from Tenq manages to make it work on the ground in Istanbul), so the audience can directly with presenters as the session unfolds. Mark Charmer will package short interviews with participants at the forum, to be used as input for the discussion. He will also make sure the session gets broadcast and can be followed via twitter as it unfolds (I haven’t told him yet though).
Learn more about Akvo.