Afrinnovator

• 7 steps to raising Seed Investment for Africa focused Tech Startups

  Posted: January 31, 2012, 7:10 am by Mbwana Alliy

  I have observed quite a few entrepreneurs trying to raise seed investments for tech startups in Africa over the last few years. I myself raised $150k for Tanzania’s first e-commerce travel portal 2 years ago. I have also seen startups here in Silicon Valley raise money as part of my work at i/o ventures. And yes, I was at Pivot25 last year and saw the significant angel investment gap that exists when most investors present were saying they don’t put in less than $1M and had little to no relevant tech experience. Impact investors are also showing interest in Africa but they don’t seem to be taking any real risk with early stage tech startups, when technology probably offers the most impactful and scalable change in Africa. But let’s face it folks, raising seed funding is hard enough for normal start-ups- I would say its at least twice as hard in Africa- even though Africa is uniquely positioned and there is rising curiosity and recognition of real growth investment opportunities outside of BRIC countries. I see both sides, Africa originated start-ups coming to Silicon Valley to find tech savvy angel investors, to foreigners (mostly Americans) trying to raise money everywhere for a new market as they bring their pioneering spirit like Africa is the last gold rush.

  I will start each point with generic advice applicable to any start-up and then I hone in on Africa relevant issues-“Reality of Africa”. I hope this helps start-ups navigate a difficult but necessary process if we are to see more entrepreneurial activity and to grow the ecosystem in Africa.

  1. Make sure you are ready – Checklist

  This first step is actually common everywhere, entrepreneurs think they deserve financing when its just an idea in their head all the way up to startups showing significant progress but are probably stalling and need significant technical/business help and capital infusion to grow their venture. Also fundraising takes a significant amount of time and if the team is small, it might actually harm the business for key individual founders or CEO to spend 6+ months pitching to investors. Its important to appoint someone in the team to focus on this more (usually the CEO)- poorly prepared startups on the funding road doesn’t help either side. A startup with a single founder is disadvantaged vs a well rounded team that compliments each other. So its key to make sure you have hit key milestones before putting your startup at more risk by spending time on the road searching for funding- you might talk to 50+ potential investors before you get anywhere.

  Next, having a product or service out in the marketplace with early customers/users and even revenue is extremely important, I underlined and bolded that for a reason. Investors have many choices to invest and they need to see your company making traction. Last week at 500 Startups demo day here in Silicon Valley, the batch of 34 startups not only proved to me that the bar is getting higher, but its also getting more international as well with significant strong representation from Brazil. India and China which are already hot. With the cost of launching internet startups continuing to drop wherever you are, we will only continue to have more quality startups surface and compete for investors attention- traction is a real currency. The only exception is if you are already an accomplished entrepreneur and have proven to make investors money- then money might be chasing you vs the other way around. But even then, companies like Color here in Silicon Valley that burn millions of dollars with no traction still exists based on founder reputation. Past success is not indicative of future performance, but it certainly helps.

  REALITY OF AFRICA: Being ready in Africa for seed investment is definitely different from western markets. Its harder to show revenue for a consumer mobile/Internet start-up- ad networks are just developing, significant scale on internet or mobile users is harder to achieve, and payment ecosystems and trust on the Internet in Africa (different on mobile) is not mature- but this is changing fast. On the enterprise buyer side, most in Africa don’t understand technology that much to decide between different offerings- however, if a technology solution solves a unique problem and gets adopted by a mainstream customer, being first to market has a huge advantage. What I have also seen in Africa is how much startups overplay their intellectual property advantage “my mobile money solution is proprietary” and so have been in stealth and not launched. First of all, enforcing intellectual property is hard in Africa given the legal system, second if you don’t share your idea with others how will you grow your team and add value? The point is that it’s not that IP is useless, many companies do very well on this- but just don’t think your web or mobile startup built with open source technologies has IP that is more valuable than getting real customers and revenue. Many African startup founders also downplay their previous success too much, if you ran a successful tech development firm for many years talk up the experience, it shows that you have what it takes to recruit local staff and build a business. If raising money from Silicon Valley, traction for Africa startups has to be very high to generate interest and compete against what other options angel investors have and because of the unfamiliarity of the market at this stage. What becomes hard is companies that can’t bootstrap to show enough traction, its hard to do a energy/clean tech startup without raising significant capital vs a mobile/web internet startup.

  2. Create a clean and short deck + put startup on Angel List and VC4Africa- but it’s no substitute for business planning and deep analysis and connecting face to face with potential Investors

  A great deck not only communicates the problem and solution- it also creates an emotional connection and inspires whoever who is looking at it to want to learn more. The deck is often e-mailed to investors, they take a look for 5 mins and then they decide whether to follow up and learn more. Treat the deck that way- its not a full business plan. Here are some guidelines:

  • Don’t put too many figures/statistics – limit to 3 per slide- be selective of the most important ones
  • Use strong visuals showing the product and screenshots of the service in action
  • Focus on the team, achievements and why you are unique to address this problem.
  • Make sure the deck flows and tells a story about how you came across the problem, who you are and how you are best positioned to provide the solution
  • Keep to no more than 10-12 slides, shorter is better. Other supporting data can be put in an Appendix.

  Its harder than one thinks to create a great deck with the requirements above- its a continuous process whilst getting feedback and knowing who the audience is also key- getting a designer to polish up the deck may even be needed. A 1-2 page brief may also be a good idea. Also don’t be afraid to be creative and show off relevant skills- for instance, check out this great HTML5 deck by DressRush (now renamed Tailored, a graduate of 500 Startups) that is both easy to go through and got a lot of buzz online- it shows the team gets how to market and promote.

  This brings me onto Angel List. This has become the “LinkedIn for Startups” and although right now it’s heavily Silicon Valley startups and angel investors it has scope for international use if both startups and investors abroad use it – so right now its useful if you are targeting Silicon Valley investors. Some of the features that are great on Angel list including newsfeed notification of progress in your startup, you can put advisors, early investors etc… In short it becomes a place where investors can discover and track your progress.

  However, you should also be sure to have solid business analysis behind your startup and industry. When investors dig deeper in a 2nd or 3rd meeting they’ll ask for this- showing that you’ve done the work rather than dismiss the questions as irrelevant is the way to go. But if investors ask for data that doesn’t exit or impossible to predict in an early stage startups, it might be a sign that they are just looking for an excuse to say no as part of their “due diligence process” or just don’t get technology in Africa.

  REALITY OF AFRICA: The deck for an African start-ups needs to focus a lot on the problem being solved and traction (users or revenue) the business has achieved more so than in western markets. Given that cutting edge engineering skills are often lacking in Africa, highlighting the development teams previous programming accomplishments will go a long way to ensure that the product risk is minimal- good design is also a big differentiator. A good mix of local and foreign talent that compliments each other especially for a business with significant on the ground presence- can anyone in the team speak fluent Swahili when operating in Tanzania and trying to address the bottom of the pyramid market? Also note, a deck targeted at social impact investors will look very different from one targeted at traditional investors in terms of content and what is important- this leads onto the next point- what sort of investors are ideal for your venture? But first, a word on analysis- focus on key assumptions- why did you chose Kenya over Nigeria or South Africa? Does Africa really need another mobile money online solution and what problem are you really trying to solve? Will people really find and download your application? There is a lot of data on the growth of Africa tech these days- take this deck that came out last week curated presentation of stats, data, graphs, analysis and insights on the mobile telecoms sector prepared by Jon Hoehler and Andrew McHenry . How do these numbers help support your startup? Next also be sure to outline how the funding you are seeking to raise will help you achieve your next goals (something often overlooked)- will this get you to revenue, scale, launch a new product or are you just topping off funding because you are out of money to fund operations?

  In Addition to putting your profile on AngelList, another option that might have less tech savvy angel investors is VC4Africa.

  
  

  3. Identify a short list of relevant investors- key criteria for Africa.

  Startups can waste lot of time pitching to the wrong investor audience- at the same time you never know whether an investor is interested in your space or not- it’s a balance in time management so it’s key to think thoughtfully about who you may want to target. Start with you closest connections then move out from there. Don’t forget to include friends and family in this- since they know your character best and can provide moral support.

  • Do they have any money (obvious I know) AND a connection or interest in your space.
  • Do they understand technology like the delicate balance between growth and profitability?
  • Do they provide value add knowledge, networks and mentoring? What is their expertise?
  • Do they treat their investment like putting money in the bank and getting interest or is it a risky bet at the casino but they learn and have fun. Is this a “feel good” or “impact investment”- make sure you line up on this. Sometimes their investment is just a way for them to “learn about the space”.
  • Are they investing for a small stake in a big pie of big stake in a small pie?
  • Do they have the bandwidth to help you based on other investments and their day job? Remember a savvy angel investor has many options and some like to get really involved, others more hands off. Are you the best option right now and why?

  REALITY OF AFRICA: Unlike Silicon Valley and other parts of the world- this list is likely really short- there are just not many active angel investors in Africa who understand technology, start-ups and pass this list- and there are not enough rich uncles in Africa to go around and support all entrepreneurial endeavors of friends and families (but this is slowly changing as success stories realize they can give back to the ecosystem and also make money). And even then, not many investors are accessible or even know how to angel invest- significant networking help is needed to reach them and get above the noise. African Diaspora living abroad have significant capital they could mobilize for your venture- there are many Kenyans, Nigerians, South Africans etc.. living abroad who might be looking to invest back home. Extending further, the Indus Entrepreneurs (TIE )network of indian diaspora has links to silicon valley that inc. tons of angel investors might overlap with the Indian population that may have resided out of East Africa. They might be eyeing Africa as an attractive investment in technology especially if India has becoming increasingly competitive, saturated or too corrupt and bureaucratic. In Silicon Valley, a connection to The African Network (TAN), might also be able to help. The middle east is another option- UAE, Oman are heavy investors in East Africa for instance.

  A word on impact investors- they started in microfinance where they realized you could profitably serve the poor in India, Bangladesh, Latin American and in Africa and have now moved into other areas (health, education etc…), its a new industry and as a result many change their investment strategy as much as the wind in the Sahara or Indian ocean changes direction! Some are more stable than others and clearly state (or can be deduced from their investment portfolio). Impact investors are also less likely to ask about high financial returns and how you will exit your company by selling to tech multinational as they mainly care about what “impact” you are making- such as no. of jobs created, reduction of malaria prevalence, serving an under-served population etc…

  4. Connect and educate with potential investors- ask for advice and you might get money. Update progress on Angel list. Draft and test your e-mail pitches, find investors at conferences, use your social skills well- how you interact and reach investors is a key skill. It’s like dating… It also communicates what you might be like to work with. The most networked people do better in business than just being smart and savvy- this is doubly as important when it comes to getting angel investment- it is about who you know and who can refer and vouch for you.

  STOP! Before you proceed- go through 1-3 a few times. 4 becomes your point to start talking to people and work your way to investors. Oh and 1-3 is called “creating a company”- you’ll be repeating it again and again for further rounds of funding. No shortcuts, learn to do it once because you’ll be doing it again.

  REALITY OF AFRICA: Africa needs tons of education to foreign investors due to preconceived notions of Africa despite growing interest- as a result they might be risk averse right now until they get more familiar with the continent- try avoid the “driveby investors” who might not add much value apart from their money. For local investors it means focusing on how the technology works. Even after foreign investors “get Africa” its really hard to anchor themselves around the needs of Africa since they are not living and breathing the problem you are trying to solve. An American team pitching to a traditional American investor who has never been to Africa would need a lot of education- they might even need to come with you to Africa to see the problem you are trying to solve first hand. People are just waking up here in Silicon Valley to the wonders of Africa mobile banking about 2-3 years late even though M-PESA is already a tired story. This means increasing the time it takes to raise money from this group of investors. European investors might take less time on education but they might not get the technology aspects as much as a Silicon Valley investors- also their risk appetite and familiarity with tech angel investing is likely to be different. An ideal investor would be some foreign expertise that brings tech and management discipline/experience and a local investor who can provide local context and connections.

  5. Practice the pitch and work up to your favorite investor(s)- Know the toughest questions upfront and address them intelligently and honestly. You might have to go through “Gatekeepers” who have the connection to the high profile investor, understand their position, don’t assume they will just make an e-mail intro out of the blue. Treat them well- their job is not to refer every start-up, it defeats the point of a gatekeeper. Note the common questions (note: not many are technology related- no one cares if you built it in php vs ruby!). Sometimes you’ll get questions to which there are not good answers- don’t be afraid to say “I don’t know”- its a mark of maturity, but be sure to convey that you will find out or are actively working to solve that problem and you are a fast learner.
  

  REALITY OF AFRICA: For entrepreneurs originating from Africa, the pitch delivery needs to practiced to perfection. Being able to pitch in 6-10 minutes is daunting for most entrepreneurs, but it should be an opportunity to distill your startup into the key elements- In Silicon Valley, you never know when you might have to talk about your startup, could be in conference, in a bar or in an elevator (hence the elevator pitch!) So most startup founders can talk about their startups really succinctly.

  If you have to talk too long- see point 4 on education. You might need to follow up or prepare with the person introducing “referring” you the investor. Here is a checklist of questions you should watch out for and have good answers ready:

  • Africa is the dark continent- its unstable right?
  • Do Africans have real money to spend?
  • There is serious currency risk, check out the inflation in Kenya and Uganda? How will your business handle it?
  • Nigeria is the best place to do a start-up right? It’s a big market! Why are you in Tanzania?
  • Can you hire the technical and managerial talent to grow your venture?
  • How will I get my money back via- Exit?

  6. Scoring an anchor and influential investor can significantly boost your chances but be careful who this is? Refer to point 3. Accelerators and incubators act a lot for this a “stamp of approval” but also make it efficient for investors coming to visit a region in Africa. In Silicon Valley, getting vouched and having influential personalities such as Ron Conway or Dave McClure can get you a long way to closing your funding round. Angel-list again is another way to make this process more efficient, but it is no substitute for face to face interaction if you can get it. Sometimes you are better off preparing really well and scoring an introduction from someone influential than trying to talk to a mass of investors who don’t understand you (at least in the beginning).

  REALITY OF AFRICA: Incubators and Accelerators popping up in Africa are helping to solve this. Accelerators like the Umbono in South Africa or Meltwater in Ghana can be a fast track to get to this step- it might take you 6 months to get to this step on your own or 3 months if your join the “right accelerator”. Be sure to evaluate them properly, the founders can have significant connections to real tech investors, others may have different intentions all together- who is the Ron Conway of Africa? The person might exist but they might not be as publicly visible as the Silicon Valley equivalent. Try get yourself into the regional pitch contest in Africa- for example Pivot East in Kenya that is organized by the iHub and sponsored by many other startup friendly organizations that provide proven regional and global visitbility.
  

  7. Be wary of terms and make sure you have a clean cap table- but don’t overly negotiate. You are getting married but it’s one of many spouses on the long road to success. Term sheets for startups are becoming increasingly standardized across the world. Some VCs are even providing their standard ones on their website you can customize For example, passion capital in the UK (wish more African VC funds would do this!).

  REALITY OF AFRICA: African investors not familiar with start-up term sheets and a country’s legal framework around concepts such as employee stock pools (setting aside shares in your company to motivate new employees with success in the company) and convertible note (a hybrid debt/equity investment instrument common in early stage start-up) might harm a start-up by demanding unreasonable terms and not ensuring the risk and reward of start-up team and investors are adequately balanced. This can kill a start-up. The big advice here is to find a lawyer that understands both sides and can educate appropriately. Do your research- the links above from sites like Quora can help you get educated fast.

  Finally- remember the old investment cliche- “we invest in people not ideas”- its actually true. Treat your angel/seed investor the same

• Doing Tech Business in Africa: A Few Lessons from Twitter’s Rise in Africa

  Posted: January 28, 2012, 5:42 pm by Will Mutua

  Very recently Portland Communications released some data from research carried to find out about the usage of Twitter in Africa. The report was received quite well and received some notable attention across the web. Much of what has been written has looked mostly at just the implications of the research on primarily social media and it’s use and growth in Africa. But I’d like to take a different turn and perhaps use some of the insights from this research to shed light on the subject of tech startups in Africa and what works.

  Qualitative vs Quantitative Factors

  According to the report, South Africa is the continent’s most active country by volume of geo-located Tweets, with over twice as many Tweets (5,030,226 during Q4 2011) as the next most active Kenya (2,476,800) and third comes  Nigeria at 1,646,212 tweets. This continues to give credence to the idea that these three are the countries to watch as far as technology and innovation in Africa go.

  Mbwana recently wrote a very well thought out exposition on what factors to look at when selecting which country is best to do business in Africa. Among the factors, Mbwana points out that one should look at are regulatory and macro-economic factors. Looking at rankings based on World Bank and IFC data, these three countries feature prominently among the top 15 countries in Sub-saharan Africa that are easiest to do business in – South Africa ranks 2nd, Kenya 9th and Nigeria 15th.

  It is interesting, however, that based largely on more quantifiable terms such as taxation and credit rankings, the latter two of  these three countries do not appear to be the most promising to invest in a tech startup relative to others on the list. There appears to be other factors that are making these countries rise above other states that would seem obviously better candidates when considering where do a tech startup than these.

  It seems the more qualitative aspects have a strong bearing on where to do tech business in Africa. Borrowing from Mbwana’a article two key qualitative considerations are:

  An entrepreneurial support network – Startup Culture:

  Basically is there a critical mass of other like minded people in the country? People you can learn from, people who’ve already interacted with the system and have learnt how to go about things in that country when doing tech business? In any case having more people trying to achieve in the same area as you are also makes it exciting to do business and creates a great ecosystem to operate in.

  Perhaps that’s why so many tech startups move to Silicon Valley, there’s something about being in a place where there are many people competing and co-operating and those clusters create great feeding ground for investors. Vibrant innovation hubs such as Nairobi’s Innovation Hub and Nigeria’s Co-Creation Hub are indicative of the presence of a strong entrepreneurial support network.

  Lesson: Don’t forget the qualitative aspects. Balance out the quantitative aspects verses the more qualitative ones.

  Local Culture:

  In ‘Pondering Africa’s Tech Investment Potential for 2012 and Beyond‘, we noted how devastating it can be for the foreign investor to fall into the mis-understanding that Africa is one country, with one culture.

  The diversity of cultures in different parts of Africa has a strong bearing on not only how people do business there but also on how consumers will respond to products – not just the product itself but how it is presented and the messaging around it. You can have a great product and kill it with your advertising messaging.

  A great example of how understanding the culture can make a great difference in how well the target market take up a product in Kenya is Safaricom’s advertising. Many of Safaricom’s products were more widely received than competing offerings simply because they understood local Kenyan lingo and incorporated it in product names and advertising messaging.

  For example, transferring airtime credit from one’s Safaricom line to another is dubbed “Sambaza” the competing Airtel service (this was really the mistake of Airtel’s predecessors, Airtel seems to be doing much better) called their own similar offering “ME2U”, people took to Sambaza versus ME2U and nowadays you’ll hear a Kenyan with an Airtel line saying they want to “Sambaza” credit to another Airtel line…. this is a bit hard to explain given most of the people reading this are not Kenyan but it’s exactly the same thing as saying you are going to “Google something on Yahoo”

  Lesson: Keep in mind the context of your operation

  The Youth of Africa are where it’s at

  The report indicates that 60% of Africa’s tweeters are between the ages of 20 and 29. That’s pretty amazing if you think about it.

  According to the 2011 Africa Youth Report compiled by the Economic Commission for Africa:

  The majority of Africa’s population is below the age of 30… Young Africans are the key to an African renaissance and will remain players in and advocates of social transformation and development in many spheres. The enormous benefits young people can contribute are realized when investment is made in young people’s education, employment,health care, empowerment and effective civil participation

  According to this document from the Africa Commission:

  Almost two-thirds of the population in Africa is below 25 years of age. More than 20 per cent, or almost 189 million, are youth between 15 and 24 years of age. This share will remain more or less constant for the next 10 years.

  This presents an unprecedented market and labor pool (Read: Kenya Julisha ICT report: Invest in new skills. It’s called Human Capital) if tapped. Many are tech savvy and connected unlike ever before on the African continent and they are willing to learn & try new things. They do not have immediate memory of colonial times, and so are not living with that burden on their minds, they see a world open to them to explore, where they can compete with contemporaries from across the globe, and share and learn from them.Thanks to the Internet and web (particularly delivered via mobile) they have ready access to information and this has empowered them.

  Lesson: Tap into the youthful African population

  Reflecting again on the Twitter report, it is interesting that majority of Twitter users in Africa are using it to stay connected with friends – 81% of those polled saying that they mainly used Twitter for communication with friends. One could easily draw a parallel between Twitter and SMS messaging (only that Tweeting is cheaper). Perhaps one reason why Twitter is picking up is that Africans can already relate to sending short messages via mobile and so it is really to turn to the internet based for communication with friends – the principle is the same.

  Lesson: If you’re introducing something new, it could be helpful if you can mimick something that’s already common to increase adoption rate

  The Power of Mobile (duh)

  The Portland Communications research indicates that close to 60% of tweets from Africa are sent via mobile phone. Now, the amazing link between Africa and the mobile platform is not a new subject but one that deserves mention over and over again. The simple fact is that the mobile device will remain the most powerful platform to reach the mass market in Africa for some time to come.

  There are companies that are doing pretty well by tapping into this. For example, ForgetMeNotAfrica brings internet messaging and social networking to every mobile phone including the most basi ‘feature’ phones without WAP.

• Building Websites that Work in Africa

  Posted: January 25, 2012, 11:35 am by Will Mutua

  It is interesting that sometimes it’s not the most robust and well designed solutions that get picked up by consumers. Great design of course is something of great importance when designing a piece of software, an app or a website. And clients will gravitate to well designed (graphically, not in terms of user experience), well tested and robust services. But sometimes, it seems, it’s enough that something simply works!

  Africa is a bit of a late-comer to the internet. Since the .com boom and bust, the internet has evolved and grown in leaps and bounds. It’s only a few years ago that the term Web 2.0 emerged, giving an identity to what the web had evolved into. In terms of technology, particularly on the software side, much has come about. There are a myriad of frameworks for developing robust web applications and web services based on a wide array of standards.

  The technology today affords the creation of some great looking web apps with solid engineering behind them. At the turn of the millenium, the websites were pretty well, boring, at least as compared to the standard today. Even, a person with little or no programming knowledge can create a great looking website in a few minutes using WordPress or other such blog and CMS platforms.

  Yet it still occurs that at times consumers do not turn to the most well designed website to satisfy their needs. Sometimes it just boils down to who was first to market and who is offering a service that works, and one that works without failing.

  Back in 2008/9 one of the suggestions going around within Kenyan tech-circles about how easy it is to create a ‘Kenyan’ Craigslist and how it would be quite easy to make it pretty successful. Craigslist is one of those few websites that survived through the .com boom/bust period. But one pretty amazing thing about Craigslist is that, at face-value, it’s not a work of genius in terms of graphic design. It is actually at best, simply a list. And it works, people use it, and they’re making money off it.

  Here in Kenya there are two very popular websites that prove this point both owned by Cheki Africa Media. Cheki.co.ke (currently ranked 49th in Kenya on Alexa, top 10 locally) is a used cars website and brightermonday.com (Currently ranked  45th on Alexa among all sites visited by Kenyans and top 10 locally) is a jobs site. Both do not have what one might consider stunning graphic design even compared to other players in the same market, but both have become probably the leaders in their industries and have expanded to other East African countries and even to Nigeria. Both sites provide a very specific service and do a great job at what they’re made for.

   

  In Nigeria, Nairaland is ranked as the 10th most popular website and 2nd among local websites by Alexa. Nairaland is a basic online discussion forum. Nothing fancy.

  Question is, why does it happen that at times the successful site is not the greatest looking one? If you’re planning to create a web offering in Africa there are some important lessons here.

  First to market

  Africa is Rising. And technology is the main engine. Things are also happening fast! There are many opportunities to offer online services that have not yet been tried in different regions of Africa but those opportunities are being filled up fast! People are seeing the gaps and filling them.

  So, sometimes it’s best not to get stuck on getting everything right as far as look and feel go but of more importance would be getting into the market fast, first and with a product that works, hence raking in the customers and possible revenues before competition shows up. Then work from there, you can add on great graphic design afterwards. Just make sure you have a solid product, that’s scaleable. You can add on the great graphics work later – that’s why you iterate in product development.

  If you are offering a great service, and customers catch on and engage with your service, it is unlikely that they’ll jump ship when someone else comes by who’s offering exactly what you are offering with a better looking skin on it.

  User Experience Design trumps Graphic Design

  As far as design goes, it’s NOT wise to throw out the baby with the bathwater. Don’t just cobble up something and serve it to the customer and say, “Hey, it works!”. You may not want to hold up the product because of the graphic design side of things but user experience is everything. If you’re going to spend time on design, spend as much of it as you can on getting aspects of user experience and user interaction just right.

  Mobile Web Rules in Africa Design Specifically for it

  In Africa, it’s worth noting that most internet consumers do not have the luxury of the full scale desktop browser experience. Much of Africa’s internet usage is via mobile phone. In Kenya, for example, statistics have shown that 99% of internet access is done via mobile. And as far as mobile web browsers go, in Africa, Opera Mini is probably the standard.

  Therefore it would be wise to invest in creating a custom site for mobile, or making your website mobile friendly. As far as web design for mobile goes, the cardinal principle is to minimize. Minimize on the number of graphics you have, minimize on the number of actions a user needs to do or number of pages it takes to accomplish a task.

  Conclusion

  It’s better that it works than it looks great but doesn’t work. All the same there is a minimum as far as design goes, it may work but it may look really awful. So get the balance, but don’t be over-concerned about getting the perfect graphic design on the first iteration. Andrew Mugoya recently published an ebooklet titled ‘Help, I am a developer with no clue about design – 6 1/2 tips for developers with no access to designers‘ that’s targeted at developers who can’t get dedicated resources for design that could help get the minimum as far as design is concerned. The simple tips in this book offer simple, practical ideas for the minimum as far as design goes.

• Doing something about bad design

  Posted: January 23, 2012, 2:30 pm by Andrew Mugoya

  With a year+ of experience of running Afriapps, we’ve seen our fair share of badly designed apps – the number one reason we decline apps submitted to us.

  So now we’ve decided to do something about it. Introducing our latest ebooklet: Help! I’m a developer with no clue about design – 6½ practical design tips for developers with no access to designers.

  Recognising that it may not always be possible for developers to get an expert designer involved in the design of apps or sites, this ebooklet offers pratical design tips for developers to follow. They will not turn developers into killer designers, but they will hopefully ensure users are not turned away from apps/sites due to woeful design.

  You can download it here.

  Happy DIY design.

• WezaTele’s MyOrder Powers Mobile Ordering

  Posted: January 23, 2012, 10:53 am by Will Mutua

  Weza Tele is a visionary firm that leverages on technologies such as, USSD, Mobile Web, and SMS to provide order management, distribution, tracking, circulation and validation solutions. Weza Tele also offers reliable customer service, support and maintenance to its clients.

  Myorder Enterprise provides a tailored, deployed solution that automates order management, tracking and validation across the enterprise. At its center is a dashboard where distributors and customers, manage inventory, generate reports, and view performance trends.

  SMS ordering: New feature in Myorder Enterprise

  According to the CCK Kenya latest report (2012), there are 27 million mobile subscribers, SMS per subscribers per month growing by 125% from 8.5 SMS as at June 2011 to 18.99 SMS at September 2011.

  Weza Tele has tapped into this market by developing an SMS-based ordering service for its clients that they are currently working with in the industries of publications, cosmetics, beverages, grocery & food stores as they strive to reach their vendors and end users with an easier way for them to order from their simple phones.

  It is easy to use and integrate into your current sales process and the service consists of 3 simple steps:

  1. Register
  2. Order your items
  3. Orders confirmed

  How does the SMS ordering service work?

  For End Users

  The system enables registered customers to send in orders in a simple and memorable format. This works from a basic phone with no need for an Internet connection.Everyitem on a catalogue a code is assigned that further simplifies the ordering process. We translate the codes, calculate the total price, and send you an electronic confirmation

  Our software also has built in error correction mechanisms. For instance, if you incorrectly type in your order information, then the system is able to automatically correct that and figure out what you meant to type. It then sends you an smsconfirmation before your order is further processed.

  For Distributors

  At the heart of the software is a simple and well-designed dashboard. This enables you, as a seller, to manage customer information, orders, prices, products, reports and recipients with control rights. You can also periodically receive orders by email,formatted as Excel spreadsheet with customizable fields you would want to see.

  Benefits:

  Ease of use – No special equipment needed hence more flexibility when ordering. Works with any mobile telephone that can send Text messages (SMS) or email.

  Fast – simplifies the process for both customer and retailer, as the customer avoids the likelihood of being held in a phone queue and the retailer gets structured, aggregated orders from time to time.

  Low Cost – Free registration.

  Convenience – Buyers send from their mobile phones and receive SMS notifications to confirm orders.

  Simplicity - There is no hardware or software to install so that in a matter of minutes its up and running.

  For more information contact us:
  Sam Kitonyi
  CTO, Wezatele
  Email: apopheniac@gmail.com Mobile Number: +254 710 742 134

• Angaza Design plans to revolutionize energy access with Solite mobile money pay as you go

  Posted: January 22, 2012, 7:05 am by Mbwana Alliy

  Globally, over 1.5B people lack access to grid electricity for lighting and battery charging (600M in Africa). Lack of access to clean, reliable energy also makes it impossible to break the cycle of poverty. There is no denying that one of the biggest challenges for Africa is to solve this energy crisis. Relying on the electricity grid means frequent blackouts at the mercy of old systems that cost billions to upgrade and as the lower income consumers transition into the growing middle class, the pressure to serve them becomes immense. Impact investors including Omidyar Network, DFJ & Draper Richards and Acumen fund have backed companies such as the well known D.light Design serving both East Africa and India. The solar lighting business is a hardware business and as a result its a distribution business- razor sharp margins, high upfront hardware costs serving lower income populations that need it the most and cut-throat competition including chinese companies make this not an easy business, especially to demonstrate scale quickly to attract further growth capital. In fact the biggest competition is what Africans already use, Kerosene lamps- a dirty, unhealthy fuel that is environmentally destructive. We need all the innovation in this area to meet the goals of clean sustainable energy for the growing demands of emerging markets around the world. I think its fair to say the chinese solar or battery powered lights are the largest marketshare holders in this segment, exact numbers are hard to obtain- but from what I have seen in Tanzania, they are absolutely dominating and competing on price. So how does one begin to compete? I believe the right distribution channel and a unique design and business model are the only ways to succeed in an otherwise very commodity environment- would your rather be an Apple or Amazon in the tablet space or a Dell or HP? Being mediocre exposuses yourself to being crushed in the middle. We see this everywhere- the iPad and iPhone are well designed and capture higher end tablet users, the kindle does well because it has great design and is subsidized by content- understanding your ultimate customers through a design based approach also dramatically increases your chances of releasing something people actually need.

  This where Angaza Design comes in. Founded by Lesley Silverthorn, an ex-Designer from the Amazon Kindle team has decided to tackle this problem and take a different approach.Their first product, SoLite, apart from being way smaller than the competition, has amazing brightness, enough to light up a whole room and be used stationary rather than hand held, many lighting companies make compromises on the brightness and build quality to achieve a low price pont. The team spent significant time in Tanzania researching the needs of potential customers before finalizing the design-what they say is a “human centered design” process- right from the books of Stanford Design School and renowned design firms like IDEO. Angaza noticed that most low income Africans can’t afford the upfront costs the solar lighting products. So taking they decided to combine Pay-as-you-Go model to subsidize the hardware. This is a similar approach to EGG-Energy in Tanzania rents out batteries using this model and a network of charging stations.

  One big difference with Angaza’s approach is to utilize the increasing ubiquity of mobile money services to help streamline collection of payments- we have seen this been used to great effect with companies like Bridge International Academies in Kenya within the education with great results. The projected pricing of SoLite (and this will change market to market once they scale up) is an upfront cost of about $15 and a stream of ongoing weekly or monthly payments for energy access. This seems competitive with companies such as D.Light design and Barefoot power which charge $10-20 for a more inferior light (bigger and less bright and of somewhat lesser build quality). When talking about product quality and specs, the World Bank and IFC operate an interesting organization called Lighting Africa that seeks to provide market information and educate the industry about offgrid solar lighting products. They have a handy section on their website where you can view specification sheets of products that have been “certified” for use in Africa. Angaza Design hopes to submit their specs here too. Curiously enough, one of the market leaders, D.light design, have their spec sheet only available on request, which sort of defeats the point- so you have to ask yourself why? Similarly, the true market leaders, chinese knockoff lights are obviously not listed at all. I feel in part, the organization is trying to simultaneously protect intellectual property whilst erecting barriers to entry for new lighting companies- Lesley, founder of Angaza Design told me that it costs about $6,000 to certify a new model of any product, it’s also an outdated mode when products are constantly iterated and improved based on feedback, this leads to a very costly certification process for a company like Angaza using their human centered design approach. Certification is great, but it should not be cost prohibitive and add unnecessary paper work for startups trying to innovate.

  Angaza’s emphasis on quality will mean a high component and manufacturing cost which is why the pay as you go via mobile money seeks to lower up front cost down to the competitive market price whilst ensure the long term cost of energy is also competitive with dirty kerosene. Presumably after a while customers will be free of the payments- but until then they have to purchase “energy credits” to use the lights. This is revolutionary if they can pull it off as it helps change the game especially if they solve the final challenge- distribution. When I asked the team about who they have worked with to date, they mentioned they are selling their product in 6 countries so far and partnered with Solar Sister, an NGO in Uganda that employs a team of women (solar sisters) who sell solar powered products. They hope to continue doing so and looking to working with other NGOs- one of the reasons for them going down this approach is that they feel they need to work with partners who can help educate customers the benefits of using their product/service offering. You can read about my thoughts about OLPC and how hardware companies need to do this to achieve scale- they agree with me that the “driveby drop” model of hardware does not work very well- Angaza are hence very customer focused in working with partners and ultimately customers who can rapidly educate and respond on both sides- advertising is achieved through word of mouth. Angaza is currently preparing to pilot with communities off the grid near Arusha, Tanzania- I asked them why they chose there (readers might feel startups blindly select where to do tech startups in Africa), and they chose mainly on finding strong partners and the ease of which they can reach off grid communities within 20 minutes driving distance from town- try getting anywhere like this from Nairobi or Dar es Salaam!

  Integrating with mobile money will be a challenge- given there is no real robust API for services like M-PESA, they will have to automate and build this feature and make it tamper proof within their own walls- something that I feel mobile money services should offer down the line (e.g. a recurring billing feature) for developers to take advantage- a perfect example of why an API is needed to unleash innovation in payments across every sector including energy access.

  One the final challenges I see for Angaza to date has been securing seed funding, an all too common problem. I have argued before and hinted in many posts that impact investors have historically been absent from early stage funding of less than $1 Million, backing more proven companies- they also seem too rigid in thinking about funding competitors who may have a different approach or may even be serving a different market. The company sort of surprised me with their approach of using a crowdfunding site IndieGogo to raise money for their up coming pilot. I have met with the team a few times and they have indeed had a hard time raising funding here in Silicon Valley for their pilot- they have a great designed product and some initial distribution in Uganda, you’d think impact investors or otherwise would be interested- nope, too early. Angaza call themselves an “early stage for profit international social venture”- caught between traditional ventures who are unfamiliar and uncomfortable with the space and impact investors who feel they have bet on their companies and probably can’t fund a competitor. Crowdfunding is a great way to get people involved to get the word out about their venture and raise the smaller amount of funds that are required to initiate and run the pilot to which they can get the results to validate their model and raise traditional seed financing. I think using crowdfunding sites to raise pilot financing for highly risky prototypes and pilots is a smart strategy, many prototypes have been launched this way if communicated and marketed correctly. Like any financing mechanism, crowdfunding has its place- lets not be deluded that you can seed fund an entire company this way, since ultimately you want value added investors who can help you down the line for scaling, hiring, strategic advice etc… But maybe they’ll attract further capital via this strategy once they demonstrate more results.

• Which African country is best to do a tech startup? A Decision Framework

  Posted: January 18, 2012, 8:45 am by Mbwana Alliy

  In recent conversation that have spanned the last 6 months, I’ve been getting the same style of questions from foreigners who recognize the growing opportunities in Africa and want to jump in. “Which is the best country in Africa to do a tech startup?” Sometimes the question is underlying in the comments I have seen in this blog “Hey, you talk so much about Kenya, what about Nigeria or South Africa- we rock too!”. But more recently the question is more vital when I get an actual startup or investor making a decision between 2 countries to launch their startup or to make investments. Or maybe down the line they realize there are better fortunes in another country- e.g. D.light Design, a darling of the impact investing industry, recently moved from Dar es Salaam, Tanzania to Nairobi, Kenya.

  So where to launch a tech startup in Africa? There is no one right answer- what I want to offer here is a decision framework based on real data and trends that I have seen- this should help people assess their situation and move forward and get on with their startup. However picking a country to launch should not be taken lightly- This framework (more questions to ask yourself) can act as a guide to assess at each stage that is practical- for instance you may grow up in one country, but your needs mean you have to move to another country to take advantage of further opportunities that might restrict growth.

  What Kind of startup Organization are you trying to build?

  At pivot25 last year, I remember asking a kenyan lady who had a shirt business “this is a tech conference- what are you doing here if you are in the t-shirt business?”, she replied, “I am curious, I want to learn more”. Then I asked her “why are you selling t-shirts?”- she replied and I will never forget it “Look around, people wear second hand t-shirts from China or elsewhere all the time- Kenyans deserve much better”. This is the sort of entrepreneur attitude I like, she is very mission driven- and it also says a lot about the environment you are in and kind of organization she wants to build. Answering this question should get most people halfway to deciding where to do any startup and that includes tech. Each country in Africa has a unique offering for the kind of company you are trying to build- If you are importing materials or products you may want to be near a port such as Dar es Salaam or Mombasa, which one is easiest to deal with, which one offers the best road network to move your products?  If you intend to build a tourism related company like when I started Yellow Masai, you want to be in an area with all the safari tour operators and major attractions- the angel investor actually owned a hotel on Kilimanjaro, this drove me to set up the company in Arusha, Tanzania- its also easier to hire talent that understand the tourism industry.

  Look for strong Macro economic factors- but the right ones.

  On the surface, the best countries in Africa for a tech startup are simply the ones with the best internet and mobile penetration figures, large middle class populations and fastest growing economies (GDP)- these include South Africa, Nigeria, Ghana, Egypt. But this is sometimes limiting.
  When I talked to Golden Gate University students last week, I used the Mckinsey diagram that segments countries to explain the dynamics of African countries and the implications. Exports per capita  show the raw output and productivity of a country, the diversity of the economy shows essentially how much a country depends on mineral resources. Both taken together are extremely important and can help drive decisions. Nigerians like to say “hey, we are a bigger country and there is more money here- we are a big deal!”- but their economy is very dependent on oil exports- so much so that look what happened in the last week when fuel subsidies were removed and the price of petrol doubled. So what? Well it drives the expectations of that country and internal economy dynamics- a lot of talent is in the petroleum economy, why should talented folks leave and join your startup with no revenues when they can make more working in the established industry- money aside, maybe that programmer you are trying to hire in Nigeria would never leave that oil company because his parents expect him to get a steady job (in Oil), find a nice wife and settle down. I use Nigeria and oil to illustrate this example but it also applies to one other factor- dependence on AID. Some countries are so dependent on AID it makes up as much as half the economy- Tanzania is a good example here. But it also implies the sort of talent you can hire there- expats who expect a steady salary, drinks at the Yacht club every night and paid for driver to take them to and from work. In the bars you might meet a very attractive Swedish lady who when asked “what do you do?”- would reply “I am here to start an NGO and save Africa!” Again, the implications are clear- maybe she raised $100,000 in grant money and hires 5 people from the local University and then when they leave they expect the same sort of job at the next place- now imagine 10 more “I am here to save Africa with my NGO”-types, it spreads. An African country historically concentrated too much on one industry (especially natural resources such as oil- look up resource curse) can be very negative on their economy for trying new things- and tech is all about new ways of doing business and efficiency- so I am sorry, but more often than not AID industry professionals don’t cut it in the tech startup world, but I stand to be corrected.
  Check out South Africa on the chart- No wonder over half African investment in private equity ends up there- its both a big country, well diversified with high export earnings- its hard not to consider South Africa for a tech startup on the continent- but even this masks other considerations before one should jump into a country.
  If you are building a social enteprise and raising impact investing capital, you may actually benefit from looking at other metrics beyond which countries are the richest, but which countries have the most NEED and hence your possible impact. For instance, where is malaria having the biggest infection rates if you are doing an mhealth app around this problem? The countries that have the most need tend to be the ones that have the worst macro economic conditions- I recently learnt that malaria has been responsible for 1% negative GDP growth African countries have experienced in the last 50 years- no wonder Bill Gates is investing his money to make an impact in this area.

  Watch for Barriers, Regulatory Environment that might open or block Market Access to a country that might otherwise look lucrative

  Despite my concerns about economic diversifcation, when you look at raw market size, numbers can also be deceiving. Nigeria is absolutely the single biggest African market right now with a population of 160M and with over half that with mobile phones- its lucrative indeed. But down the line the East African Community (EAC) presents a potential 120M people between the member countries Tanzania, Kenya, Uganda, Burundi and Rwanda- and a possible single currency soon. Size of a single country is not the only thing that matters (yes its true!), market access does. Take mobile banking- in Kenya you have 15M people mobile users with M-PESA and 7 transactions a second. Whilst in Nigeria, there are supposedly 11 mobile banking companies that are operating and the regulatory environment meant that they had to apply for those licenses. The potential for mobile money in Nigeria is certainly huge, but its still very early and without a strong agent network and being so fragmented, its hard for mobile money to see the growth and success that Kenya does right now- when half of adults use one system- regulation has hindered the growth of mobile banking thus far and once licenses were released- 11 services jumped into the market. That being said, Nigeria is forecasted to hit 20M mobile banking users by 2015.

  Another example on regulation is Tanzania’s very odd 18% VAT phone tax  which has been abandoned by neighboring countries. What is strange is that there are no such taxes on traditional PCs – I once saw someone on a mailing list in Tanzania ask someone who was going to Kenya whether they’d buy  for them 10 Android smartphones so they can avoid the high prices in Tanzania- the tax makes a difference for higher end (smart)phones. Phone manufacturers like Nokia and Samsung absolutely hate this since it denies them a chance to sell higher profit margin phones where they will make their money in the future. The point is, Tanzania smartphone penetration which is strongly correlated to mobile web access may remain stubbornly low compared to its neighbors. And the data when digging deeper shows this (but of course, other factors do play like the higher GDP per capita)- New Government stats show that whilst Kenya only just edges Tanzania in mobile penetration (68% vs 45%), the web penetration gap is much wider by 3 times (36% vs 11%).

  Support Network, Doing Business & Entrepreneurial Ecosystem
  An energy startup founder pondering which lawyer to work with recently told me that the 2 lawyers she had talked to had a 25 to 1 difference in pricing to incorporate their company! The exact no.s were $25,000 vs $1,000. Yikes! I responded “Welcome to Tanzania”.  This illustrates how hard it is to do business in Tanzania from a very serious decision of which lawyer to use- who you know and work with matters tremendously, or risk being ripped off or cost prohibitive for foreigners to enter.
  Similarly- closer to tech, hubs are now popping up all over Nairobi inc. the iHub and Nailab- it is now getting “cooler” to hang out at these spaces and bump into likeminded people with a community- peer to peer networking as well as regular visits from investors and tech industry, mentors and officials. In short, tech workspaces like the iHub backed by the industry make doing business in technology much easier not to mention bringing legitimacy to the tech scene in the country. Nigeria just opened up their first workspace end of last year, Co creation Hub, last year- a fragmented tech scene does not help investors and likeminded people trying to connect with each other. South Africa has a number of spaces and initiatives around Silicon Cape and when coupled with talent it helps launch your startup faster. Word of caution- in contrast some workspaces or incubators are heavily influenced by the world bank or government bodies such as in Senegal, Tanzania and Rwanda- whilst an incubator is better than no incubator at all, one that fosters a strong community and doesn’t feel like a “big brother”/Government is watching – i.e. best run by the private sector or at least not too influenced by Government, makes the most sense.
  Another factor of the ecosystem is expectations of investors and valuation of technology and startups. Because of the understanding of the impact of technology in the economy, some investors make unreasonable demands on startups such as asking for 50% equity stake of a business for a very small valuation. Closely related is the willingness and comfort of big companies to buy startups at decent valuations to provide a return to investors and especially the entrepreneur for taking the risk in doing a startup- we have seen little to almost none of this appreciation in Africa to date, but global companies like Visa with the recent acquisition of Fundamo may begin showing the way. You can bet that technology startups will disrupt banking and media and other industries in Africa as the internet has in the rest of world, how quickly do the incumbent companies recognize this and pay for innovation or suffer a death from the disruption? Countries that encourage this and hence coordinate the entire ecosystem end to end will have a more dynamic IT industry.

  Competitive Dynamics
  Whist Tanzania may not be as business friendly as our Kenyan neighbor- there are generally less competitors for that market for a given sector- this can be a significant advantage. Note that with the EAC such advantages will erode away just as it happened in the Euro as free movement of labor, capital and good makes it easier to transact across the region. Tanzanians need to shape up fast or they will see Kenyans or other EAC members eating their lunch. A lot of middle managers in Tanzania frequently come from Kenya. At the same time lack of competition is also a bad thing, for instance the example of the $25,000 fee to incorporate stems from the fact that there are very few qualified lawyers in the country and most focus on the big concentrated industries such as mining with little regard for the needs of startups.

  Unique industry advantages & Startup Lifestyle

  I’ve slammed Tanzania (disclosure: I am Tanzanian) quite a bit- but it does have some unique benefits related to lifestyle. When I am working in Dar es Salaam and I am very tired, I can take a $10 2hour ferry ride or $70 flight in 20 mins if I am in a hurry and be in total paradise. Zanzibar is such a laid back place- one long weekend there and I am fully refreshed, its a great place to go recover and sometimes my best thinking over the last 10 years has been there because I spent time to recharge. I always tell my US friends- that $1 spent in Zanzibar is probably equivalent to $10 of luxury I would spend anywhere else. I mention this because it is important to maintain a good work-life balance. One of the reasons Silicon Valley is so great is because it has amazing weather and offers access to a variety of outdoor activities- you can go snowboarding one day and surf the next. Aside from living a nice life, there are obvious opportunities in tourism but also trade- did you know that the kariakoo market in Dar es Salaam is one of the biggest markets for imported products in East Africa? Access to the Dar es Salaam port recently has made this a big trading area. Merchants come as far as Rwanda, Malawi, Burundi and Zambia to buy everything from flat panel LCD screens to clothing.

  Another factor related to lifestyle is expectations of startup ambition- many investors claim that in many parts of the emerging market too many entrepreneurs have aspirations to build a family business and have no expectations that their investors to which they raised  money from who may want to see an exit (whether acquisition or dividends). VCs don’t fund family businesses- they are looking for big regional if not global businesses. The sort of startup life you want and who you want to draw investments from can impact where you need to be. One of the reasons I left yellowmasai, the travel website (yes, I am no longer involved) was because the investor’s expectations were different from mine and the investor wanted to just address the Tanzanian market not go regional which would require new outside investment or go head to head and compete with other companies. This point is closely related to “the kind of organization you want to build” which in turn informs the sort of investor you want to attract and ultimately where you are likely to find this.
  South Africa may win here given their links to the global market, talent and investors that expect this. Take a recent conversation I had with South African serial entrepreneur Vinny Lingham about where he finds seed investors- he has learnt to always try raise money in Silicon Valley because it aligns his expectations of the kind of returns and hence the kind of organization he wants to build. Even though South Africa is an excellent market, it has some of the access to angel investment problems common to all the regions in Africa and indeed many countries around the world except Silicon Valley. Having been in the Silicon Valley region for a number years, you see countries as diverse as Finland, UK, Brazil, Singapore, Netherlands, Norway, Canada, Chile come flocking here to learn from the best and become more competitive- some very proactive governments even have technology trade missions or offshore hub/embassies here to help the startups from their region- example is the new innovation house Norway. When will African countries begin to do this? Of course not every country can afford it- the next best thing is to send delegations, like the Kenya ICT board did last year and in previous years- it can also help mobilize diaspora talent that there are opportunities at home-talent that can join your startup!

  Be Global: Take advantage of all the countries and their diversities.
  The best startups treat the world as flat, and from day one are opportunistic about where they source customers, talent and investors. The most diverse networked entrepreneurs will do best. Apple designs and markets in California and manufactures in China. Tablets can be designed in Nigeria and manufactured in China too. Lets promote more regional trade within Africa to help each other out- it is exciting that Kenya’s M-PESA has inspired other startups and even big companies to try replicate their success.
  One country that stands out a lot for financial access, doing business and transacting across the continent and indian subcontinent is Mauritius. It offers some of the best tax advantages thanks to its treaties with numerous African countries and has transformed itself as a financial hub, a lot of it has to do with its political stability over the years and Government push to be able to do this (note: its a very diversified economy based on the chart I pointed out earlier). Botswana with its International Financial Services Centre is trying to be a financial hub too given similar advantages and ambitions. I think startups that grow in substantial size and start expanding across the region might think about reincorporating their startups in hubs such as Mauritius, Botswana or South Africa- especially if there is a remote chance of getting acquired by a multinational company or they want to float on a public exchange via an IPO.

  Promote your own country and don’t be afraid to enter others
  As readers may know, I am very biased towards East Africa. I don’t speak French, Portuguese or Arabic to be able to navigate the other half of the huge and diverse parts of Africa, but I am eager to learn- I hope I have demonstrated that there is diversity and no one country is the only place to launch a startup. I expect more country advocates to step forward and put forward their case for why their region of Africa is uniquely positioned to do a startup. I have friends in many other African countries and I always seek to be educated about the opportunities there for the sectors I am interested in. This brings me onto a final and important point- the country you should enter almost always the entrepreneur needs to understand intimately all these factors and in particular people who can guide them through the unique environment- many emerging markets countries including Africa have unique cultural and business practices that are best understood by working closely with trusted people. Great people make startups work not just huge metrics. Don’t be like this guy for example who only spent 6 months in Chile and concluded that Chile was not fit for startups- more that Chile did not accept him because he was not patient enough to find the opportunities. I strongly believe comfort and familiarity and a healthy appetite for risk make most places in the world ripe for startups. Remember, if Mo Ibrahim can start a mobile operator in the Congo, then why not elswhere? Also like D.Light, don’t be afraid to move on as your startups needs grow to exploit new opportunities- whether its going to Mauritius, Nigeria, South Africa, Malawi (heck try South Sudan!) or Silicon Valley to support the growth of the venture. Partnering with other organizations both within Africa and beyond you build a trust with in other countries can help you . Most of all, remember, what kind of startup are you trying to build?

• Apps4Africa 2011 Winners: Innovative Apps Combating Climate Change

  Posted: January 16, 2012, 10:57 am by Will Mutua

  Originally from the Appfrica blog

  Appfrica is the organizer and facilitator of the second annual Apps4Africa competition which rewards African technologists for developing creative solutions to some of the continent’s most challenging issues. 2011 was the second year we’ve done Apps4Africa, the first year culminated with this congratulatory message from U.S. Secretary of State Hillary Rodham Clinton:

  Last year the theme of the competition was Climate Challenge, which means all the entrants should have focused on solving climate change and adaptation issues that affect their local communities. Over the course of 7 months our teams are going to over 15 countries to support the competition, answering questions and hosting workshops. Since we’re now two thirds through the competition, I wanted to share descriptions of the 6 winners from the East Africa and West/Central regional competitions.

  The East Africa winners were announced on January 14th, 2012 at Villages In Action in Kikuube, Uganda. The West/Central Africa winners were announced on December 8th, 2011 in Durban, South Africa at the COP-17 Climate Change Conference.

  East Africa Winners

  1st prize of $15,000 – The Grainy Bunch by Eric Mutta (Tanzania)
  The Grainy Bunch is a national grain supply chain management system that monitors the purchase, storage, distribution, and consumption of grain across the entire nation. It was developed with the understanding that selling “the effects of efficiency” to actors in the grain supply chain is much easier than selling “the effects of climate change”.

  Grain is nicknamed the “white oil” which lubricates the engine of Tanzanian growth. Even short-term disturbances in its supply chain adversely affects hundreds of thousands of people. To ensure both food security and economic security for all Tanzanians, a system is required to both monitor and facilitate the supply chain of grain, from the soil to our plates.

  2nd prize of $7,000 – Mkulima Bora – Stepheno Maleche, Gerry Nandwa, Joseph Onginjo and Oliver Otieno (Kenya)
  Mkulima Bora enables farmers to input the type crop they wish to plant into an app, then it cross-checks meteorological data to determine if the crop is suitable given the timing and location. Mkulima improves farmer yields, saves them time, and money

  3rd Prize of $3,000 – Agro Universe – Oliama Brian, Daniel Mumbere, Nabuto Josephine, Bossa Alex, Sanya Duncan, Olwenyi Victor, Kato Charles, Masaba Kizito, Kalema Moses, Namuyiga Winfrey (Uganda)
  Agro Universe allows farmers with agriculture products or livestock to alert the app’s community so that they can buy and sell goods from each other. It works on both mobile and the web. The aim of Agro Universe is to create a regional marketplace where products can be sold that may have no demand in the user’s immediate area but that might in areas farther out.

  West/Central Africa Winners

  1st prize $15,000 – HospitalManager by Victor Ogo Ekwueme (Nigeria)
  HospitalManager is a web-based application that helps hospitals and health organizations prepare for disasters such as floods and storms. More frequent heat spells, rains, and floods are leading to heath emergencies, both due to the event itself, and later to water related disease. HospitalManager will help hospitals in Nigeria, and potentially throughout Africa, identify patterns in patient visits following rains and floods, so that staff can better prepare for these situations and save more lives. Hospitals can anticipate incoming disease and emergency patterns using real time climate forecasts. On longer time scales it will allow policy makers to plan locations of new hospitals.

  2nd prize $7,000 – Eco-fund Forum by Assane Seck, Guillaume Blandin and Markus Faschina (Senegal)
  Eco-fund Forum is a web-based community organizer and geo-localized data exchange tool to help individuals and communities working on sustainable resource management throughout Africa to share their own experiences on best practices. Thus they will better understand and respond to the climate change challenges impacting each specific local context. For example, coastal communities in Senegal that suffer from erosion can learn from neighbors that are successfully and durably overcoming the same problem by regenerating and preserving a littoral forest. Furthermore, the Forum will give those communities a voice which should alert political decision makers to address climate change challenges in time.

  3rd prize $3,000 – Farmerline by Alloysius Attah and Emmanuel Owusu Addai (Ghana)
  Farmerline is a mobile and web-based system that furnishes farmers and investors with relevant agricultural information to improve productivity and increase income. Lack of information about weather patterns and about which crops grow best in a changing climate hurts rural farmers’ yields. Cell phone use is growing rapidly throughout Ghana, including in rural areas. This mobile tool can help farmers in Ghana to get information about agricultural best practices down to the farm level, including choosing crops best suited for their specific location, and how to prepare for changes in the weather (including dry spells, changes in seasonal onset, and extreme events).

  East Africa Honorable Mentions

  CoHeW – Geno Juma, Nicholas Mugah
  The CoHeW program is designed as an aid to the community health worker (CHWs). The program will have a two pronged approach; it gives stop gap solutions to the respondent and serves as an information gathering tool for the CHWs. The ministry of health and other health administration planners need a source of information on likely occurrences of diseases and projected disease outbreak periods.

  AgriRight (Plant it Right) – Wamahiga Grace, Njeri Winnie, Harun Mwangi
  AgriRight is a mobile app that helps farmers plant crops that are right for a particular area.Many farmers, plant crops which are not sustainable for a particular area, which leads to a waste of resources (time, money, energy). They often incur huge losses, reaping very little or no crops at all.

  West/Central Africa Honorable Mentions

  iProtect
  An application that allows residents report issues like bush burning and deforestation in real time via SMS. It’s a citizen reporting and preparedness project that allows the public to alert the greater community of emergency events.

  Mobile Agri Business
  Mobile Agribusiness is an agriculture application for farmers to have information, skills and to connect them to available market in real-time in DRCongo. The project aims to create a mobile market place for farmers in Congo.

  What’s next for Apps4Africa? Well it’s too soon to say but the Climate Challenge will begin in the Southern Africa region in a few short weeks. Bookmark this post and come back in early April to find out who the Southern Africa regional winners will be! If you’d like to get involved with Apps4Africa or the winners, please email us at info@apps4africa.com. Many of the entrants are choosing to open source their code which you can find here on GitHub.

• Pondering Africa’s Tech Investment Potential in 2012 and Beyond

  Posted: January 15, 2012, 2:52 pm by Will Mutua

  [In 2012] New investor interest thanks to continuing coverage of Africa economic growth potential vs other markets- especially in the attractive mobile segment (700M subscribers barrier will definitely be crossed in 2012). – Mbwana Alliy

  It is clear that Africa’s fate has been changing and will continue changing in the coming months and years. Perhaps one of the remarkable evidences of this is depicted in two Economist articles. In the year 2000, The Economist ran an article titled, “The hopeless continent“, the article went on to paint a rather dark, and indeed hopeless, picture for the future of the African continent, citing the negative effects of civil wars, poverty and disease on African states. Fast forward one decade into the new millenium and The Economist in 2011 runs another article postulating the exact opposite, “The hopeful continent“,

  Over the past decade six of the world’s ten fastest-growing countries were African. In eight of the past ten years, Africa has grown faster than East Asia, including Japan. Even allowing for the knock-on effect of the northern hemisphere’s slowdown, the IMF expects Africa to grow by 6% this year and nearly 6% in 2012, about the same as Asia.

  Africa is now considered by many to be the place to invest in for the future. This has also been supported by the kind of resilience that the continent has shown amidst the financial turbulence in the past few years that has gripped the west. According to this article by Charles W. Corey back in 2010:

  African economies have shown resilience in the face of global financial adversities, have passed the stress test and can be expected to achieve economic growth this year, says Donald Kaberuka, president of the African Development Bank (AfDB).

  Addressing African finance ministers April 26 in Washington, Kaberuka acknowledged that the global financial crisis has done some damage, but said African economies are expected to average 5 percent economic growth in 2010 and 6 percent growth in 2011, with some countries forecast to achieve an even higher rate.

  In many African countries, he said, the crisis has “only been a setback.”

  So it’s only logical that we are seeing more and more investor interest in Africa. In 2011, it became clear that one of the areas of particular interest as far as foreign investment goes is the area of technology and innovation. Of course there has been specific interest in very specific countries as far as this goes but the fact of the matter is that the stories of technological innovation from Africa that have gone global such as Ushahidi and MPESA (we need new examples to talk about) have drawn the eyes of potential investors in this direction. The number of foreign seed investors in technology (particularly from Europe, though we are yet to see how the eurozone situation will affect things in 2012) for example in Nairobi, Kenya has increased.

  There are, however, a few pointers for both foreign investor and investees to consider if we’re going to reap the most out of the oppotunity

  For the Foreign Investor

  1. Learn the continent: Africa = Diversity

  One of the most devastating mis-understandings among foreigners is that Africa is a single country, with one culture. This mindset can be devastating to potential investors. The fact of the matter is that the African continent is diverse and the diversity has far reaching implications on not only how to relate to people but also how people prefer to do business in different parts of Africa.

  The business culture in some countries is really fast paced and aggressive whilst in other areas there’s a kind of laid back, easy going culture which does not necessarily indicate that there are less opportunities in such a culture. Foreign investors need to take time to study their chosen country for investment and understand what the people are like, what their culture is like, then adapt and approach investments with that understanding.

  2. This is not America or Europe: Africa = Uniqueness

  Still on the issue of culture, foreign investors also need to understand that Africa is a unique playing ground. Do not approach Africa with the idea that things will work here the same way they work elsewhere just because they work in those other places. In fact, going back to the issue of the rich diversity of the continent, one strategy may not even work for two different countries within Africa!

  With the diversity of the continent comes the uniqueness of states and regions within the continent.

  These two amazing qualities of the African continent are in part contributed to by the histories of the different states, whilst many African states got their independence from colonial masters around the same period in history, their experience of colonialism set them on vastly different tracks in some cases.

  3. Shed the veil: Africa != Aid

  There’s still much mis-information and resulting mis-conceptions regarding Africa out there. I remember once working on a project for a foreign client and the guys’s daughter once asked her father (my client) whether I lived in a hut and whether we had elephants walking about all over. It was kinda funny really, but also a bit sad.

  Mention Africa to many foreigners and the ideas that float to the top of their mind generally revolve around, aid, AIDS, malaria, poverty, civil war and famine. Many others believe Africa is one big charity case. Many stick to only what they see on TV, never going beyond that. Sure these issues face many African states, but they are a) not a one size fits all description of all 50+ states on the continent, and b) not the only story to be told even in some of the areas plagued by some of these evils.

  Africa is also a place of innovation and entrepreneurship, and many Africans are hardworking people, not to mention the physical beauty of the contient

  Some notes for potential investees

  1. Funding is not everything

  Andrea Mugoya calls this the ‘funding addiction‘:

  I’m not against funding but as I mentioned in my ebook, getting funding for the sake of getting funding (or as an end goal) is dumb! I’m still amazed each time I see ‘funding’ being used as a measuring stick or as a major goal for a startup. I tweeted recently, “only fraudsters and scam artists see funding as an end in itself”. Genuine businesses or NGOs consider funding simply as a means to an end. Further, they would avoid external funding if they could. So why would entrepreneurs seek (or be encouraged to get) funding at the earliest opportunity, sometimes even before they have launched or tested their concept?

  2. Don’t just copy

  Sometimes you’ll here about someone building the ‘Kenyan Facebook’ or ‘Nigerian Twitter’ or something of the sort. While the aim may be to create a similar service that caters to the specific needs of that demography, many times it’s a matter of simply copying that service and hoping to sell it locally without adding anything unique or innovative to the offering.

  Not only is this an un-innovative approach but also not very likely to succeed since the local population may already be using the other service heavily and so have literally no incentive to use your product, not only that but the entrepreneur may create for themselves a competitor whom they have neither the capacity or resources to compete with.

  The challenge for the potential investee is to come up with something unique and as we have noted before, one thing would be to create something that solves a very real problem in the every day lives of local consumers.

• Learning Ruby on Rails, Fighting the Funding Trap and Other Interesting Things

  Posted: January 13, 2012, 11:49 pm by Andrew Mugoya

  Riding the Rails
  One of my goals this year is to learn Ruby on Rails. When I first decided to get into web development (proper), about 7 years ago, my analysis lead me to PHP/MySQL. After coding two major sites literally from scratch (including the now defunct Jijini Markets), I decided it was time to find a CMS or web development framework. My search and comparison analysis lead me to Drupal, which I’ve now been using (religiously) for more than 3 years, including for most of the sites we’ve done at Asilia. Drupal is great for CMS websites but I find it too ‘heavy’ for web apps, hence my decision to try out Rails. I’ve also missed the buzz of learning something new and further think that it would be good to have Rails in our Asilia toolset.

  I’m still in the early stages but have already got my initial “Hello world” app done. For anyone else interested in learning Rails, these are some of the resources I’ve found useful:

  • [tryruby.org] (Ruby tutorial)
  • [railsforzombies.org] (an interactive intro to Rails)
  • [ruby.railstutorial.org] (online book and Rails tutorials)
  • [rubyonrails.org] (list of sites using Rails)

  Happy coding!

  Fighting the funding addiction, one addict at a time
  Sadly, the new year always throws up the usual flurry of tweets and blog posts about how this year will be the year for African startups to grab all the funding coming Africa’s way.

  I’m not against funding but as I mentioned in my ebook, getting funding for the sake of getting funding (or as an end goal) is dumb! I’m still amazed each time I see ‘funding’ being used as a measuring stick or as a major goal for a startup. I tweeted recently, “only fraudsters and scam artists see funding as an end in itself”. Genuine businesses or NGOs consider funding simply as a means to an end. Further, they would avoid external funding if they could. So why would entrepreneurs seek (or be encouraged to get) funding at the earliest opportunity, sometimes even before they have launched or tested their concept?

  Refreshingly, I’m not alone in my thinking. None other than the creator of Ruby on Rails, (also a partner at 37Signals) feels so passionately about it that almost every talk he gives touches on it, including one he gave to Stanford University MBA students. Check out his site for more on his views – there’s generally good and interesting advice for entrepreneurs and developers.

  Design: The missing link
  Another focus this year is design (or better appreciation of good design). I’m lucky that, at Asilia, I work with fabulous designers who, not only educate me on design, but also make sure everything we put out has had a qualified designer’s input. In Africa especially, design seems to be the missing link. Loads of great apps (probably solidly built) but lacking that special ingredient that will make them killer apps – great design and UI.

  Apart from my colleagues, one designer whose work I’m continually inspired by is Swiss Miss. She’s got one of the best blog’s I’ve come across and is involved in some very cool projects: TeuxDeux (one of my favourite apps), CreativeMornings and Tattly. There’s also this very inspirational talk she gave that’s worth watching.

  Steady, organic growth and more to come from Asilia
  Officially, Asilia launched in August 2010. So 2011 was our first full calendar year of experiencing what it means to build up a portfolio of clients, submit annual results, recruit staff and do everything else that comes with running a business.

  I’m very proud we’ve managed to grow (in every sense) and still be self-sustaining. We acquired many new clients, went from 3 staff members to 7 (5 fulltime, 2 freelancers) and completed or grew several in-house projects, including Afriapps and Afri-Love. More excitingly, 2012 promises to see this trend continue.

  What this has taught me is this: If you focus on putting out a great product/service and offer great customer service, customers/clients will flock to you and your business will grow. And this, ultimately, is the basis of building a sustainable business. Sometimes we forget that.

• A Mobile Money Wish List for 2012

  Posted: January 11, 2012, 9:38 pm by Will Mutua

  In an effort to identify the 12 major tech trends to look forward to in 2012, Mbwana Alliy, noted that 2012 would be a landmark year for the growth, innovation and increased adoption of Mobile Money in Africa. What specific growth/innovation areas would be most anticipated? ere’s a wish-list:

  1. More mobile money powered convenience services – both online and offline, mobile money has enabled a lot of convenience to the consumer. It has been said that many foreigners to countries such as Kenya, the birth place of mobile money, find it hard to fathom that people pay for such ‘trivial’ expenses as taxi fares from their mobile phone. The convenience of mobile money has gone on to be applied to a wide variety of areas, from organisations paying employees via mobile money, paying your insurance premiums or paying your electricity bill. It would be great to see wider and even more innovative applications of mobile money in 2012.

  2. Tighter integration of mobile money at the POS (or better stated, powering micro-payments via mobile money) – This is closely related to the first point but it seems that it should be noted separately. Mobile money operators have made efforts to provide a means to pay for your shopping at the supermarket via mobile money, it is still quite a hassle, and a definite area for further innovation.

  3. Mobile Money to power Africa’s E-commerce Age – Companies such as PesaPal have innovated to bring mobile money onto the web and online payments. The MNOs have also made strides to partner with banks to provide prepaid debit cards that would facilitate online payments. Perhaps this point is not so much for MNOs and mobile money powered online payment gateways such as PesaPal, but for others who can create solid e-commerce businesses that now take advantage of mobile money.

  We are in the early stages of an amazing changein how electronic payments are done on the continent. Africans will begin to gain more trust from mobile online commerce as trusted global brands including VISA, MasterCard and Paypal enter and compete to play in the ecosystem they previously ignored. – Mbwana Alliy

  4. Disruption/Original Innovation – Erik noted the decreasing tendency of mobile network operators to want to step out of what is already raking in the revenues.

  Generally speaking, mobile network operators (MNOs) were highly disruptive in the 90′s, but have continued to decrease in this over the last decade. Operators are no longer the offensive, attacking force of yesteryear, instead they’re putting up barriers and defensive walls trying to protect what they have and hide.

  This being the case, it is up to third party innovators and entrepreneurs to really come up with original innovations based on mobile money that really disrupt the mobile money ecosystem. It would be great to see more innovations that find smart ways around the big boys to provide some really innovative solutions.

  5. APIs please! – Mbwana predicts that this could be the year when finally one or more of the major mobile money operators opens up their platform via an Application Programming Interface that allows third parties to hook in and innovate. It would definitely make it much easier for original innovation to take place. APIs would also increase the size of the ecosystem by making it easier for innovators to join in and provide more services, which would in turn attract more consumers and so on. It would be great to see mobile money being mashed up with other open APIs on the web, for example how about a service that allows anyone to send money from PayPal to MPESA and vice-versa seamlessly?

  In conclusion…

  Whatever the case, one thing is for sure, one can definitely expect more innovation in the mobile money industry – whether bottom up or top down! Last year VISA got serious about mobile money by acquiring Fundamo and formally joining bandwagon. Just this action alone could force the giants of the mobile money world, who for the most part right now are the Mobile Network Operators, to wake up. Another simple contributing factor would be the simple fact that mobile penetration is not only on an upward trend but is out-pacing expectations.

• Some Popular Android Devices in the African Market

  Posted: January 9, 2012, 12:53 am by Will Mutua

  This is a guest post by Rebecca Jones of gizmowatch.com and designbuzz.com

  Mbwana Alliy, in his widely popular article predicting Africa’s tech future for 2012 noted that one key trend will be the increased adoption of Smartphones among Africa’s middle class as well as the gap between feature and smartphone being bridged more and more.

  Smartphone adoption will grow among Africa’s emerging middle class as entry prices for an unlocked phone continue to dip below $100. Nokia/Microsoft Symbian/Windows Phone and Google/Samsung Android will battle for smartphone dominance- Nokia’s strong brand and feature phone momentum will prove to be an advantage. But affordable Chinese smartphones led by Huawei’s Ideos will continue to tempt Africans to upgrade. – Mbwana Alliy

  When you talk Smartphones in Africa nowadays, it’s almost impossible to ignore mighty Android, Google’s open source Operating System for mobile devices. Google has been keen on growing it’s foothold in Africa and Android has been a major contributor to Google’s efforts. Coupled with the burgeoning middle class that’s powering Africa into it’s future, Android could see increased adoption as Africans with greater spending power seek the hallmarks of the middle class lifestyle. According to an article on The Guardian:

  The African Development Bank (AfDB) says Africa’s middle class had risen to 313 million people in 2010, 34% of the continent’s population – compared with 111 million (26%) in 1980, 151 million (27%) in 1990 and 196 million (27%) in 2000.

  Africa has a young, fast-growing, fast-urbanising population. Many countries have benefited from a commodities boom and a 10-fold rise in foreign investment in the past decade, notably from China. Africa’s productivity is growing by nearly 3% a year, compared with 2.3% in the United States. Arguably, governance is improving, elections spreading and dictatorships and wars declining.

  The following is some popular Android devices from around the African Market:

  Huawei IDEOS

  Based on the tremendous popularity of the IDEOS upon launch in Kenya, it would be safe to say that the IDEOS set the tone for the future of affordable Smartphones. According to this statement by Huawei, the IDEOS U8150 sold about 60,000 units within the first five months.

  Mr. Herman He, CEO Huawei announced that, “Since the IDEOS launch five months ago, so far over 60,000 pieces have been sold and we are moving towards the 100,000 piece mark with its share of the local smartphone market at 45% in the first quarter of the year, making it the top selling device with February alone reaching 73%.”

  The 3G capable phone runs Android 2.2 (Froyo), boasts a 3.15 MP camera, 256 MB RAM, 240×320 touchscreen, and a 528 MHz ARM 11 CPU

  Samsung Galaxy S

  This cell phone has 1 GHz Samsung Hummingbird processor giving excellent 3D graphics experience with exceptional speed. The phone carries 4 inches screen which is better in size as compared to the iPhone and other Smartphones. The resolution comes to around 800 by 480 and is manufactured with Gorilla glass which is fairly robust and scratch resistant. At the back, you will find a 5MP camera which can shoot video in 720P at 30 frames per second.

  Motorola Milestone

  This device is also called Droid in other markets, which is seen 13.7 mm thick having an impressive slide out full QWERTY keyboard. The touchscreen comes to around 3.7 inches pretty similar to the HTC hero’s screen commonly seen in other android phones. It supports the Android 2.0 software which is best suitable for the quad band GSM and the dual band 3G support. You also get a multi touch support which is not seen in Droid in the US market. The camera of the phone is 5MP; you will find A-GPS and Wi-Fi support with MicroSD slot and the RAM as 256MB.

  Sony Ericsson Xperia X10

  Earlier Sony Ericsson often came with Windows, however, with Xperia X10 you can find the company switching towards the Android OS. This phone runs the Android 1.6 unlike what you see in the Motorola or Samsung Android based phones. One of the important features of this device is its interface which is a modified as compared to the other phones. The interface TimeScape which is a social networking interface best suited to access data from number of social media sites like Faceboook, Twitter, Myspace etc. Similarly, you have MediaScape which extracts a number of multimedia content in one player. The processor used in this phone is 1 GHz Snapdragon which gives excellent processing speed. Also the device has MicroSD slot which contains both the wi-fi and GPS.

  Motorola Dext

  This device is considered to be the best cell phone for social networking crowd coming through the Motorola’s MotoBlur service. With this feature you can store the social networking profiles online and then get them on your phone devices. With this interface you can customize all your incoming emails, texts and social messages in such a way that it makes sense to you. The phone runs Android 1.5 and has 5MP camera with wi-fi in the MicroSD slot. The touchscreen over this device is pretty small as compared to the Milestone. Unlike the Milestone, this device too carries a slide out QWERTY keyboard and a built in GPS system.

  About the author: Rebecca is a blogger by profession. She loves writing on technology and lifestyle. Beside this she is fond of Mac themed mods and loves writing articles on iPad Wireless Keyboard

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