Lots of books dwell on the excellent experience of African startups, on their dynamism and their exponential growth. This is unfortunately a superficial overview. Obviously, there are some successful experiments, but reality is somehow different.
In Africa, startups incubator’s formal and cultural aspect is similar to American and European ones. But here investments are few and the exits are almost inexistent – the exit is the sale of the startup: it is possible when the company and its product are so good that investors are attracted by them and so buy some shares to keep on developing it or to take it into an IPO for stock exchange.
In USA, they use to say that among 10 failing startups, one rewards all of them with interests.
When looking at African situation, you can see no significant sales. Incubators instead sell their services, such as offices, technological assistance, web design, administration, as they were their only reason to economically live. Searching for money to make their startups take off seems to be their last worry, while in digitally developed countries this is the first thing to think about.
To confirm all these things, we visited “iHub”, one of the biggest African startups aggregators.
In 2008, Herik Hersman, one of this Savannah Silicon Valley’s mentors, had an idea while attending Bar Camp’s Nairobi, which involved lots of young people and little startups. He was so affected by dynamism and enthusiasm, that, with Ushaihidi, Rotich and Kobia – the team which had taken the digital band from UAE to Mombasa – decided to launch “iHub”, which soon became a benchmark for Africa, a place where technology and ideas could find a fertile ground for meetings, work and sharing.
We personally met iHub team during a stay in Nairobi, in a two-floored building – that was still in construction – which seemed really modern and similar to San Francisco’s, London’s and Milan’s offices.
In that occasion, the main discussions were about figures, which in this field depend on the ability of collecting investments and, at the same time, of selling your startup and sealing the business with a good exit.
Just think about Airbnb, Uber, Facebook… billions of dollars of investments and now billions of dollars of capitalization.
During the meeting with iHub team, their answers were very evasive, modest and little convincing.
Some days after, we met the competitive incubator, Nailab, which has a significant subtitle: “Changing Kenya One Startup at a Time”. It is a state-controlled company, similar to iHub in its structure and supported by the entire Africa innovation elite, from Accenture to Delloite, from Microsoft to Nation Media. Today 24 startups are working under its roof. Despite enthusiasms and good experiences, we went out both meetings with the same feeling we have when meeting Italian incubators: something’s missing. Digital system’s development is uncertain and premature: forms are respected, but the essence has not been achieved yet.
Road is still long, but at least they have started it…
Another technological platform impressed me very much: Esoko, which was created in Ghana and that now is available in 15 African countries. Esoko offers their customers information about agricultural market, trends and prices, only by using a simple mobile phone.
At the beginning, Esoko enabled the delivery of market prices via SMS and set up a call centre to support local languages and address issues with literacy. Over time they added weather alerts and crop advice and linked buyers with sellers. The company then leveraged its technical platform and field force for the collection of information, mostly using tablet devices and smartphones. Today, Esoko provides smallholders with access to inputs and finance through their virtual marketplace and reinvest the majority of its returns into the business, to scale quickly and maximise its impact on rural communities.
Esoko showed that it could positively affect customers’ companies’ performances, increasing their productivity. It has reached the sustainability threshold with 10,000 subscriptions and has created competitors like MFarm, a similar Kenyan website, a little simpler and created with the aim of connecting sellers and buyers on an online platform: a real farmers’ marketplace where also a training program on how planting seeds and making your soil more productive will be launched.
A certain method emerges: in Africa technology wins when created to fulfil local context’s typical needs and when finding African solutions to local problems.
When it imitates western countries’ methods, it risks being useless.