My first trip to Cameroon was in the spring of 2011. Amazing to see what kind of progress is being made only a year and a half later. It is exciting to see the ranks of technology entrepreneurs grow in the country. Also the quality of startups has greatly improved and I noticed a serious focus on business models. Several teams have gone through multiple iterations of their product before refining concepts that have real potential to gain traction.
In fact, a recent visitor from Nairobi remarked that the Kenyan entrepreneurs have something to learn from their Cameroonian counterparts. Indeed, it might seem that the constraints placed on entrepreneurs in the country forces them to focus – working faster with less resources. It was also noted technology entrepreneurs in Nairobi are sometimes hesitant to close their computers and speak with actual customers, when most of the teams in Cameroon spend a great deal of time and effort on market research.
Almost not a week goes by that we don’t read about the launch of another fund in Nairobi, an accelerator in Ghana or a competition targeting startup entrepreneurs in Nigeria. Its herd mentality with everyone piling into the same plane. Maybe Cameroon doesn’t get the same attention because people are less familiar with the operating environment or the government has done less to bolster its image. Certainly there is less sector support. That said, the quality of innovators we know in Cameroon are on par with any we have met.
There should be a podium for technology entrepreneurs in every country, and the Cameroon Startup Challenge 2012 is another step for the community in Cameroon. These individuals, in every community, are critical if we are to solve difficult social, economic and environmental problems. They are an important part of our future. Their path is not an easy one and it is important to take a step back and to recognize the progress being made.
It is hard work and these guys are blazing a new path for hopefully many generations to come. Already we see new teams of entrepreneurs staking their ground. These are still the early days of many exciting times ahead. Congrats to the team at Djoss.tv, KingMaker and Agro-Hub!
At the recent Pivot East competition, an event in which developers pitch their mobile apps to possible investors, Uganda was represented by 4 startups. The contestants included Easy Order, Story Spaces, mPoultry and MafutaGo. With a 50% success rate, two of the four pitching teams walked away with $10.000.
The four startups that competed:
1) Easy Order: EasyOrder is an SMS based mobile ordering and supply chain management application developed to simplify the way customers order for goods from manufacturers and distributors.
2) Story spaces: A digital story telling portal. Collective Mentoring Through the African Story Telling Experience. StorySpaces is a digital story telling application. create stories at your own time and on the move.
3) mPoultry: Mpoultry is a simple technological solution that enables chicken farmers to simply monitor the conditions of the brooder via SMS. It utilizes environmental sensors and an android device to monitor the temperature, lights and chicken feed inside the brooder. The farmer receives an SMS when his intervention is required.
4) MafutaGo: Helps users find the nearest fuel stations with the prices and Services that best suit their needs. Recently AppsDivision the makers of MafutaGo made a merger with Code Sync, taking on three more members to make an amazing team of eight. The team is more diversified and skillsets balanced out.
The two winners were Easy Order, in the Business and Resource Management category, and MafutaGo, in the Utilities category.
Having spent time with the community in Kampala, and at places like Appfrica Labs, the Software Factory, Digital Solutions and the Makerere Faculty of ICT, I think it’s just great to see Ugandan borne apps recognized like this.
Watch out, the Ugandans are coming!
VC4Africa was pleased to host the panel, ‘Strengthening the VC pipeline’ at the 9th Annual Conference for the African Venture Capital Association meeting hosted in Accra.
I was joined by Yemi Lalude, Managing Partner of Adlevo, Tayo Oviosu, Founder and CEO of Paga, Karima Ola, CIO of the African Development Corporation, Mathew Boadu Adjei, CEO of Oasis Capital and Arjuna Costa, Director of Investments at Omidyar Network. The time we had was limited for getting into all of the issues we wanted to cover, actually there is more than enough content for a stand alone conference on the subject, but here are some of the points I felt were raised during our different conversations.
– Within the emerging African focused VC space there is a inherent leaning to scalable concepts and a natural orientation toward financial services. As penetration rates increases across African countries, banking services are the first step to unlocking e-commerce activity that will drive the ecosystems development.
– Challenges with market size remain a key constraint. Ghana at 8.4% Internet penetration is looking at somewhere around 1.2 million users compared to the 4.3 million found in Nigeria. The numbers are far less in countries like Tanzania, Ethiopia or Uganda. Innovation can come from anywhere, initially incubated and tested in Accra, Kampala or Dar, but how can a venture then find its way into bigger markets next door?
– Operating in a country like Zambia can be extremely expensive. Sales operations might be in Lusaka, but don’t be afraid to put the back office in CapeTown. Where Nigeria is where a company might want to expand its network of merchants, the programmers and technical staff might be based in Accra. Staff are easier to find, higher quality and therefore cheaper. And it can be as simple as the company needing better power supply and reliable infrastructure.
– There is a need for more qualified entrepreneurs. For the organizations that can, investing into the support ecosystem remains important. Platforms like incubators are critical to developing new networks of entrepreneurs. That said, do the existing platforms successfully produce new ventures and how do we make sure entrepreneurs graduate and get into the market successfully? A stronger link to business development is needed and is a point being addressed by incubators like ActivSpaces in Buea, the Nailab in Nairobi and MEST in Accra.
– There is a growing amount of capital looking to engage ventures at an early stage. It might not be enough, as many entrepreneurs are quick to make clear, but certainly the environment is improving. Two panelists had angels. One happened to be from the US and one happened to be Dutch. Both offering a million USD plus. But we also met local Ghanaian angels investing in early stage ventures here in Accra and we see a growing number of ventures finding early stage support this way. No surprise we see the rise of local angel networks like the Ghana Angel Investor Network (GAIN). A challenge for many entrepreneurs is in developing these contacts and here more could be done to matchmake on a local level. At VC4A we do this via meetups brining the member base together in an informal way that sees lots of business cards exchanging hands.
– Government does have a role to play. Legislation that helps to protect IP is critical. But also efforts like the Ghana Venture Capital Trust Fund. A facility that has helped Ghana based investors top up their funds. More success stories would give governments the opportunity to bolster these programs and expand them. In Kenya the government has gone so far as to promote the development of Konza, an entire tech city.
– Tech is different than sectors like housing, education, agro, etc… Where the first subscribes to a culture more attune to Silicon Valley, the other, more traditional sectors, are more often family run businesses. The approaches to building a portfolio are quite different. The business model and exit plan are also adjusted. Taking from revenue might be more attune for a business when run by a family that isn’t actually looking for an eventual acquisition.
– Average size of ventures on the tech side are still quite small in size. The economics for a pure play early stage tech fund in many cases doesn’t make sense. As a result, some investors have a carve out and allocate a % they can put into early stage technology ventures. Fitting the investments into a larger portfolio can improve a fund’s balance sheet and be more appealing to investors.
– Costs are high. Traveling in Africa is more expensive than traveling across the US. Hotels are not cheap. Qualified staff are not cheap. Secure power and working infrastrcuture can add to the cost base. These costs stretch what can be facilitated with a traditional managetment fee.
– Exits were not a primary concern, although many investors question the point. That said, If you build a business with real scale, there is confidence exit opportunities will emerge. Possibly an exit within the industry as larger funds look to fill their own pipelines with qualified ventures. If you don’t have a long view, and an underlining faith in the market, you probably shouldn’t be involved.
I will look to build on these points moving forward and as always I invite your feedback, thoughts, questions and ideas. Certainly, progress is being made every day and this conference and our time in Accra was testament to that.