Tag Archives: Africa rising

There and Back Again I: DEMO Africa 2016

“Here’s to the crazy ones. The misfits. The rebels. The troublemakers… -Mac ad by Apple 1984

Yawn.. Stretch…     Ding! “Landing in 10 minutes. Cabin crew please take your seats…” Ding!  This was the captain of The Zambezi River on flight 761 from Johannesburg to Nairobi. I was waking up.  Shake my head… rub my eyes… The interesting thing is I hadn’t been asleep. I had been wide awake, but I was waking up from a dream. And that dream was DEMO Africa 2016. Pinch myself. Wake up sleepy head!

I will be honest with you DEMO has been on my bucket list since 2013. So this was a dream come true. And I really didn’t want to wake up J But besides it being a personal goal, DEMO Africa 2016 was a parallel universe. Otherworldly, overwhelmingly, different.

DEMO Africa is Africa’s best launchpad for its top startups. And when I say ‘best from Africa’ it very literally means that. This year the number of startups launched was 30 and this year about 720 startups from across Africa applied. Now by definition a startup is a curious thing. It has a sideways view of a value chain or gap which it then decides to get into and rearrange or fill. So when you get 700 startups applying, even if it is from across the continent, then you know that the future of entrepreneurship in Africa is bright. Going by these numbers DEMO Africa curates the top 0.5% of startups coming out of the continent over a given duration. Unverified sources tell me that there were panels looking at 2 sets of 10 startups each. So each startup was assessed by two separate panels. Thereafter the total scores per startup were averaged across all the panels which assessed them. In summary the selection process was rigorous, transparent and competitive. It is partly what makes DEMO Africa what it is. This process resulted in a talented set of entrepreneurs being selected. We shall discuss the Kenyan startups shortly and the rest of the startups in a later article.

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The 2016 Bootcamp Class.

For starters it was hosted at Sandton Convention Centre (SCC) which is South Africa’s biggest and best convention centre. So it is arguably the best in Sub Saharan Africa. Rumour has it that it is booked one year in advance. For example, the attendance was approximately 400-500 persons. The conference had one wi-fi network assigned to it and that network was always up and fast. This was covering all social media uploads and downloads – whatsapp, instagram, facebook, twitter, livestreams, periscope, snapchat etc. 500+ people.  As Willy Semaya captured in his article on twitter activity, there were 4500 tweets with the hashtag #DEMOAfrica. And that was only Twitter, and specifically that hashtag. And wifi was always on. That was just the wifi, which should give an indication as to the scale of SCC. We shall deal with the name Sandton later.

To dial it back a bit, I am from Nairobi, and we call Nairobi the Silicon Savanna of Africa – the unrivalled epicentre of innovation in Kenya and East Africa. There is a place similarly called the Silicon Cape of Africa and that is Cape Town. Cape Town has been running away with the brand of being the innovation and entrepreneurial hub of South Africa. Now Johannesburg, being the economic capital of SA has decided it will not just stand by and watch as that brand is stolen out from under its nose. And so in the past week, there was a series of events which planted it solidly on the map as a rival in that space.

  1. LeaderX was aimed at SME’s and spurring innovation not necessarily large scale, but SME’s and innovation all the same. It was geared towards a slightly older, more experienced demographic. A mid-career executives thinking of taking the big leap and unsure about what they were getting into.
  2. The launch of the South African Business Angels Network.
  3. Simodisa was an evening cocktail bringing together some people from within LeaderX and the South African Business Angel’s Network. The keynote speaker was one VC who goes by the name Vinny Lingham who is one of the sharks on Sharktank SA, in other words our version of Kris Senanu or Myke Rabar. At Simodisa I had the opportunity of meeting a mid-career oil and gas engineer with 3 patents about to launch out. He inspired me because too few Africans are diving into the deep end of innovation with technical solutions.
  4. Then there was DEMO Africa.

So as you can see there was a wide range of levels, events and demographics which one could plug into and participate in both spurring as well as celebrating entrepreneurship. In the light of this sequence of events, we must recognise the strong and effective hand of the City of Johannesburg for orchestrating it. In a strange twist of events, the mayor of the city, who had been deeply involved, had originally been selected to open the conference. However, voters expressed their displeasure for the ANC and voted the ANC out of Jo’burg, Pretoria and Cape Town. As a matter of fact, my taxi from the airport to the hotel featured a live radio interview with the new mayor expressing his thanks to the voters and staking out his line item deliverables. So the original mayor of Jo’burg who was a rather effective person was no longer in a position, to undertake this duty, both literally and figuratively. Bad things do happen to good people sometimes. But we digress.

The preparations for DEMO Africa began weeks in advance. Our cohort was being guided online by Innovate Africa’s team which is led by Stephen Ozoigbo. Innovate Africa took us through the business plan canvas, how to calculate customer lifetime value, and most importantly how to value a startup for vc negotiations. We learnt that when discussing funding with vc’s, you should preferably not mention company valuation until as late as possible. As an aside Stephen operates out of Silicon Valley, California and is one of the most experienced and probably centred people in the VC space I met. I should have gotten a selfie with him.

Also, the ICT Authority of Kenya very graciously bought the air tickets for Kenya’s five startups to attend the conference. In many cases, startups are stilling fleshing out cash flow on to the bare bones of a market opportunity. So for startups to raise the funding to attend can be a task. For example, a number of startups missed the bootcamp two days prior to the main event for financial reasons. During day one of the bootcamp is when we taught how to handle negotiations with venture capitalists. During day two of the bootcamp, a lady from University of Cape Town (Silicon Cape things) took the class through how to structure and plug a pitch. Experience and expertise was shared during the bootcamp and all of Kenya’s five startups benefitted from it. The bootcamp itself was so good that one DEMO Finalist from Egypt called Ehab said that even if he never demoed then he had gotten enough value for money and time so far. In short the Kenyan government is involved in innovation here, and we Kenyan startups were grateful for that.

Now that we are mentioning the startups let me give a special mention to the Kenya Team

  1. Anthony Nyagah from Strauss Energy. Strauss are Kenya’s sole representative in DEMO Africa’s Top 5 and will be going to Silicon Valley later this year. They are replacing roofing tiles with solar tiles. An interesting component of their technology is that the energy storage is done not via battery but via a technology called compressed air energy storage (CAES). CAES achieves conversion efficiency of 75% compared to 60% with the latest lithium-ion batteries. This CAES is provided by a demo 2015 finalist called LiGE who’s operations director, Margriet Leaper, I had the opportunity of meeting.
  2. Patricia Mithika from Boresha Ltd who is doing digital content for peer-to-peer learning. We spent a good 4 days together and she has a golden heart, much better than mine :-). Not to mention the fact that we happen to be from the same area in Meru! Boresha Ltd has users outside Kenya, which is proof of a valid opportunity and business model. 20160826_120716.jpg

Patricia doing what she came to do…

  1. Brian Ondari from AirKlip was the youngest member of the team. A true innovator, he paid a grand total of USD 100/- for his accommodation in SA. That’s the power of AirBnB. AirKlip is also in educational technology helping students plan their coursework, classes and exams.
  2. Millicent Micere and Isis Nyong’o from Mum’s Village. Mum’s Village is an online community for mothers and especially first time mothers. Motherhood can be overwhelming and the community provides a place where experiences can be shared, resources identified and targeted marketing done. One of their most interesting products is called The Milky Way. Let me leave it at that. Millicent and I were classmates in campus and I find this important because Strathmore IT graduates have been said not to stack up against Chiromo or ‘Juja Boys’ or Moi University graduates. So that fact that 2 DEMO Africa finalists were Strathmore graduates should be proof that we measure up against the best of them out there. Millicent is also one of the most humorous ladies I know. Much love Millie!

 

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BBIT class of 2016 lol

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Serious discussions in our own personalised deal room 🙂

  1. Then there was me plugging anti-money laundering solutions for the African market.

As you can imagine selecting the best 30 from across Africa was difficult judging strictly on the basis of the Kenyan startups. More on the other African startups and the experience itself will follow in the next two days in a different post.

A word must be reserved for the organising teams who made sure that 29 out of 30 startups made it to the event, including visa organisation, air tickets for some, audio-visual set up, food, drinks and logistics over the four days, scheduling the pitches, confirmations for various events, slotting in speakers and panellists per industry experience, planning, backup-planning, exit-planning and more planning. These were Harry Hare the leader, in conjunction with LIONS Africa, the City of Johannesburg, Google, Intel, Microsoft. Harry’s team comprised Mbugua Njihia, Pamela Sinda (whose brother used to school me in basketball in high school) Hany Zuhudi(who I once shared an office with at 3Mice) Francis Nderitu and Engineer Martin Obuya.

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With Hany Zuhudi after it ended…

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With Mbugua Njihia at Michelangelo Towers. First Day of Bootcamp

 

Perspectives and frontiers for Kenya’s technology ecosystem

The Kenyan tech scene has in the recent past given significant media and 5th estate coverage to the concept of the Silicon Savanna. However, beneath the media coverage of OLX, m-Pesa, Rupu, Kopokopo, iHub, AkiraChix and so forth, there exists a sub-stratum of technology firms that I refer to as the ‘unsung’ heroes of the Silicon Savanna. You may already have heard some of the names in this in-exhaustive list. What may not be obvious is the significance of their stories. A large percentage of these people and their firms operate in financial services technology (FST) and have been instrumental in the growth and competitiveness of Kenya’s financial services industry.

Paul Kukubo and Ken Njoroge of 3M and Cellulant

Paul Kukubo set up 3Mice Interactive Media which handled digital branding and exposure (website management, digital campaign planning and so forth) way back when the most tech savvy people I knew were catching up on the difference between a computer mouse and a server. At that time, one could make a clean 150,000 making a basic 3 page website. Mr. Kukubo also deserves special mention because it was under his watch at the Kenya ICT Authority that Kenya’s tech ecosystem began to receive international plaudits for its credentials. As we speak, he is breaking new ground as usual heading up East Africa’s first commodities exchange.

Ken Njoroge of Cellulant was the first techpreneur to see the potential in Kenya’s nascent mobile revolution. All those ringtones and local digital content on mobile phones started out from Cellulant. Nowadays, there is a chance that several services that you use on your phone may be running on a Cellulant-provided backend. His list of clients includes Barclays, Kenya Airways, KCB and Standard Chartered among others. As a matter of fact when the Nigerian government wanted to bypass all middlemen in their fertilizer procurement process, it was none other than Cellulant which provided the necessary technical skills to enable them to do this.

Fintech Kenya

If I am not wrong, Fintech was Kenya’s first indigenous FST company. It was started by a group of 5 bankers who saw the gap between industry standards at the time and the cutting edge. They decided to fill this gap which in my understanding was a conceptual leap at the time. Rumour has it that they did not leave their jobs to bat for the fence. Being bankers, they were more considered in their risk-taking. However, shortly thereafter Fintech became a powerhouse in the FST industry and have clients in 16 countries across Africa. In recent times Fintech has experienced stiff competition within the market. However this is a natural part of industry maturing.

Mike Macharia of Seven Seas Technologies

Back in 2004, working in Seven Seas Technologies was the equivalent of working at Twitter or Google today. An SST engineer would swagger onto campus, very likely to teach a class or give a talk. There would be hushed whispers of acknowledgement “This guy works at Seven Seas” to which the response would invariably be something along the lines of “Wacha!” Given SST’s early bent towards network-related products and services, it goes without saying that around this time there was massive investment by corporates in networking technology. It could be that it is around this time that the concept of branchless banking came into vogue. Kenya has since developed the capacity to produce trained networking engineers which has marginally driven down the pizzazz associated with this sector of IT. Be that as it may, it is rumoured that Mike Macharia turned down an opportunity to study in the US of A to chase down a business opportunity in Rwanda. It was a case of two tickets and only once choice, with one ticket more likely favoured by his parents. And here we are, several years down the line, discussing Kenyan tech history. Perhaps not all youth is wasted on the young.

Kamal Budabhatti of Craft Silicon

This gentleman in my opinion could easily vie for the resident wizard of this group. Reason being that he developed an entire core banking system (CBS). From my point of view that is a massive undertaking. There are countless banking products, SWIFT formats, government regulations, multiple possible user configurations, different client-relationship structures and a whole myriad of things that go into a core banking system. In short, if you take away the people running a bank and its relationships, a bank is its CBS. And if you go the bank and the teller tells you (pun intended) “Sorry, systems are down,” it is most likely that their CBS is suffering from one form of flu or another. Craft Silicon has clients across Africa, Asia, Europe and the Americas. His is definitely a resounding Kenyan success story.

Ken Ngunjiri and Paul Mbugua of Eclectics International

Eclectics International is arguably Kenya’s largest FST company. In a brief space of time it has acquired over a hundred clients across Africa, the vast majority of these being banks. The conceptual leap behind Eclectics’ meteoric growth has been their development of proprietary intellectual property to meet their clients’ needs. This IP is developed by the firm’s strong bench of tech wizards who would put any ‘Silicon Savanna aspersions’ to shame. The thing about these wizards is that they are busy serving behind the scenes as opposed to developing apps in our startup ecosystem. For every Rupu or Kopokopo you see there could easily be a legion of tech wizzes out in offices or server rooms designing, developing or tweaking software for large corporates.

Vincent Ntalami and Conrad Akunga of Innova Systems

Vincent Ntalami and Conrad Akunga are the founders of a firm called Innova which specialises in custodial, investment banking and bancassurance software. Mr. Ntalami and Mr. Akunga are both graduands of a program called IMIS which was quite the rage in the late 90’s and early noughties. (IMIS graduands hooba!) Mr. Ntalami studied actuarial science and became AIG’s youngest vice president globally (before 2008!) while Mr. Akunga studied computer science and went on to become one of Microsoft’s top MVP’s in Africa. They have clients across East Africa including top tier banks in Kenya and are bent on world domination in their space. Anyone who has ventured into bespoke banking software in Kenya will agree that landing top-tier clients can be an extremely competitive and rigorous process. What I particularly like about Innova’s enterprise is their conceptual leap into a niche category which drew on their skills and experience. This precluded entrenched players in the industry from claiming a stake in their space.

As has been mentioned above, one of the reasons we don’t hear much about many of these people is because they serve behind the scenes in niche markets. Their primary sale is to enterprise buyers as opposed to the average Joe on the street. Another reason is that we have not been putting out enough local content on the Internet. This has resulted in these stories getting crowded out by ‘noise’. It is said that in order to know where you are going, it is important to know where you are coming from.

The important thing is that these stories need to be told for the benefit of the new generation of students going through and emerging from our technology colleges and universities. During my time in campus, the stories of Yahoo, Amazon, E-bay, Paypal, Google, Facebook and LinkedIn had me enthralled. Much as that was the cutting edge of global tech innovation I was so enthralled that I overlooked the significance of these local stories happening right in front of my eyes. After entering the workplace and working the grind I forgot to dream. However, this same grind gave me a much higher appreciation for the significance of these local stories. It taught me that if I want to make a difference globally, I would have to start locally and solve local problems. In my opinion it is in understanding the stories of these gentlemen that we can figure out the next frontiers of opportunity.

Observing the valuations, profit margins and threat-of-new-entrants for most of these companies, it becomes apparent that industry first-movers accrue serious incumbency benefits and in most cases are able to lock out other entrants from gaining a foothold. Most importantly, new entrants are forced into increasingly niche areas.

So how does this affect cocoa production in Ghana? It appears to me that the FST industry, which has traditionally employed a considerable portion of our best and our brightest, is maturing. The implication is that profit margins are narrowing together with the space for ground-breaking innovation. Additionally new entrants are being forced to newer and more niche segments of the sector. Coupled with the fact that Kenya should be moving to a cheaper energy regime in the next 2 years or so, this could easily mean that the next frontier of opportunity for Kenya’s IT graduates, engineers and aspiring industrialists might, at long last, lie in manufacturing.

As a matter of fact, there exists a very real danger in the ‘Africa Rising’ narrative. The danger is that African entrepreneurs could fail to seize the opportunity presented by ‘Africa Rising’ by failing to develop a competitive manufacturing base. The result would be that our rising markets and growing middle class would be supplied with foreign products, a scenario which would be hard to come back from. It has been opined that one of the main structural differences between Germany’s and Britain’s economies is that Germany retained its industrial base and edge while Britain did not. The effects have been clear to see post-2008.

All in all, in order for us to take full advantage of this information may well require conceptual leaps such as the gentlemen above have made.