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Guest Post: Start-up Attention Shifting from Kenya to Nigeria? Print E-mail
Wednesday, 12 March 2014

By Russell Southwood from Balancing Act Africa and Smart Monkey TV


Suddenly Lagos is the focus of start-up attention in Africa with the arrival of Angel Fair West Africa and the soon-to-be-launched 88Mph accelerator unit in Lagos. Last week in Lagos I spoke to Tomi Davies, Technovision, one of the movers behind the Angel Fair and Kresten Buch, the founder of 88Mph.

In terms of promoting themselves as the coming thing in Africa, the country that stands out is Kenya. It had the first incubator space outside of South Africa and there is a constant stream of start-ups getting profile. Its more shameless promoters describe it as the Silicon Valley of Africa. Pity poor Ghana whose rather unassuming approach to these things tends to leave it in the shade. I take nothing away from Kenyans in terms of what they have achieved but ...

However, when it comes to self-promotion, it was probably a Nigerian who wrote the manual. But despite their industrial grade skills in this area, it has been something of an uphill struggle against the unenticing reputation of doing business in Nigeria and of the city of Lagos itself. But with the ending of the second year of Social Media Week Lagos last week, which was an absolute ferment of energy in several different directions, things may be changing.

I spoke over last week to several independent outsiders at Social Media Week who made the same basic point about the Kenyan start-up scene: As one put it, Kenyans are too ‘academic’. They like the sound of ideas more than the implementation. Let me add two anecdotes to the fire.

 
I was speaking to a Kenyan entrepreneur last year about an idea that he was in the process of trying to sell to a customer. If he had stopped after 10 minutes, I would have thought he was a genius but he went on to describe a further six ideas over the ensuing hour. This hustling ‘jua kali’ approach to entrepreneurship produces more sound than results.

 
At an innovation conference in Kenya, a young entrepreneur asked advice about what might happen if he sold his ideas to other developers. To be clear, I asked a couple questions and indeed he was proposing to sell simple short description ideas to other developers. When I queried this with friends and colleagues, it was described as a cultural difference. Waking up in the morning and having an idea is not being an entrepreneur.
 
So this brings me back to Lagos, which is itself no stranger to hustlers, but seems to be developing a start-up ecosystem that has attracted serious international investment and has seen the opening of several incubators (iROKO’s Spark, IDEA, Rocket’s space and ccHub). It has a market big enough to make certain kinds of online plays have enough critical mass and there are an estimated 700,000-1,000,000 broadband customers in the city.
 
I spoke to Tomi Davies from TechnoVision, one of the moving forces behind Angel Fair West Africa which comes to Lagos on 30 and 31 March 2014 (see http://www.angelfair.net). It is backed by the African Venture Capital Association (ACAVA), the Lagos Angel Network, the Ghana Angel Network and the Senegal Angel Network.


The Lagos Angel Network is ‘a group of senior private sector individuals. There are 15 members, 10 of whom are active. In other words, they’ve done small investments in a personal capacity.’ He met Ghanaian Eric Osiakwan of Angel Network and talked. The Nigerian angels who had gone to Angel Fair Africa in Johannesburg in October 2013 liked it but wanted to be able to invest closer to home. ACAVA approached an organization he sits on the board of and they came on board, coming to Lagos themselves for the first time.

There’s a shortlist of companies who will get the opportunity to pitch, with three to four of whom will be drawn from the winners of Tech Cabal’s Battlefield competition which was part of Social Media Week Lagos. Three examples on the shortlist give a flavor of what’s coming. Adugbo ‘takes FourSquare to the next level’ and is about how you can ‘get things done locally on multiple fronts.’ 500 Shops is an online store, Casa Cuepo is an online real estate site;, and Decoded is an African music discovery platform.


Davies laughingly cites as one of his claims to fame the registration of the domain of marksandspencer.com. After several years of working as a technology strategist outside of Nigeria, he came home and discovered ‘there wasn’t any seed funding there.’ He spotted this gap and started to invest locally and after his first investment decided to set up a long-term accelerator. He has two companies in the accelerator: Sproxil (brand verification by SMS) which has a USD2m turnover, and the Slimtrader mobile payment platform which has a turnover of just over USD0.5m.

See Tomi Davies talk about Angel Fair West Africa and what angels look for when they invest:
http://www.youtube.com/watch?v=uKB2soDGURU
 
See also Folabi Esan on what they look for in an African tech company investment
http://www.youtube.com/watch?v=CG0Y46NVvUQ

Kresten Buch, founder of 88Mph, is a person who started an accelerator in Nairobi and took over one in Cape Town. He’s now in Lagos looking to set up a similar accelerator in Lagos. He’s got the place but hasn’t yet reached the point where he can announce it publicly.

He got involved in Africa through meeting two Africans at a conference at Stanford University, one of whom was David Owino, then Head of Products at Safaricom. The original idea in 2008 had been to produce a website where entrepreneurs and investors could meet. The next iteration was to make seed investments himself: ’I made a list of investments and realised I could only do this if I created an accelerator to try and scale the businesses quickly. With venture capital, the winner takes all and only about 2% are making money. I wanted to create the best accelerator brand and platform and therefore be the most attractive to investors in the market.’

‘The plan was always to cover Africa and you can’t really say you’ve got African coverage, if you’re not in Nigeria. So applications for the Lagos accelerator open in May and we’ve raised 85% of the USD1.5m needed. We’re signing an MOU on the space quite soon. Lagos is not a walk in the park, but we have a strong local partner who’s done quite a lot here, Chika Nwobi of Jobberman fame.’

So what does he make of the Lagos start-up scene? :’First impressions are very good. Kenya has been destroyed by the impact of NGO funding. On the media side, it’s been well exposed and there’s a lot on the surface. Real substance, companies that are successful? There’s not a lot. The Kenyan business community have also become discouraged by that.’

The bigger, serious investors lean more towards Nigeria. It’s mostly about market size. You can scale something here.’



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