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What startups may come: a look at Silicon Savannah in Kenya

“How would you like to pay?”, a cashier at the Jomo Kenyatta International Airport asks me. “M-Pesa or cash?” she continues as I try to gather my thoughts. And then it hits me — this is Kenya, where mobile payment works and is everywhere.

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This is Africa’s hub of innovation. The technology ecosystem here works and unlike Nigeria, the fragments are better held together. So I have decided to spend some time getting to know the ecosystem and the startups and components that make it tick.

Welcome to the world of startups

Nairobi is quite something, from the airport to the city streets. I hop in a cab, where I can pay with dollars and make my way to the heart of the city for lunch. Crossing the streets reminds me of Lagos – it is chaos but in the chaos there is excitement. Lunch is even more exhilarating: at every table there is talk of an idea, funding, going to market and conversations around scale. The city truly is abuzz with startups. I must meet these creators and builders.

Startups are a dime a dozen here, and they have the incubators to match as well, from the iHub to Nailab and 88MPH. I start at the iHub. In the space of the five hours, I spoke to about 15 startups, all of which have great ideas for solving a particular problem. Some of them are just that, ideas with no capital to go to market or build. Others are fully fledged enough businesses that I am not sure the word startup does them justice.

iHub is a sight to behold, around four floors, each area dedicated to something different. There is a research area, the co-working space, the UX lab and areas for companies who have outgrown the co-working space.

“The hope,” says iHub co-founder Erik Hersman, is to “own the whole building one day.” This make sense as almost every floor of the building has some iHub related office in it. As we take a tour of the building, we stop at Pete’s, a cafe that services the building’s gastronomical needs. It has a menu item called the “Hersman Choc Chip Pancakes”, reputedly the best pancakes for miles around. The menu, I suspect, was heavily influenced by Hersman.

If you are a startup in Nairobi this is likely the place you want to create. The freedom and flexibility it allows, along with its super-fast internet access, means you get things done.

About two blocks from Bishop Magua, iHub’s home, you will find yourself at GrowthAfrica, an accelerator all about impact and problem solving. The programme was founded in 2012 and has raised US$32-million in investment and grants. It argues that its startups have “created 11 300 jobs and income opportunities with a success rate of 87%, from the businesses reporting a steady growth trajectory from support and services rendered”.

“What we do is take entrepreneurs and startups, figure out their business and recognise the gaps in the business,” says Patricia Jumi, one of GrowthAfrica’s founders. “We also help them close those gaps and connect them with investors and mentors.”

According to Jumi, the entrepreneurs that come through the programme are prepared for investors. Companies that have come through GrowthAfrica have received sizable investment rounds.

As I navigate this space that is so enticing, I begin to see a landscape so alive with potential that entrepreneurs from around the continent and the world are moving their lives to Kenya to start their businesses.

Where are the Kenyan startups?

The founder and Marketing manager of Mazuri Kenya, an ecommerce startup (watch out for a piece on them next week)
“If you go to One Acre Fund, they do this social entrepreneurship happy-hour one Thursday a month. You’ll get there and wonder if you are in downtown New York,” says Jumi. “It is all expats. You have to ask about the employees that work there, why aren’t they coming to network?”

Kenya truly is alive with innovation and there are people creating and building amazing products that Africa can be proud of. The problem, if you can call it a problem, is that around 70% of Kenyan startup founders and entrepreneurs that I met were expats.

This becomes most evident while I’m sitting at the iHub and startups are streaming into chat to Ventureburn about their companies. It’s busy and I am slightly overwhelmed by the volume. It is exciting. After startup number eight, however, I am beginning to notice a pattern. Nearly all the founders I meet are expats. Where are the Kenyans? Indeed, of all the startups I meet, there are only a couple with Kenyans actively involved at the top.

In one respect, the high number of expat-founded startups is great for Kenya, as it means that the rest of the world sees the potential and opportunities in the tech space here. But on the other hand, it can be incredibly disconcerting.

“I believe that there are a few Kenyan founders,” says Francis Mugane country manager for Kopo Kopo, a backend merchant solutions for mobile payments. “They just have more challenges than expats when it comes to starting a business.”

He argues that when expats come to Kenya, they likely come in with some seed money and can get going right away. The problem in Kenya, he says, is funding to start something.

“The problem here is getting funding to startup businesses and maybe it is also having someone with great ideas and helping them execute those ideas. So I think there is a bit of an education gap between that great idea and how to implement it.”

He reckons that the way Kenya is heading now, there are a number of programmes trying to address the issue of execution. One such programme and place that is helping entrepreneurs is the iHub. The irony, however, is that all the startups that showed up for the Ventureburn meetup came from outside the iHub.

“The entrepreneurs here are struggling with a number of things, so they probably thinking that if they don’t have the capital to get their business set, why sit in an hour-long interview,” Mugane adds.

Nanjira Sambuli from iHub Research argues that that expats are seemingly more visible and are increasingly becoming key players in the Kenya tech ecosystem. Something she says “local techies need to awaken to and question curiously as to why it is so”.

But Sambuli argues that Kenyans will create soon enough.

“Part of why we may as yet see a lot more Kenyan inventions (MPESA doesn’t count, we were just good consumers: a tech invention met a hungry consumer base) may lie in socio-economic dimensions.”

One could argue that Kenya’s perceptions and education around creation versus consumption is perhaps underrated in terms of how it informs innovation in technology and other sectors in Kenya.

“We are primarily cultured and somewhat educated for consumption, of jobs and opportunities, and this is a crucial dimension that we have to address as to how it affects innovation and enterprise in tech, and other sectors,” adds Samubli.

The great PR machine

Malaika Judd from Savannah Fund discussing the ecosystem
When people talk about technology and innovation they talk about Kenya. They talk about MPesa, Ushahidi and M-farm. The benchmark for innovation on the continent is what is happening on the East African coast and the developers and creators hacking away in Nairobi.

Could Kenya be falling into a gap of great hype and PR and lack the true innovation to follow? Are people doing, building and not just talking about innovation? Of course there is creation, there must be, people are flocking to the country to do just that. BRCK and Kopo Kopo are shining examples of actual doing and not just talking.

The PR Kenya has received, Sambuli argues, is “still on the same innovations and tech adoptions”. Though this is good, she says it has also created a situation where it is not the developers and innovators controlling the narrative.

“The risk then is that stories may not be as visible or deemed impactful unless they come under the PR and hype lens through which stories about our ecosystem have been told,” says Sambuli.

Believe what we will about Kenya, its startups, its expats and what its place in Africa is, its tech revolution and continued dominance in the conversation around Africa’s tech scene cannot be denied.

Top Image Credit: Brian Snelson

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