Evaluating our startup ecosystem

By Josiah Mugambi
iHub
  Published 26 Sep 2014
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Evaluating our startup ecosystem

While thinking and sharing our ideas about startup communities in Africa, and the explosive growth of Nairobi’s tech community, we have consistently emphasised the importance of having a critical mass of tech talent in a particular town or city as well as the role of the government. I recently came across this white paperpublished byUP Globalthat echoed this and a lot more. Five elements are cited as critical to supporting a flourishing entrepreneurial ecosystem: talent, density, culture, capital, and regulatory environment. I thought I would take a stab at evaluating how well (or not) the tech ecosystem in Kenya is doing in these areas. (Disclaimer:unscientific and based on my own observations)

People

At the core of any community are the people it consists of. People and their talents are absolutely crucial in any economy and tech is no exception. It is not by accident that many multinational firms have set up Africa or regional offices in Nairobi. The people and the talent here has played a major role in that. That said, there’s obviously gaps, with firms sometimes needing to fill gaps at the top end of the market, and in some specialised areas. For the country to increase its pool of top tier talent, we can learn from India with the Indian Institutes of Technology as well as Singapore (see this very usefulpost by Sunny Bindrafrom 2008). It is not by accident that as at 2012 in the US, founders of 8% of all technology and engineering startups are of Indian origin, yet they comprise less than 1% of the population. (FromthisForbes article). Singapore is interesting as they took advantage of top tier foreign talent and flourished.

good but more quality and quantity needed, learn from (and get?) the best in the world.

Clusters and Density

A tech community that organically grows until it achieves critical mass can result in revolutionary ideas and innovations. Engineered spontaneity or serendipity created isprobably the best way to describe what happens when a group of diverse and brilliant people are able to connect and interact, as we have seen over the last 5 years here. Looking at the larger community in Nairobi and beyond, there has been rapid growth, as well as increased linkages involving academia, industry, investors and government. A denser concentration of brilliant minds can only be a good thing for the industry and the country, with the probability of successful companies increased. At some point I do believe we will see a big exit from the many startups here. One useful thing to note though is that while Silicon Valley is seen as the ecosystem to be like, I do agree with the point made in thisinstalment of the Kauffman Sketchbook video serieson the need to stop trying to be Silicon <fill in region/place>, a copy-and-paste approach.

We’ve got unique problems and opportunities here, and thus need to innovate with our singular circumstances in mind.

Culture

Brad Feld in ‘Startup Communities’ has some useful ideas regarding the culture that should permeate a successful startup ecosystem. I came across this insightful post by David Marete on some of the trail blazers in the tech space in Kenya. They have a crucial and leading role to play in shaping the entrepreneurial ecosystem. There's a lot of new young techies in the communities who would greatly benefit from the wisdom of thesepeople.

Here are more ideas on culture.

More people doingas opposed to just talking:

DO

A give before you get approach is something Brad emphasises. Sometimes it’s not easy to quantify what one would be ‘getting’ but it ought to be easy to figure out what you can offer to the larger community. Guys stepping up to do something during the early days of Skunkworks was a critical part of the growth of the community then. Inclusivity is important as this brings diversity and contributes to the melting pot of ideas within the community as people learn from each other.

Let's DO!

Government and Policy

The government has a critical role to play in fostering a thriving innovation and entrepreneurship ecosystem, specifically ininfrastructure and policy. Over the last ten years, the cost of internet bandwidth has dropped significantly, with Kenya now having thecheapest internet bandwidth on the continent. A ‘wait and see’ policy has allowed mpesa to flourish, and this also seems to be the approach taken with thin sim tech. Additionally, the Cabinet Secretary for ICT publishedregulations requiring foreign contractors requiring 30% of government tech tenders to be reserved for local firms or purchase a third of Kenyan made raw materials, which should be interesting for local firms.  There’s definitely areas where policy could be better though, particularly as the cost of hardware innovation drops and more software developers starting interacting with physical devices, and the line between the analog and digital world gets blurred. For instance the BRCK team had at some point to pay $100 to bringa component that cost only $15 at source while prototyping in Kenya. This is a huge cost barrier to high tech hardware innovation and manufacturing in Kenya, particularly as such components are sourced from all over the world.

The last 10 years are testament of what good infrastructure and policy can do. Let's continue with the'wait and see'but hardware tech needs more support

Capital is something highlighted as well in the UPGlobal white paper, and there’s a lot that has been said regarding this over the last few months, and interest is growing among would be local angels and VCs. We do need a big exit soon though.


I'm curious though about how youwould rate our Kenyan techecosystem through this parameters. Comments?

 
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