Tech Startup Ecosystem Comparison

Impact of the Internet in Africa

I’ve been in Nairobi, Kenya for the last 5 months of 2013 learning about the East African startup and investment landscape. It was interesting to compare the Tech Startup Ecosystem in Kenya to that of of Lagos, Nigeria where I had lived for nearly 14 months prior to arriving in Kenya.

Like chalk and cheese, the Tech Startup Ecosystems and Investment Landscapes of the two countries are very different.

Local vs Continental

The entrepreneurs I met and spent time with in Lagos seemed to be solely - understandably so - focused on their home market of Nigeria. Contrast this with the many entrepreneurs I encountered in Nairobi who were raising seed and Series A rounds to launch their product or service in Nigeria as well, and in many cases seemed to be nearly as focused on Nigeria as on the East African region in which they are physically located.

Also, with regards to Nairobi Technology Hubs and Accelerators, I found that although they are based in Kenya, they promote and leverage their Nigerian Entrepreneurs, Startups and activities to project an image of Nigeria focus/expertise — even if their connections to Nigeria are in reality, quite limited, such as having one startup with one founding member being Nigerian.

I did not get the impression that there are many East African entrepreneurs working out of hubs in Nigeria like Co-Creation Hub (although things may have changed since I was last there in May 2013), but even if there were, I would imagine that they probably wouldn’t receive extra promotional support, or additional attention due to their East African roots.

Entrepreneurs and businesses in East Africa (as well as across the globe) are fascinated to an unparalleled degree by the economy, peoples, potential and mystique of Nigeria. This past spring, I asked some entrepreneurs at Cc-Hub if they’d heard of and/or were considering applying to any of the accelerators in Nairobi —none said yes. My impression is that Nigerian Technology Entrepreneurs don’t share a reciprocal level of fascination with East Africa in general.

Although I’ve often heard Westerners state that Nairobi is a ‘more livable’ city than Lagos—real estate is more affordable, power general more consistent, Wi-Fi is more reliable and affordable, etc.— the investment climate for Seed and Series A non-impact investors is undeniably larger in Lagos.

Social Impact or Profit?

There’s a huge social impact scene in Kenya. For instance, the Growth Hub is an impact incubator and accelerator that supports early stage social enterprise entrepreneurs and startups specifically. There are numerous impact investment groups such as One Acre Fund and Acumen, and the large United Nations Employee and Alumni network, and decades-old legacy, in Nairobi, perhaps plays a role in promoting social impact agendas.

In Nigeria there are social enterprise startups such as Wecyclers, but the impact scene is much smaller than Kenya, and the Global Development and Aid Industry plays a less prominent role in Lagos than in Nairobi.

Many innovative startups coming out of Cc-Hub receive small seed grants from Tony Elumulu Foundation, but it doesn’t seem like many, if any, of these grants explicitly have social-impact-strings attached.

Whether it’s cultural and/or due to a historical lack of American, European, etc. impact-oriented capital providers or Aid Organizations in Nigeria, a greater proportion of Nigerian entrepreneurs I’ve met are purely focused on building profitable businesses rather than raising money contingent upon social impact benchmarks. Personally I feel that the successful implementation of either business model ultimately generates positive social returns, and I by no means intend to pass judgment upon, or rate either against, one another.

Spending the last 18 months in Nigeria and Kenya (and a little time here and there in South Africa) has been an incredible experience – one for which I feel blessed to have had, and look forward to continuing. I’ll be spending most of Q1 2014 in Nigeria, and look forward to catching back up with the Technology scene and my Entrepreneur friends in Lagos.

Image credit: Meghan Semancik

Meghan Semancik

About Meghan Semancik

Corporate Development at Mara Group. Previously, Investment Analyst at Rio Partners focused on seed, early and growth stage investment opportunities in the mobile, e-commerce and media spaces.

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