For the past 2 years I have been privileged to visit over 20+ countries across Afrika to scout for the best technology entrepreneurs and work with a number of passionate startup ecosystem builders. With new challenges and opportunities presenting themselves constantly, everyone involved in building these ecosystems has taken it upon themselves to create a favourable environment for entrepreneurs to thrive in.
However, building these environments remains a work in progress. In preparation for the Seedstars Africa Summit where “building entrepreneurial ecosystems” will be one of the main points of discussion, there is much that can still be improved.
Figuring out the dynamics of an ecosystem often requires some time on the ground and meetings with the main actors. During my travels, I have identified 3 players that predominantly could back an ecosystem financially.
Donor backed ecosystem
Firstly, “the donor-backed ecosystem” often occurs in younger and underdeveloped environments, for example Maputo, Mozambique and Kinshasa, Democratic Republic of Congo. Donors play a crucial role in supporting high-impact social entrepreneurs with grants and capacity building. This allows entrepreneurs to have an good learning curve and tap into their knowledge while not having to give up equity.
While the common word on the ground is that donors do not allocate their funds properly, more and more of them are considering entrepreneurship as an interesting vehicle and an opportunity to start channelling their funds more efficiently.
The challenging part about the donor-backed environment is that the entry requirements to work with these donors are often difficult (reporting, budget, etc.) and a startup's solutions need to align with their existing agenda.
On an ecosystem level, perhaps the most interesting role donors play is acting as a bridge between government, the private sector, support initiatives and startups.
Private sector backed ecosystem
The private sector backed ecosystem remains one of the preferred environments for both entrepreneurs and support initiatives in more developed ecosystems, such as Johannesburg, South Africa to sponsor, invest and open markets. The usual suspects are often corporation and multinational companies.
There are, however, a couple of challenges regarding their involvement in a startup ecosystem.
The first problem is the structure of where the support program for startups is positioned in the hierarchy of the multinational company. Many of these corporations have been supporting entrepreneurs for several years and are still have not seen much value. That is why some of them have started placing their startup support programs under their Corporate Social Responsibility (CSIR) departments. In turn, these CSIR departments hardly ever prioritize the needs of the entrepreneurs or startups participating in the start-up program.
Moreover, when startup support initiatives are backed by corporations that are competitors (such as banks vs FinTech startups), it automatically creates a hostile environment, as the support program ends up witnessing very little collaboration between the corporate and the startup.
Government backed ecosystem
Rwanda is most likely the best example of how a government backed ecosystem can turn a nation into one of the most tech-savvy countries and lighten up the structural burdens for entrepreneurs.
Having said that, we are yet to see the results in terms of producing succesful technology startups. I am therefore not convinced that even the most involved governments have reached their potential into lifting the ecosystem to the next level, which brings me to my next point.
Focusing on where stakeholders add most value
Over the past years, many articles have commented on how Afrika needs to build its own model and stop copying Silicon Valley. What seems to be missing is a cohesive and inclusive long-term strategy and plan to build technology startup ecosystems.
Instead of launching yet another (corporate, donor or government) backed incubator, it would be more interesting to look at how they could plug into an already existing startup program. We often see more empty seats at incubators than actual entrepreneurs, which in turn causes many incubators to try and keep talent in, as opposed to preparing them for the real world. Also, depending on the nature of the startup, we might be better off by encouraging entrepreneurs to get their own office space, pay the rent and make them feel the responsibility of actually running a business once they have passed a reasonable deadline.
Since the majority of ventures are focused on business model innovation and not technology innovation in the first place, we shouldn’t keep entrepreneurs in this sheltered environment with no consequences when a startup doesn’t generate any revenues, just so that we can fill some seats.
Government typically do not present the best investors or entrepreneurship support initiatives, nor should they want to. Apart from lifting structural burdens that can prolong an entrepreneur’s runway (e.g. tax rebates), in my perspective their most important role is driving inclusiveness, fight cultural prejudice, build infrastructure and help create innovation hubs in the neighbourhoods.
Incubators and accelerators should be focusing on providing a high quality network of mentors and large corporations, while large corporations should focus on opening gates to foreign markets and becoming startups’ early customers.
What if every stakeholder not only focussed on what they might be “good” at, but rather on where they can provide the most value?
"Not just to the entrepreneurs, but to one another as well?*
Added to all this, stakeholders of the startup ecosystem alsi need to actively track how entrepreneurs assess the available resources. In turn, these results need to be shared amongst all players of the ecosystem to improve the efforts of stakeholders and stimulate transparency. To effectively tackle the challenges of entrepreneurs, all stakeholders should be constantly aware of which elements are in need of improvement.
Finding your unique identity and the creation of networks
As we all know, “Afrika is not a country” and this becomes even more evident when you start crossing borders and realize that you are dealing with completely different realities, cultures, language and history.
On an ecosystem level, we might be doing countries a disservice by collectively referring to “Afrika” or even a country, since there are many different ecosystems that exist from city to city, and neighbourhood to neighbourhood. Many countries and cities trace their history thousands of years back and have created their own particular dynamic in which the importance of people, cultures and connections can play a decisive element in building a unique identity. And once these identities are created, there should be enough opportunities for the different networks to merge and overlap.
Despite some efforts to link different communities in ecosystems such as South Africa’s Johannesburg and Soweto, they still tend to operate in parallel universes that don’t speak or work with each other and are extremely difficult to access. Therefore, at times, I do wonder if a coalition should be forced between these different ecosystems on a national level and Pan-African level.
Lastly, about hype.
Over the past years we have seen a significant increase of foreign initiatives entering Afrika, local stakeholders (government, corporates etc.) collaborating with home grown entrepreneurs in different capacities, and a general increase in the number of entrepreneurs. After all, we are dealing with the largest untapped market in the world and if you are not involved now, you just “might” be missing out on a great opportunity.
Everyone that is part of the ecosystem has seen it: your pitchpreneur, tenderpreneur, wantapreneur etc. It is in this tricky moment where skeptics like myself wonder if we have been or are becoming a victim of the hype surrounding startups. However, it would be foolish to say that there is no positive consequence when it comes to the “hype”.
The hype has made entrepreneurship a topic of discussion among government officials who still have the traditional power and could possibly lighten up structural burdens for startups and young companies. In a perfect world, governments in every Afrikan nation would use their lobbying power to shine light on the local ecosystem and attract relevant people to get a better understanding of what is happening on the entrepreneurial scene, such as French president’s Macron and Dutch Prime Minister’s visit to Impact Hub in Accra, or Jack Ma’s visit to Rwanda on invitation of its president, Paul Kagame.
Furthermore, the hype is causing local and international media to cover Afrika based entrepreneurs and their businesses now more than ever, which is positively contributing to changing the Afrikan narrative.
The young generation is being inspired to materialize their own ideas and they have showed that the corporate world is not the only career choice they have, which in turn creates new job opportunities.
As far as I’m concerned, the hype can go on for just a little longer. And then, when it eventually dies down, what will matter is not the entrepreneurs that abandoned their entrepreneurial activities, but the ones that are here to stay and succeed.
Every “Afrikan” ecosystem has its own particular challenges. The question of turning a city or a region into a startup hub is not a zero-sum game with one loser and one winner, as every hub has its own strengths and weaknesses, as well as challenges and opportunities. Everyone should take on the responsibility of being an architect for their own environment, as long as these efforts are inclusive.
In my perspective, a large part of the fight of our generation is figuring out what works for us, as Afrikans.
When it comes to building ecosystems, creating success stories and changing the Afrika narrative; the job will never really be done.