How can we build thriving local ecosystems that can effectively support the growth of world class entrepreneurs and startups in Africa? This was the focus of our discussion with participants at our recent roundtable in Accra on 2nd November. The event brought together startup hub leaders, entrepreneurs & other ecosystem players to discuss the needs as well as share ideas on how to drive the ecosystem forward.
Below is a summary of some of the key points discussed
Driving investment into the ecosystem
Participants raised the fact that the current opaqueness of the ecosystem with regards investment was one of the factors holding back its growth. It was mentioned that access to investment has become about "who knows who" rather than merit-based resulting in some high potential startups being left out while the mediocre ones selected then poorly represent the ecosystem to investors.
Speaker Josiah Eyison of iSpace mentioned that part of the problem was due to laziness on the part of investors who are only interested in skimming the best startups from the ecosystem for them to invest in without making any effort to develop the pipeline of quality startups. He called for investors to be more involved in building the ecosystem, work closely with hubs and come on the ground to find the small but promising startups. He also highlighted the fact that investors need to have a different approach when in investing in Africa. Rather than copy and paste the silicon valley model which focuses on exits, they need to focus on startups that are solving real problems and have potential to scale.
Another factor that was identified to be hindering the ecosystem was competition and not enough collaboration between the hubs. Participants pointed to the limited pool of funds available for ecosystem builders as a key driver of this with many hubs struggling to simply survive.However it was noted that this was starting to change with hubs realising they need each other to survive. An association of hubs in Ghana has been initiated however better organisation and leadership is needed for it to be effective. In addition some work needs to be done to build trust as well as capacity of the member hubs. It was also suggested that hubs should specialise in particular sectors or verticals in order to diffuse competition and encourage collaboration. Kumasi Hive, a hub specialising in incubating hardware startups was highlighted as a good example of this.
Addressing the early stage funding gap
Speaker Worlali Senyo from Farmerline shared their startup journey and pointed to a grant from Indigo trust as one of the key factors that was critical in enabling them get their business off the ground. He added that in their early days Venture Capital was not an option because they did have the traction needed to attract VC funding. He emphasised the need for patient capital such as grants which can enable startups to invest in building the capacity of their team as well as give them the freedom to experiment, fail and prove their proposition. He however cautioned startups not to rely on grants but rather use them to research and develop their sustainable business model. Participants however highlighted the fact that it was very challenging for most local startups to access these grants and the lack of a strong body of follow on support in the form of angel and VC investment also made it difficult for startups graduate to investment and avoid getting stuck in the cycle of grants.
Knowledge generation and sharing
It was raised that there is a need for building capacity of hubs and startups to generate and share their knowledge to build the brand of the ecosystem globally. Startups and hubs hold a lot of knowledge about the emerging African tech ecosystem but this is not being collected and marketed effectively to attract support for their initiatives and the ecosystem as a whole. The team from PR and marketing firm Djembe Communications who were in attendance, spoke about some of the work they are doing to promote the brand of African innovation. They emphasised the need to for startups to invest in the marketing and telling their stories effectively in order to build their credibility. They added that this was an area that startups tended to neglect and were not willing to invest to get the relevant expertise needed. Participants however also raised the fact that many of the marketing experts did not provide packages of support that were affordable for startups and should partner with the ecosystem to provide this.
This roundtable formed part of a new initiative by ATBN and co-funded by the UK Government’s innovation agency (Innovate UK), which aims to drive digital co-innovation and collaboration between the UK and Africa. We will be sharing more about our findings and bringing together stakeholders to discussing bridging the early stage funding gap in the African tech ecosystem in London on Friday 17th November
We just sent you an email. Please click the link in the email to confirm your subscription!