[kictanet] Kenya's Tech Startup scene leaves investors underwhelmed

Wed Jan 7 13:48:52 EAT 2015

This might be a mind projection fallacy. Arguing that ones view and
experience of an industry determine the state of the industry. Added to the
fact that it's an authoritative argument, it has the ability to cloud the
global view of the market.

I'll give a simple example. The coffee business. Dormans has been
struggling with the retail coffee market for the last few years. They had
to eventually get Art Cafe to run their outlets. Savannah is also
struggling. I'll assume that if you asked the investors in those companies
about the state of the coffee market in Kenya, they'd have very different
views from Java and Art Cafe. They would not be wrong. That is their
experience. It would be wrong, however, to point the entire industry with
the Savannah/Dormans brush. Java has never been healthier, they are
expanding, going regional. They had stores at the same locations as Dormans
for a very long time, oft next to each other (Junction, Capital Center,
Yaya Center, Sarit Center, CBD). So it's not the location, or the people,
that took down Dormans, rather, the ability of their leadership to execute
and take advantage of the opportunity in the market.

The same applies to startups. The investor is in the market for startups
worth investing in. The fact that they were unable to find good companies
might mean several things but I'll focus on two - they are unable to
attract the right startups (an internal issue), the right startups don't
exist (market issue). Now, other funds are not complaining, they are
actually *increasing* their investment in the market (e.g. BRCK raised >
$1M in seed capital, KopoKopo has raised >$2m etc), so it might be that
they were unable to attract the right investments.

There are multiple views to a market, you need to ask several people what
their views are in order to get a complete picture devoid of bias. I'm
reminded of this poem, that I studied in primary school, by John Godfrey
Saxe, I've pasted it below, for your amusement.

The Blind Men and the Elephant

It was six men of Indostan
To learning much inclined,
Who went to see the Elephant
(Though all of them were blind),
That each by observation
Might satisfy his mind.

The First approached the Elephant,
And happening to fall
Against his broad and sturdy side,
At once began to bawl:
"God bless me! but the Elephant
Is very like a WALL!"
The Second, feeling of the tusk,
Cried, "Ho, what have we here,
So very round and smooth and sharp?
To me 'tis mighty clear
This wonder of an Elephant
Is very like a SPEAR!"

The Third approached the animal,
And happening to take
The squirming trunk within his hands,
Thus boldly up and spake:
"I see," quoth he, "the Elephant
Is very like a SNAKE!"

The Fourth reached out an eager hand,
And felt about the knee
"What most this wondrous beast is like
Is mighty plain," quoth he:
"'Tis clear enough the Elephant
Is very like a TREE!"

The Fifth, who chanced to touch the ear,
Said: "E'en the blindest man
Can tell what this resembles most;
Deny the fact who can,
This marvel of an Elephant
Is very like a FAN!"

The Sixth no sooner had begun
About the beast to grope,
Than seizing on the swinging tail
That fell within his scope,
"I see," quoth he, "the Elephant
Is very like a ROPE!"

And so these men of Indostan
Disputed loud and long,
Each in his own opinion
Exceeding stiff and strong,
Though each was partly in the right,
And all were in the wrong!

On Wed, Jan 7, 2015 at 12:49 PM, Victor Kapiyo via kictanet <
kictanet at lists.kictanet.or.ke> wrote:

> I think there is good work which is being done in the sector, albeit with
> challenges, which is normal. People had great expectations of a tech boom,
> which unfortunately is yet to be realized. But all is not, lost, the
> potential exists and we just need to restrategise.
>
> My observation is that there is a missing link between innovation and the
> market. The startups/ICT business need to invest more on R&D to ensure that
> their products are actually meeting a need in the market, then come up with
> stuff that the market actually needs and not so what they think the market
> needs. Plus, while not advocating for copying, its possible to come up with
> alternatives for what's already in the market  especially for mobile apps
> for android, iOS, WP etc. I may be wrong, but there are very few apps
> across the various categories e.g. games, entertainment, utility apps etc
> from kenya on those appstores. Most are news/corporate apps.
>
> We should therefore continue encouraging guys to innovate at all levels,
> high school, uni etc., and for all manner of things if possible, then help
> them put their apps in the market. Also, encourage industry to work and
> partner with schools, colleges and universities to harness talent.
>
> Plus, it doesn't have to make money immediately, but at least should have
> potential. Then they figure how to monetize it later.
>
> I agree, we need good environment - policy, legal, financial etc to
> catalyze innovation. Good copyright & patent system are also key. And when
> GoK is giving financial support, it should not just be for one off
> projects, but for innovative ideas with demonstrated potential.
>
> Victor
>
> Victor Kapiyo
>
> ====================================================
> *"Your attitude, not your aptitude, will determine your altitude" Zig
> Ziglar*
>
> On 7 January 2015 at 05:24, Matunda Nyanchama via kictanet <
> kictanet at lists.kictanet.or.ke> wrote:
>
>> Friends
>>
>> Happy New Year.
>>
>> This discussion is very informative and offers various perspectives.
>>
>> I am wondering whether there is an up to date in-depth report (complete
>> with raw data) of  the complete innovation ecosystem in Kenya e.g:
>> - universities & training institutions + their outputs
>> - R&D chain from ideation, proof of concept, ... commercializaion
>> - tech sector players: all the way from startups to mature market players
>> - infrastructure
>> - financing & its different flavours
>> - policy & regulations
>> - SWOT of this ecosystem
>> - gaps in ecosystem and challenges
>> - bench-marking (if any) with successful ecosystems: Silicon Valley, Tel
>> Aviv, Ireland, ...
>>
>> Example 1: it would be interesting to see the skills demand versus output
>> from academic institutions; ditto for availability of such talent as in
>> tech business leadership.
>>
>> Example 2: how does the regulatory environment support/drag/etc the
>> innovation "train"? - what is? what ought to be? and what could be done?
>>
>> Example 3: what's the attrition rate? How about
>> mergers/acquisitions/consolidation?
>>
>> Example 4: Innovation culture: how does this compare with that in
>> successful ecosystems in such matters
>>
>> ....
>>
>> Regards
>>
>> ----------------------------------------------------------------------------------------------
>> Matunda Nyanchama, PhD, CISSP; mnyanchama at aganoconsulting.com
>> Agano Consulting Inc.;  www.aganoconsulting.com; Twitter: nmatunda;
>> <http://twitter.com/#%21/nmatunda>Skype: okiambe
>>
>> ----------------------------------------------------------------------------------------------
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> The Kenya ICT Action Network (KICTANet) is a multi-stakeholder platform
> for people and institutions interested and involved in ICT policy and
> regulation. The network aims to act as a catalyst for reform in the ICT
> sector in support of the national aim of ICT enabled growth and development.
>
> KICTANetiquette : Adhere to the same standards of acceptable behaviors
> online that you follow in real life: respect people's times and bandwidth,
> share knowledge, don't flame or abuse or personalize, respect privacy, do
> not spam, do not market your wares or qualifications.
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-- 
Warm Regards,

Phares Kariuki

*E*: pkariuki at gmail.com | *Twitter*: kaboro | *B*: http://www.angani.co |
Angani Limited
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