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

Wed Jan 7 16:32:01 EAT 2015

Folks:
 I would like to frame a discussion on citizen tv breakfast show around this issue: IT or ICT as an area of investment and econ growth and her competitiveness of our investment environment. What should the topic be and who are the 2 critical people that should form part of that panel. And why.

Last year, I tried in vain to get my friend and member of this network, Catherine Adeya, then CEO of Konza city, to come on air for an exploration of the subject but...  Doesn't mirror much the robust discussions I see here (behind the curtains?).

David

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> On Jan 6, 2015, at 9:38 AM, Ngigi Waithaka via kictanet <kictanet at lists.kictanet.or.ke> wrote:
> 
> Listers,
> 
> My 2 cents on this issue.
> 
> Kenya Technology scene, is actually quite old; I know a few firms that were founded in the 90s, some even earlier, and that are still going strong. If anything, firms founded around the late 90s and early 200s have had a lot more success than in later years, IMO. If you doubt me, check firms like Virtual City, Craft Silicon, AT, SevenSeas, 3Mice, Cellulant, Verve, ReelForge, Turnkey Africa, Lantech, AfricaOnline, Wananchi etc
> 
> Having being involved in this sector over the last 20 years, I think that the article is quite fair in that in recent times, there has been a lot of hulabaloo of a new IT Startup which in no time bites the dust, leaving investors obviously, licking their wounds.
> 
> But this didn't just happen overnight. 
> 
> Sometime around 2007, there was a general drift towards mobile technology. There were very nice sound bites, that, if you built a mobile application, and got 1% of the world to buy it, you would be best pals with the likes of Facebook, Twitter, Google Founders who would probably be calling you up to borrow your yacht.
> 
> This excitement was quickly followed by the "...build it they will come mantra...", and besides, a new city technology city, Konza!
> 
> This had the quick effect of churning a lot of money into these startups to the point where what traditionally we would call "functions" in an application, was being touted as a full application. These were quickly showcased in the next mobile competition, and the winners of these parlayed across the media as the true technology champions of Kenya.
> 
> And with the success of Mpesa (that Kenyan application that is not built in Kenya), Kenya had arrived in the technology scene. But this could not have been further from the truth!
> 
> I have argued before, that if we are to build a local technology scene, it has to first cater for the current needs in the market. The Kenyan Technology scene is heavily dominated by procurement of enterprise applications & technologies. Put together, GoK, Safaricom, Airtel
> , KPLC, KenGen, KRA, KCB, Equity etc spend not less than Ksh 200B every year in IT purchases.
> 
> If we ought to make a serious push for technology, then we need to first address the market where local firms are already buying into, instead of concentrating on developing functions wrapped as mobile applications for a market that at most cannot even hit Ksh 100M.
> 
> This is what every one of those firms that I have listed before did and its no wonder 20 years later, they are still here.
> 
> And this is the fundamental difference between the Kenya & Nigerian startup scene. There are countless Nigerian firms that are already in Kenya pushing their Nigerian built core Banking, Insurance, Manufacturing and Public Sector solutions. Solid firms that are making applications that the market is already paying for.
> 
> So, lets not shoot the messenger. Lets reserve our vitriol and energy for the ICT policy makers and ask them to build a policy that leads to self-sustaining ICT growth.
> 
> Regards
> Ngigi Waithaka
> A1.iO
> 
>> On Tue, Jan 6, 2015 at 2:46 AM, Eric Osiakwan via kictanet <kictanet at lists.kictanet.or.ke> wrote:
>> .....you are very far from wrong, actually too close to right.
>> 
>> HNY.
>> 
>> Eric here 
>> 
>> Sent from my iPhone
>> 
>>> On Jan 5, 2015, at 17:40, John Kieti via kictanet <kictanet at lists.kictanet.or.ke> wrote:
>>> 
>>> Dear Ali, and other listers,
>>> 
>>> Once in a while, we read articles in media, especially international media carrying very misleading headings on the Kenyan startup scene. The piece you share Ali is one such misleading story
>>> 
>>> I would easily dismiss such an article, not only for it simply "re-tweeting" old unfounded stereotypes but for two other reasons as follows :-
>>> 
>>> 1. The story is built solely on the investment philosophy of one investor - not that its a wrong investment philosophy but that its not the only investment philosophy relevant for a young ecosystem like ours. Even in other advanced ecosystems there's many competing investors with diverse investment strategies. 
>>> 
>>> 2. The story fails to capture sentiments of local founders seeking capital and the challenges they face - from a startups perspective. Considering that local startups have perceptions such as existence of "vulture capital" and  "racial capital preferences", it is fair to expect that closing even the simplest of deals, or even attracting the requisite pipeline is not for faint hearted or non-committed investors. The writer could have gone under the hood to explore these at the very least.
>>> 
>>> At the very least I would ask myself this when faced with such an article; Can anyone really fairly compare our five year old ecosystem with mature (decades old) ecosystems such as Silicon Valley or Tel Aviv? What yardsticks would be fair across the board?
>>> 
>>> That said, our startup ecosystem still experiences the usual challenges expected at these formative stages. For instance (a) There's still too many parallel entrepreneurs (for justified reasons) running startups sub-optimally (b) we continue to experience a gap in local angel funding (or traction proof funding) which cannot be replaced by foreign capital. (c) Players and commentators in the ecosystem continue to assess startup growth and performance with the same yardsticks applied to consultancies and lifestyle businesses (d) The local market has sustained this uncanny tendency to favor the presence of a non-local when a sales pitch party is granted - if at all such is granted to a startup. (e) In the legal, PR/marketing, accounting and other supporting professions, available skills sets and professional approach are for the most part inflexibly corporate minded  - neither customized nor conducive for working with startups. These to me are new issues below the surface that a writer should be exploring rather than repeating the usual rhetoric damning the fledgling ecosystem - which I find unfounded.
>>> 
>>> I may be entirely wrong, but I could be right in my observations.
>>> 
>>> Best regards
>>> 
>>> On Sun, Jan 4, 2015 at 9:44 PM, Sean Moro
>>> 
>>> On Sun, Jan 4, 2015 at 10:52 AM, Ali Hussein via kictanet <kictanet at lists.kictanet.or.ke> wrote:
>>>> Listers
>>>> 
>>>> A lot of discussions in this area over the last few years. Are the chickens coming home to roost?
>>>> 
>>>> Have we focused too much on competitions, donor funded money and shared spaces and a lot less on commercially viable ideas/nurturing what is there towards commercial exploitation? 
>>>> 
>>>> My sense is that we now need to move to 3.0 to enable realize the potential of our startups. 
>>>> 
>>>> Read on:-
>>>> 
>>>> http://www.businessdailyafrica.com/Corporate-News/Kenya-s-technology-push-leaves-investors-cold/-/539550/2574220/-/13qkohy/-/index.html
>>>> 
>>>> http://www.gsmaentrepreneurshipkenya.com/GSMA_KENYA-AR2014-060214-WEB-SINGLE-PGS.pdf
>>>> 
>>>> 
>>>> Ali Hussein
>>>> 
>>>> +254 770 906375 / 0713 601113
>>>> 
>>>> Twitter: @AliHKassim
>>>> Skype: abu-jomo
>>>> LinkedIn: http://ke.linkedin.com/in/alihkassim
>>>> Blog: www.alyhussein.com
>>>> 
>>>> "I fear the day technology will surpass human interaction. The world will have a generation of idiots".  ~ Albert Einstein
>>>> 
>>>> Sent from my iPad
>>>> 
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>>> 
>>> 
>>> -- 
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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.
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> 
> 
> 
> -- 
> Regards,
> 
> Waithaka Ngigi
> Chief Executive Officer | Alliance Technologies | MCK Nairobi Synod Building
> T + 254 (0) 20 2333 471 |Office Mobile: +254 786 28 28 28 | M + 254 737 811 000
> www.at.co.ke
> 
> 
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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.
> 
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