Africa’s innovators are open for business
By Catherine Jewell, Communications Division, WIPO
“Africa is on the move,” US President Barack Obama told the Global Entrepreneurship Summit in Kenya this summer. A new generation of tech-savvy entrepreneurs with a “can do” attitude is injecting dynamism into Africa’s start-up scene, which is skyrocketing. The continent is abuzz with innovation and entrepreneurial activity. Tech hubs, incubators and other initiatives are popping up across the continent, fueling a spirit of optimism and unprecedented opportunities for growth. One such initiative is the public-private partnership, DEMO Africa. Harry Hare, Executive Producer of DEMO Africa, shares his views about Africa’s gathering technological revolution.
What is DEMO Africa?
DEMO Africa is a launchpad for new technology start-ups. It is a place where Africa’s most innovative companies can launch their products and tell Africa and the world what they have developed. Each year, technology start-ups from across Africa apply for a chance to promote their innovations at the annual DEMO Africa conference. We identify 40 of the most innovative start-ups to participate in that event. These are businesses that are solving real-world problems with high potential to succeed.
The DEMO Africa conference brings Africa’s tech ecosystem together in one place. It’s an opportunity for Africa’s top start-ups to pitch their innovations to venture capitalists, investors, technology buyers and the media from across the region and beyond, and to secure investment and attract publicity for their inventions.
What makes the African technology sector so interesting?
Africa’s tech space is fresh. Africa’s new entrepreneurs are passionate about what they do. They are skilled and ambitious and have a lot of energy. This is a potent mix which is generating a great deal of enthusiasm and belief in Africa’s potential to join the global stage.
The continent has a diverse and talented pool of young people and now we are beginning to see a commitment on the part of governments to utilize this massive source of brainpower to bring about positive change, especially through technology. Africa has many problems, from education to health and infrastructure, and the technologies that are coming out of Africa are solving real problems – this is what people are seeing and what they are interested in.
How is the technology landscape in Africa changing?
Since 2012, when DEMO Africa launched, the start-up scene has really taken off. The quantity of these businesses is quite remarkable, as is their quality.
One thing that really excites me about Africa’s technology landscape today is that for the first time in a long time, we are seeing technologies being built in Africa, by Africans, for Africans, but also usable anywhere in the world, and especially in other developing countries. Until now, Africa has been a net consumer of technology, but now we are seeing people developing and using home-grown technologies. We are also seeing African-built technologies being exported around the world. It is a very exciting time to be in Africa and to be working in the field of technology.
Africa faces two challenges which have become opportunities. The first is that we have a lot of problems. The second is that we are “under-wired.” This has fueled the massive uptake of mobile phones across the continent which is creating huge opportunities for mobile-based solutions. Start-ups have recognized that the widespread uptake of mobile technology in Africa means there is a huge and expanding market for their products. That explains why well over 50 percent of the applications launched through DEMO Africa are mobile based.
What are the main challenges for African start-ups?
The first is access to capital. Many find it difficult to attract the seed capital they need to establish proof of concept. Then, if they overcome that hurdle, they need capital to scale up their business.
A second challenge is capacity. Not technical capacity to develop the solutions, but the soft skills needed to get a product to market, to handle sales, marketing, human resources and so on. These skills are critical for building up and sustaining a business. Many of these start-ups were established by technical specialists who simply have never had an opportunity to learn the skills needed to run a business successfully.
A third challenge is credibility. Investors need to feel that start-ups are credible partners with solid technologies that offer viable business solutions. Creating that kind of credibility in the market is a big challenge. We are beginning to see changes in this, but it is happening very slowly.
The fourth challenge is connectivity. Today, business survival can hinge on having access to business or client networks, but many start-ups struggle because they do not have access to them. Most people still have a phobia of technology solutions coming from start-ups because they associate start-ups with uncertainty. But as big corporates start adopting technology solutions from start-ups and are increasingly willing to partner with them on their go-to-market strategies, there is some movement in this area also.
A fifth challenge relates to effective use of intellectual property (IP). IP is fundamental to the success of these companies. They need to protect their innovative assets, but more needs to be done to change perceptions within the start-up community and to drive home the message that IP is a friend of business and can enable them to advance their goals.
Start-ups know they need to protect their ideas and their businesses, and are generally unwilling to share information about their products before a non-disclosure agreement (NDA) has been signed. But the way they use NDAs is often counterproductive. Overly preoccupied with their own interests, they often present potential investors with a one-sided, hostile NDA which does little to build trust or cement a fruitful outcome.
Start-ups need a supportive ecosystem to thrive. Government has a key role to play by putting into place a robust regulatory framework and business-friendly policies. By its nature, investment is a risky business, but governments can do a lot to help de-risk it.
What is the key to ensuring the sustainability of Africa’s technology sector?
Markets are the key to sustainability. Markets are created by producing real solutions to real problems. When people can buy a product or a service that solves a practical problem they face, the market for that product will grow.
Africa has many challenges, but each of these is actually an opportunity to develop practical solutions and applications. We don’t need to copy what others have done, we simply need to look at all the problems we have, identify a need and develop an application to meet it. Basically, we need to do our own thing in Africa. This is starting to happen and it is very exciting.
Do you see any improvement in the investment climate?
We are seeing growing recognition within the investment community that Africa’s growing tech scene offers significant investment opportunities. Investors have a key role to play because investment takes entrepreneurs from where they are to where they want to be and the success of any start-up depends on its ability to scale-up its operations.
But we do still have some way to go with respect to engaging local investors, who are still more comfortable investing in brick-and-mortar projects. Until the local investment community fully recognizes the value of investing in technology, it will be very difficult to have sustainable investment in African start-ups. Many Silicon Valley and European investors don’t really understand the local environment, and therefore tend to shy away from investing heavily in start-ups, so local investors play a key role. It is a journey and we are slowly but surely making progress.
We are working with our partners to organize Angel Investor Bootcamps to help mobilize early-stage investors and to highlight the huge potential of the African tech sector. As part of DEMO Africa 2014, we organized the first Annual Angel Investor Summit, which was a great success and resulted in the formation of the African Business Angels Network (ABAN). A similar event is being organized as part of DEMO Africa 2015 and will bring together a growing number of investors from across the continent and elsewhere.
What benefits do start-ups get from DEMO Africa?
DEMO Africa offers start-ups a launchpad for their products and an opportunity to attract much-needed investment and publicity. They benefit from business support and advice provided by a team of coaches and mentors at our boot camps. These intensive three-day entrepreneurship training courses cover all aspects of business development, including intellectual property. We groom them to make an effective pitch at the launch event, and follow them for around six months after that to help them with any unforeseen challenges. Start-ups also benefit from extensive media exposure and crucially, they are plugged into DEMO Africa’s global network. If a start-up launches at DEMO Africa, it can also launch at other DEMO events elsewhere. If they decide to enter the US market, for example, they can launch at DEMO in Silicon Valley, or if they want to enter the Brazilian market they can go to DEMO Brazil.
What lies ahead?
We are beginning to see world-class products and solutions coming out of Africa, and people outside the continent are taking note. We have also started seeing joint-venture projects between African entrepreneurs and their counterparts in other countries. But more importantly, we are seeing increased interest by venture capital firms from both within Africa and in Europe and the United States. All these factors point to a very fertile space where big-ticket solutions will start to emerge.
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