Archives for posts with tag: tech hubs

COVER

Pride vs existence. Vison vs survival. Impact vs. Communication

All of us, small incubator and accelerator of the world face these dilemmas every single morning.

Our job  to build real companies, help them train and retain a talented team and generate revenue on a daily basis is so much of a full time job that it is sometimes challenging to focus on a long term strategy and vision. Stuck in this operational framework, we often follow blindly the few important partners that we have signed (or rather that have us signed) and which use us to get in touch and buy legitimacy with the tech ecosystem.

However, we should not forget that we are also entrepreneurs and that we are here to build long lasting organizations – hence here are few reasons why we should not let our “beautiful big partners” dig too much into our beliefs, or dig in them at all:

1) They don’t know much about technology entrepreneurship

Ok, that’s an easy one.  Any angry kid could have said that, but it is, nonetheless, it is true. Almost none of the employees or executives in those corporations, even the so-called “technology experts”, really know what it’s like to build technology SMEs, fund them, support them, manage HR and finance for startups, etc. Whatever program, event or money they want to give you, never forget that they’re mainly in it  for corporate responsibility reasons and not really ecosystems building.

That is not necessarily a problem. The problem is when their hidden objectives are more prominent than your priorities. When it comes to building the ecosystem, never forget that you are the visionaries, the ones to make it happen. More importantly, do not forget that you have a responsibility, to yourselves and to your clients, to remain true to that vision. Take their money, help them achieve what they need, but never at the price of your vision.

2) They tend to see you as “their” incubator

Well at least if you’re successful. But when you fail, they suddenly remember that you have other partners. That really may be a problem since you want to remain independent,  objective and open with all the entrepreneurs.  And you want them to perceive you as such. Indeed, the last thing the latter want is to belong to a large company, they want that large company to be their client. Just take for instance the corporate accelerators with no other partners: no entrepreneurs want to be part of those, because they need more than one partner. They need banks, investors, technology providers, legal advice, etc. Money and communication can never buy a trustful network.

3) They may discourage your team

As most large corporations, they live and grow by putting others down. They seem not to know any other way to build business relationships. It is even more flagrant in African ecosystems where open innovation and co-creation are still obscure concepts. Thus, when you collaborate with them, they may have behaviors and words that can really break your team’s motivation. Every young team is going to make mistakes but what matters is that they work  their ass off to execute perfect events and programs. Getting criticized just because your partners need a reason to diminish your fees or justify an internal argument within their team, may hurt your more passionate team members.

4) Your core vision is to help entrepreneurs succeed, not them

At the end of the day, the main reason you should not bother too much about keeping an unbalanced, non-constructive relationship with a large corporation is that, on the long term, you should not be relying on them to be sustainable. Of course, they are important in the first years, before you’ve found your business model and generated consistent revenues from your companies. But always bear in mind that you are here for one reason:  to build entrepreneurs. Every endeavor you may undertake along the way to survive is good but, if by any chance it had to stop, well it just may be a sign that you should refocus on your own core activities.

Your goal : make them better !

Of course, there is also amazing talented and passionate people in those companies who try to change it from the inside… you should definitely be close to them in order to build fruitful relationship with corporates that could also have a huge leverage on your incubator’s activity

Good luck and have fun.

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On a daily basis at CTIC Dakar, we are questioned about our model, how we get funded, who is the “boss”, why incubated companies have to pay us, how did we started, etc.?

To answer few of these questions, I would like, in this article, to discuss the pros and cons of the various forms of governance for technology incubators and accelerators in Africa, using the lense of CTIC Dakar, which is a public-private partnership and non-for-profit organization, aiming at being financially sustainable after 5 years (2 years left, damn !)

Type of support provided

First of all, it is very, very important to distinguish the various form of support provided to the entrepreneurs and set what I mean by “incubator” or “accelerator”. What you aim to do as a strong influence on your overall budget and thus on the ideal governance model for your tech hub. For me, an incubator or accelerator is an organization, non-profit or for profit, which provides a physical place and an intense, hands-on support to entrepreneurs in order to foster their growth. Their first and often only mission is to create sustainable fast growth companies. The quality of the support provided is highly dependent on the quality of the team members and thus this type of organization requires important operating /human resources costs. They generally employ 5 to 10 people plus occasional mentors and consultants and their building has to be large enough to ideally provide individual office spaces to at least 7-10 small companies.

On the other side, other tech hubs like fablabs and coworking spaces have for primary mission to create and animate tech communities and thus their costs structure is mostly made of community management and events’ organization. You can start with a small or medium-size open space and one full time employee along with the hub manager.

Market size and deal flow

Secondly, you have to ask yourself: what is the size of your market as an incubator? I believe that in most sub-Saharan countries except south Africa you don’t have enough high growth companies to sustain a fully private funded model for incubators, no matter what revenue model you use (equity, revenue sharing, etc) except maybe if you only do space rental (no added HR costs).

Moreover, since there is not enough fast growing SMEs at the moment, at least in Senegal, I think that we have to build a pipeline of promising startups by investing a lot of time and resources at very early stages, including at university and school level. We do this a lot at CTIC through various workshops and events, including TEKKI48, a 2 days startup accelerator we launch in various cities in Senegal every 4 months.

Doing this we hope that 1 out of 20 of the projects we support and identify will finally become an interesting startup and enter our programs. We had two beautiful example this year with TongTong.sn, a group buying platform and Genius Family, a company developing financial management software and apps for illiterate shop owners. Both companies started from scratch at CTIC in 2013, got grant funding through one of our public partners, and are now profitable and able to pay around 10 salaries each at the end of the month. The first has more than 100 recurrent customers and the second around 60.

In a nutshell, if you don’t have enough mature SMEs in your country or market, you will for sure need some government or international donor’s money at some point unless you have very strong private investors behind you (case of the amazing MEST in Ghana). The idea here is to do like we do at CTIC, use this money to trigger the engine, grow the pipeline and then generate revenue from your own client companies.

Governance, decision making and innovation

This is obviously the largest drawback of public incubators. If you support entrepreneurs, you absolutely don’t want government people managing the entire thing. However, if you want those people to give you money, they will want to be involved in some way. It is a tricky, very delicate power balance you have to deal with. The way we handle it at CTIC is to have the most relevant of them in the incubator’s management board but to make sure the latter remains headed by the private sector (IT Business association). Other private partners are also strongly represented (the Telco Orange for instance). It is also important to note that none of our international donor partners (World Bank, GIZ, EU) is involved in the management board. So far, we have been able to manage the ambitions of our public and international partners, driving them towards the realization of our own vision and model, but we feel that the pressure is increasing as we gain good results, recognition and TV appearances!

Access to market and finance

Let’s be realistic: In a lot of African countries, Government are relatively powerful compare to the private sector. Thus, the best advantage of having local public and/or private partners involved in a close relationship with your hub is the opening of doors. Indeed, once they believe in your mission and understand the concrete value you provide to help them fulfil their own objectives – which most of the time they have no idea how to reach – they can help you and your startups a lot by involving them in public projects or by providing seed funding for startups. For instance, last year, we secured around USD 150,000 from the Senegal Telecommunications Regulator, directly granted to 8 startups. This type of public or grant funding can be harmful for your startup business model – as it has been largely discuss recently – but I believe that if you couple this money with a business oriented support by an incubator, it works.

Team management & retention

Finally, I believe that the largest drawback of not-having a fully private model is that at some point, if your management team and business developers are entrepreneurial enough – which is what you want in the first place – they will leave after 3 to 5 years to do their own thing. Whereas, if you have a private model, it is either your own baby or you can hope to get some equity in it or at the very least drive it wherever you want. As far CTIC Dakar is concerned, our first Director Omar Cissé left after 3 years – as he always announced – and we were lucky enough to have him succeeded by our very own former business developer Regina Mbodj, who helped us accomplish a very smooth transition.

In summary, there is obviously no one-size-fits-all model for technology incubators. I believe that the markets for purely private funded – and sustainable – incubators is not here yet for most sub-Saharan countries and we have to grasp the opportunities which lie in involving public and international development partners. But again, in the field of technology entrepreneurship in Africa, it is only a matter of leadership and balance of influence.

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A few weeks ago in a small former colonial town north of Senegal called Saint-Louis, Tekki48, a two-day startup event organized by local tech hubs CTIC Dakar and Jokkolabs in partnership with the local University, was launched.

The purpose of the event, designed and created by CTIC Dakar, is to take the best of the StartupWeekend model and adapt some aspects to the needs of local entrepreneurs. This raises the question: Should African tech communities, incubators and accelerators create and brand their own events and programs instead of replicating proven international concepts? Of course there is no easy answer to this question, but I will try to outline a few of the pros and cons associated with each choice.

The Benefits of Localizing Your Tech Event

–        Events like StartupWeekend or accelerator programs like TechStars and Y-Combinator have been designed for startup ecosystems in the US or more precisely for some US tech-savvy cities.  However, when you implement such a program in a different geography or context, you may see that several things do not fit. It could be the stage of the companies supported, their needs in terms of support, the availability of the mentors and investors, the pitching capabilities or the young entrepreneurs, etc.

For instance, after organizing the first StartupWeekend in francophone sub-Saharan Africa in Dakar, and hosting another in Saint-Louis, CTIC decided to stop using its entire team and their resources to deliver this model. Why? Because although we may have been successful in terms of attracting media and stakeholder attention, we did not create startups mature enough to integrate into our acceleration and incubation programs. Furthermore, the governance structure of StartupWeekend stipulated that only one person from the community could serve as the entry point in Senegal, which made it difficult for CTIC to include the event in its strategic plan.

As a result, we started thinking about creating a new event more adapted to our environment. A few months later, we had a “minimum viable product” that we launched in Dakar as the first Tekki 48, a two-day startup accelerator event where companies are selected in advance and the culmination is a combination of the final pitch and several deliverables the teams have to produce during the weekend. These include financial projections, communication materials, a customer base description, an action plan and a business model canvas. For CTIC, Tekki 48 has two core objectives: to raise the awareness of local decision makers of their tech ecosystems, and filter motivated and promising startups. However, Tekki 48 will continually evolve, because as the creators of this event, we don’t have to ask permission to transform it as long as we learn and our ecosystem evolves.

–        Another reason to localize your events and programs is to encourage the natural adoption and acceptance by your tech community and sponsors. For example, using local names, concepts and ideas makes it easier for people to relate to your effort, and reduces the belief that foreign influence is too significant. However, taking this path can be more difficult at the beginning when you have no track record of success. But once one or two of your local events have worked, you start creating a brand that people recognize and belong to – and that’s a terrific victory. In our case, we named our event, Tekki, which means “success” in Wolof, the national language of Senegal.

The Challenges of Localizing Your Tech Event

–        On the other hand, an internationally recognized brand and concept is easier to present and to pitch to partners, especially if you don’t have a long history as an event organizer. It also gives you the time to build the skills of your team by using an existing concept, because you follow the canvas the international organization has developed for you. This helps you get to implementation quickly because you can focus on the logistics, which can be pretty difficult to manage in Africa on a small budget, and pay less attention to the model and program.

–        The second beautiful thing about global models like StartupWeekend is the community and international recognition. Organizing such an event can put your city “on the map”. Even though it’s just an event, it seems sometimes as if a country with no StartupWeekend is a country with no tech ecosystem, so it helps you be visible and build links at a global level. This international community will then help you learn and grow.

In conclusion, I would advise you to carefully think about what your ecosystem and organization need before involving your hub brand, team and partners in large-scale events. I believe that we need many more events in our countries in order to see entrepreneurs blooming everywhere. This includes events like Startup Weekend and barcamps, because they are fast to implement and have a clear value in building communities and raising awareness about entrepreneurship and technologies. But we also need events and support programs precisely adapted to the need of our organizations and ecosystems, and which belong to our communities. Our goal as hubs is to empower people, so let’s empower ourselves first.

NOTE : this article has been co-written with Tayo Akinyemi, Director at Afrilabs, the pan-africain network of incubators and tech hubs – and first published on the afrilabs’ blog – Thanks Tayo !

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