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How a subsistence farmers’ problem led to the launch of Wala, a digital banking platform for Africa

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Tricia

Wala is a digital banking platform for Africa making banking FREE for everyone and completely changes the way consumer’s access, engage with, and use financial products and services.

From accounts, to payments, to insurance, Wala aims to make personal finance easier or more affordable for all. It’s philosophy is different. By working in partnership with banks and other financial services providers, Wala can offer zero-fee and below market rate products to mass market consumers. The Wala platform sits in between banks and customers eliminating many costs thereby creating a more efficient system for everyone. Building a savings culture is imperative! Wala’s number one priority is to protect customers and ensure they get zero-fee banking and affordable financial products so they can get on the path towards financial stability.

TechMoran caught up with Tricia Martinez, Wala’s Co-founder and CEO and this is what she told us.

Tricia

What inspired you to launch Wala? Is Wala a result of your work in Uganda?

My work in Uganda absolutely influenced me to start Wala. I was spending time in Kitgum, Uganda where I had launched a mobile cash transfer solution for subsistence farmers in one of the most underserved areas of the country. We were doing some really incredible and impactful work, but I was conflicted. The women we were providing cash transfers to would receive mobile payments, go to an agent and pay a fee to cash out, and then place that money in cash boxes in their huts. They had no safe place to guard it, to grow it, or create more value from it. Whether a subsistence farmer living in rural Uganda or an Uber driver in Johanessburg, South Africa the problems remain the same- financial services are extremely costly and generally inaccessible due to reasons of inefficiency and distribution.  It was my time in Uganda that I realized banking was the problem, but also the answer. And from here, Wala was born!

Wala team

What have you done before Wala?

Prior to Wala I founded two companies and devoted my time to socially innovative initiatives in areas including microfinance, economic development, and women’s empowerment. My previous work ranges from cash transfer solutions in Sub-Saharan Africa to the development of an investment fund for underserved markets. I received my Masters of Public Policy from the University of Chicago’s Irving B. Harris School with a concentration in Development and Behavioral Economics. It was there that I began learning how small scale improvements could make lasting impacts through methods of financial innovation.

How does it work?

Once a user registers and download the app they can digitally register for a current account. At minimum, a user needs an ID book to register. Users can then open savings accounts. From here, users can deposit and withdraw money through partner ATMs and agents, receive direct deposits and inbound payments, send p2p payments to friends and family in the Wala network, buy airtime and pay bills, and login to check balance, move money between accounts, get insights into spending habits and history.

In the future, users will receive debit cards/prepaid cards to transact directly with merchants, get access to insurance, international payments, loans, and credit all through the Wala mobile platform!

Do you think South Africa is the right market for Wala? Why did you decide to launch in South Africa first?

While consumers throughout every African country need better banking and financial services, we strongly believe that South Africa is the best country for Wala to launch in given the customer base and financial industry.

The most important part of Wala is creating what I like to call a “consumer-driven” financial solution. Everything we do is for consumers and our goal is to provide zero-fee accounts to all Africans so financial empowerment becomes a reality. Over the last 10 months, we have seen a huge increase in our customer base specifically in South Africa. We have almost 1M South Africans who have signed up for a Wala financial community via Facebook and given how quickly that number is growing we want to focus our energy here.

Additionally, South Africa is the financial hub of Africa. Most banks are headquartered in Johannesburg, industry experts reside throughout the country, and the banking infrastructure is developed and very advanced. We need to make sure we are not only close to our partners, but also valuable resources that will help us grow.

What is Wala’s business model?

The beauty of the Wala business model is that we make money when our customers save more money! We work in partnership with banks and other financial services providers to offer free or below market rate products. The Wala platform sits in between banks and customers eliminating many costs thereby creating a more efficient system for everyone.

We don’t generate revenue by charging fees on transactions or cross-selling products. Instead, our partners pay us for bringing assets into their banking system. We built our model this way so that we always stay in line with the needs and financial stability of our users. If they improve their financial lives, Wala succeeds.

Do you have any investors?

Wala is currently backed by angel investors that recognized a massive opportunity to innovate the banking industry throughout emerging markets while also solving a global problem impacting billions of people.

Do you have bank partners?

We are working closely with a number of banks and financial services provider so we can provide zero-fee banking and below market rate financial products to our users.

How is Wala helping to improve users savings culture?

The Wala philosophy is different from most financial companies. Rather than focusing on lending we focus explicitly on savings. There is no shortage of companies that are willing to offer consumers loans and that’s because they can do so at high interest rates that end up costing people an arm and a leg. Loan businesses are very profitable as long as they are run properly and loan businesses that target the poor or people with bad credit can even be predatory, making it worse for the consumer long-term.

Of course there are banks and companies that do provide good loans but we believe financial health starts with something more basic: a bank account. A bank account allows you to safely store your income, grow your savings, and even hold your loan money. Having an account helps you build a financial history, which will allow you get loans at lower interest rates in the future. With Wala, consumers can easily send payments to their community, pay bills, and access other great financial tools. But again, it all starts with a bank account!

Wala CoFounder and Chief of Product, Samer Saab.

Any plans to launch in new markets?

Of course! We plan to expand throughout Africa in the coming years to markets including Nigeria, Uganda, Ghana, Mozambique, Egypt, and many more. Wherever customers are in need of better banking, Wala will be there.

Which services compete with Wala and how is Wala unique from them? How different is Wala from a basic debit card or mobile money account?

Wala is the only company that can provide ZERO-FEE banking. From traditional banking to mobile wallets and payments to loans, most financial products in Africa are transactional-based meaning they charge consumers for any type of transaction. If you use mobile payments with a telecom provider you will incur fees to send money, receive money, hold money, withdrawal money, etc. But with Wala, we cover all fees for you and make the experience convenient through a digital only tool so that you don’t have to deal with the additional financial stress. No more hidden fees. No more long queues. Just Wala.

What have been your biggest challenges so far?

Change in any form is extremely difficult to accomplish and we are pushing boundaries on multiple fronts- banking, technology, policy. Everyday we have a new challenge, but we have an incredible team driving forward every step of the way.

As a financial company, most startup founders would agree with me when I say the greatest challenges are:

  • Acquisition- It takes time to build trust when you are dealing with people’s money. Fintech isn’t like building another social media app, it’s creating solutions for the most important asset in people’s lives- money.
  • Policy- Many regulators are risk averse and implement policy for a reason making it often times difficult to navigate complex systems. It can take a long time to build relationships with regulators and to get them on your side and in the startup world time is our most precious commodity.
  • Fundraising- Even if you have the greatest idea, solution, product, customers, etc. investors always want more especially when you are in underserved markets so you need to figure out how to stay lean and continue to build and grow with limited capital.

 

 

This Kenyan startup is launching the world’s first $0 Smartphone for retailers

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There are things you would want to be free-like smartphones, cars, houses, books and almost everything nice like a handbag, a pair of shoes and several other things we would all want for free.

And for years, several firms have tried to give users free stuff but with hidden charges or on some conditions like putting their users on monthly contracts, or asking them to ‘buy one, get one free’  and several other offers. FreedomPop plays in such by offering a contract-free plan for voice, text and internet to any US number or a FreedomPop app user worldwide.

However, Kenya’s Tanda One, a retail value chain startup is partnering with Google’s Android One to launch the world’s first $0 Smartphone for retailers to help automate millions of retail shops in the country then expand across East and West Africa.

Speaking to TechMoran, Geoffrey Mulei, CEO Tanda One said, “Tanda One smartphone comes preloaded with an app that automates the entire duka. It automates orders from suppliers, manages inventory and enables them vend electronic services to their customers such as lottery tickets, airtime, Kenya power tokens).”

“The phone is absolutely free. There are no hidden charges, no plans , no credit, nothing,” he added. “All for free for the shop owner.”

According to Mulei, Tanda One automates a duka’s supply chain and matches the duka with a cheap and affordable supplier. It then takes a commission from the duka’s supplier. Mulei adds that Tanda One’s goal is to solve Kenya’s mass market supply chain problem as most supply chain networks are either inefficient and unreliable forcing duka owners to source their own inventory, costing them lots of money and time.

Tanda One is something close to Koko Networks which uses KOKO points – located inside neighborhood shops in target cities with interactive touchscreens to enable mass-market consumers learn about, purchase, and take delivery of a wider range of products and services than is typically available from such shops.

KOKO Points handle all payment and supply chain management functions, ensuring the seamless movement of money and goods between suppliers, shopkeepers and customers. The firm’s first product on offer is the SmartCook, a modern cooking solution that competes with traditional cooking fuels on cost, safety and convenience. Tanda One, works similarly but it’s on a free smartphone.

 

 

US-based digital education firm 2U acquires South Africa’s GetSmarter for $103m

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US-based 2U, a digital education platform for colleges and universities is set to acquire South Africa’s GetSmarter for approximately $103 million in a move expected to strengthen its position in the approximately $1.9 trillion global higher education market.Both 2U and GetSmarter focus on delivering high-quality, high-touch digital higher education from world class colleges and universities to unlock a student’s full potential.

According to Christopher “Chip” Paucek, CEO and co-founder of 2U, “With GetSmarter, 2U expects to strengthen its position as a leader in digital education. We also expect to accelerate our growth, extend our global footprint and provide a broader suite of services by matching up more students to the right programs at the right time as they further their professional and personal development.”

GetSmarter’s partners include the University of Cambridge, Harvard University’s strategic online learning initiative, HarvardX, Massachusetts Institute of Technology (MIT), and Africa’s top three universities, University of Cape Town, University of the Witwatersrand and University of Stellenbosch Business School. With over 50,000 students since inception and an 88% average course completion rate, GetSmarter was a right fit for 2U.“In 2U we have found a partner who makes us stronger. They bring deep experience and access to capital that allows us to pursue stellar growth and stand out student outcomes at scale.” said Sam Paddock, CEO and co-founder of GetSmarter. “We look forward to better serving our University partners and their students across the globe.”

Following the closing of the acquisition, GetSmarter will be an independently operating, wholly-owned subsidiary of 2U, based in Cape Town, South Africa. GetSmarter will continue to be operated by its current management team, including its founders, Sam Paddock and Rob Paddock, with GetSmarter co-Founder & CEO, Sam Paddock, remaining as its CEO and reporting to Chip Paucek.

2U will pay approximately $103 million in cash upon closing for all outstanding equity interests in GetSmarter, with up to an additional $20 million in cash payable to the equity holders of GetSmarter upon the achievement of certain financial milestones in calendar year 2017 and 2018.

In addition, 2U will provide certain members of GetSmarter’s senior management team with approximately $9.4 million of restricted stock units in the aggregate, subject to the continued service of such individual to GetSmarter following the closing.

Globally, Edtech is getting so hot with technology seen as the future of education delivery in the next few years. South Africa’s Naspers is also banking heavily on the future of education with the investment into Codecademy and Udemy only time will tell if it will reap out of education as it has from its believe in the internet from its old newspaper days.

How to Buy Bitcoins in Africa

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With bitcoin gaining popularity, value and legitimacy around the world, many believe it could change the game in Africa. Two thirds of the population remain ‘unbanked’ and many more are interested in trading speculatively in bitcoin. Regardless of why you have an interest in the cryptocurrency, first you’ll need to get your hands on some.

So how do you actually buy bitcoin?

This question has lots of answers and the most suitable method for you can change. I’m going to help you learn your options, and make sure you are ready to make the right decision.

Bitcoin in Africa

Every year interest in bitcoin is growing. What started as an experiment is now a viable currency and a great option for investors.

The bitcoin market is less established in Africa compared to countries such as the US or Europe. This means there are fewer options available and less information on how to keep your money safe.

Caution

The history of bitcoin is littered with scandals and security breaches. Exchange platforms have been hacked and companies have stolen users funds.

The bitcoin technology itself is secure, but the companies and third parties managing funds are subject to theft and fraud. This means you need to be very careful when choosing where to buy and store your bitcoins.

Your best bet is to choose companies with a good reputation, and solid security features. Once you have bought your bitcoins, be sure to transfer them to your own wallet.

Considerations

There are many ways to buy bitcoins. The best method for you depends on a few questions.

  • Where do you live?
  • How much bitcoin do you need?
  • How quickly do you want them?
  • What payment methods are available to you?
  • How important is anonymity?

The answers will help you decide the most suitable way to buy bitcoin.

Bitcoin Exchanges

Bitcoin exchanges are the easiest place to buy and sell. You can use many of them just like you would use a regular bank. You’ll pay fees for this service, but it is worth it if you are just starting out with bitcoin.

Many countries have a local bitcoin exchange that residents can use. If not, then there are a few great international companies that make it easy to buy bitcoins from almost anywhere.

International Exchanges – Credit Card / Paypal

The safest way to buy bitcoins is by using the larger international exchange platforms. Because the industry is so unregulated, it is possible for a company to just run away with your money. Reputation is the most important factor when choosing a company to buy bitcoins from.

Credit / Debit Card

Until recently, it was impossible to buy bitcoins with a credit card. People could buy bitcoins, then call the credit card company and ask for a chargeback. As it is difficult for sellers to prove the bitcoins were sent, they would be forced to refund even after the bitcoins were sent.

Luckily for us, a few exchange platforms have solved this problem.

CEX.IO is one of the largest and most trusted international bitcoin exchanges. You can buy, sell, and invest in bitcoin from across the globe, including GBP, which are rarely traded elsewhere. Also you can add your Credit Card in ZAR to your account. You’ll need to verify your identity to set up an account, then you can use not only bitcoin exchange, but also benefit from their affiliate program.

Paypal

Paypal is an extremely convenient way of making online payments. Unfortunately, you cannot buy bitcoin directly with Paypal. It is too risky for the seller (because of the chargeback problem again) and it is actually banned by Paypal. Due to the high risks, bitcoin exchanges, working with the Paypal, have higher transaction fees.

There is a workaround, however. The Virwox (Virtual World Exchange) allows you to buy Second Life Lindens, which can be traded for bitcoins. Second Life Lindens (SLL) are the currency of the game ‘Second Life’. They have more info on their FAQ page.

Local Exchanges (bank transfer)

If you live in South Africa, Nigeria, or Kenya, you may be able to buy bitcoins directly through a bank transfer. This is a very popular method around the world, as it can be cheap and relatively safe.

There are two major players in this market.

  • Luno (used to be BitX)

Luno can so far be used from South Africa, Nigeria and Kenya.

  • Ice3X bitcoin exchange

Ice3X is a South African based company that also runs in Nigeria. For news on bitcoin in South Africa, check out https://www.bitcoinzar.co.za.

Peer-to-peer Trading (all payment methods)

The most universal method of buying bitcoins is peer-to-peer. This makes sense, as bitcoin is a peer-to-peer technology.

When buying bitcoins this way, it is essential to use an escrow service. This is a third party that will act as a mediator to ensure the transaction is successful. By far the most popular choice is a site called Localbitcoins.

Localbitcoins is an online marketplace where bitcoin buyers can meet bitcoin sellers. You can pay with almost any method, and there are no set prices or rules for making transactions. Just go to the site, sign up, find a seller and start buying.

Securing Your Funds

Once you’ve bought your bitcoins, you’ll want to make sure they are safe. The best way to do this is to store them in your own wallet.

Anonymity and Privacy

Many people choose to use bitcoin for privacy reasons. While it’s true that you can maintain anonymity when using bitcoin, the process of buying them can leave you exposed.

Using credit cards and bank transfers with inevitably leave a paper trail of your transactions. If you are worried about this you will want to try one of the more private methods, such as paying with cash.

Keep Up to Date

Just because a method of buying coins works well right now, it doesn’t mean it will last forever. Bitcoin exchanges can get hacked, or new laws can change the way sellers act.

This is especially true in Africa. With lots of new investment and new laws, the bitcoin environment changes quickly. To make sure you are safe and getting the best possible deal, you need to stay up-to-date.

The OPPO A57 is launching this month in Kenya, here is what to anticipate.

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The OPPO A57 was launched in China in November 2016 before making its way to India in February this year. The company already made headlines with its selfie-centric FIs and FI Plus which featured a 16-megapixel selfie camera and it looks like the company wants to continue with the same trend with the launch of the A57.

So what should Kenyan consumers expect? First, the OPPO A57 is clad in a metal unibody design and its home button also doubles as a fingerprint sensor. Available in two color options of gold and rose gold, the phone features a sleek back finish with curved edges.

The OPPO A57 Review,camera,specs.

The Oppo A57 is powered by 1.4GHz octa-core Qualcomm Snapdragon 435 processor and it comes with 3GB of RAM. The phone packs 32GB of internal storage that can be expanded up to 256GB via a micro SD card. As far as the cameras are concerned, the Oppo A57 packs a 13-megapixel primary camera on the rear and a 16-megapixel front shooter for selfies.
The Oppo A57 runs Android 6.0 and is powered by a 2900mAh non removable battery. It measures 149.10 x 72.90 x 7.65 (height x width x thickness) and weigh 147.00 grams.The Oppo A57 features a non-removable 2900mAh battery which easily lasted us a full day on a single charge. Our HD video loop test gave us a runtime of 12 hours and 7 minutes, which is very good. There’s no fast charging, so the battery does a take a fair while to fully charge.

The Oppo A57 is a dual SIM (GSM and GSM) smartphone that accepts Nano-SIM and Nano-SIM. Connectivity options include Wi-Fi, GPS, Bluetooth, USB OTG, FM, 3G and 4G (with support for Band 40 used by some LTE networks in India). Sensors on the phone include Compass Magnetometer, Proximity sensor, Accelerometer, Ambient light sensor and Gyroscope.

 

 

This Zimbabwean energy startup to turn the country’s waste into fuels & energy

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Zimbabwe’s Tawanda Energy, a diversified group operating in the energy, fuels, petrochemicals and related industries in the form of community scale bio-refineries has launched an initiative that will turn the country’s waste into fuels and energy able to power various households in teh country.

The firm says its mission is to be the driving force for social, environmental and economic benefit by producing gaseous and liquid Climate – Neutral Energy Carriers. The project aims to accelerate the development and introduction of climate – neutral fuels into the Zimbabwean transport sector.

Tawanda Energy says each community will benefit from the waste they generate through the conversion of the waste water they produce to energy in the form of electricity and pure diesel and petrol.

Based in Mutare Zimbabwe, the firm says it has been given the permission to use the city’s three waste water treatment plants for the next 25 years to make bio-methane which will be bottled and used for cooking and biodiesel for fuels.

The concept is local energy independence for communities whereby communities become self sufficient in renewable fuels by using the wastes and residues they produce. It would also reduce greenhouse gas emissions and the carbon footprint for the community. This is a new concept that we want to adopt in Zimbabwe,” said Tawanda Chitiyo.

“Efficient utilisation of this resource could be important to our country, where there is a relatively limited availability of arable land to grow plants (sugarcane) bio-fuels. Municipal Sewage Waste  can be processed in a number of ways including gasification, fermentation and digestion to biogas.”

A bio-refinery is a facility that integrates biomass conversion processes power, heat and value-added chemicals from biomass (municipal sewer waste). The bio-refinery concept is analogous to today’s petroleum refinery, which produce multiple fuels and products from petroleum.

The objective of bio-refineries is to optimise the use of resources, and minimise wastes, thereby maximising benefits and profitability. The term bio-refinery covers the concept of integrating production of bio-fuels with higher value chemicals and commodities, as well as energy.

The government through the Zimbabwe Energy Regulatory Authority has encouraged the firm and in partnership with the Harare Institute of Technology, the firm plans to produce a superior fuel, safely and professionally and also a product that will be easily accepted by the community at large.

“Our ambition is to make Zimbabwe a petrol and diesel fuel independant country in the next 5 – 10 years utilising renewable sources using various feedstocks from sewage waste to coal and methane,” concluded Chitiyo.

 

How to land that job of your dreams at Safaricom

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Bob Collymore, CEO Safaricom

Safaricom, the biggest telecom’s firm in East and Central Africa, with over 26.6 million subscribers, providing over 200,000 touch points for its customers and offering over 100 different products under its portfolio with annual revenues in excess of Kshs 150 Billion is one of the best firms for anyone to work for, especially those that love job security.

The firm pioneered commercial mobile money transfer globally through M-PESA in 2007 and ten years later, the service is one of its kind anywhere in the world serving over 24 million customers and over 114,000 M-PESA Agent outlets countrywide. TechMoran caught up with the firm’s acting HR boss to see how and who it hires to stay innovative and retain its culture.

TechMoran talked to Joseph Ogutu, the Director Strategy & Innovation and Ag, Director Human Resources. Ogutu says the firm carefully designs interview process that is competency-based this means that as the firm seeks to understand a candidate’s abilities based on a set of role-specific behavioral and technical competencies, as well based on how they have performed in these competencies in the past. We believe that the past is a good predictor of future performance.

Here is what Ogutu told us.


1.How do you as the HR lead, ascertain a candidate’s future performance in a one or two-hour interview?

It’s indeed hard to be 100% certain about a candidate’s future performance from an interview process. The candidate could have the right technical abilities, but the specific environment might not be the right one-thus making it difficult for them to thrive once on boarded. To increase the chances of best-fit candidate for a job, we do conduct multiple level interviews- and all the feedback is collated into a single report. For Senior positions, we also conduct some standard psychometrics tests for the finalist candidates- this help us to understand their development gaps in relation to the type of job that they applied for.


2. How are you dealing with millennials and their need to work remotely than the traditional 9.5 office work schedule?

 We have flexible working policy in place- meaning one can structure there working pattern in agreement with their supervisor. We focus on the agreed deliverables as opposed to physical presence. Given that we are Technology based Company, staff can work remotely from various locations –unless required by the nature of job to be physically present.

3. With employees from various fields and regions of the world working in various departments. How do you maintain a uniform company culture?

We have common communication platforms including a daily briefing newsletter from the PR & Communications department. As a company we also subscribe to a common value system that is around 3 key values- Speed, Simplicity and Trust. All staff are expected embed this values in their everyday activities and interactions.

4. Last year tech firm Infosys ‘released’ 9000 employees due to automation. Do you think routine lower end jobs will vanish at Safaricom too?

Customers are key to the success of our business, and we are conscious that Technology or automation can never replace the impact of human interaction or touch.

JOBVINE GLOBAL launches in Kenya as recruitment moves away from job boards

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South Africa’s JOBVINE GLOBAL has launched in Kenya after closing a Series A funding round for its global rollout plan.

Founded by Joubert Botha who also runs MoneyVine, Karma Digital Media and HashtagRadio in 2009, Jobvine is an online recruitment platform that connects businesses, recruiters and job seekers in South Africa, Nigeria and now Kenya.

JobVine Nigeria was launched in January 2017 and today’s launch in Kenya expands JOBVINE GLOBAL into Africa’s most lucrative markets. However, several recruitment firms are moving away from job board model where they only provide platforms for job ads, job search and CV placement and engaging in headhunting and recruitment itself.

Job boards are so old school that anyone can launch a site without any operations in a country and charge a number of premium clients to do job posting for clients, CV placement for job seekers and select a few CVs from among them then send to a client remotely.

The new age firm needs more than those online aptitude tests, CV selection and talent identification. Firms in the new age job market require recruitment firms to do more than just scream millions of CVs to narrow done on two impressive persons.

Though the marketplace model is sweet, the human factor is important in recruitment and no AI or algorithms can replace that.

JOBVINE says it’s a recruitment based website, where job seekers can scan through a selection of employment opportunities placed through recruitment agencies or individual companies. Companies and recruiters can now advertise their jobs for free on the site and manage their entire Job advertising service through JOBVINE.

These might work for recruiters who are looking for just anybody to fill a position but more established firms are looking for specific persons who are not hunting for jobs and uploading their CVs on job boards for recruiters.

Looking at the Untimely Death of BookNow, Kenya’s Uber for Buses

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BookNow, a bus booking platform was founded in September of 2013 and headquartered in Nairobi – Kenya, and was the first and only bus travel market place for East Africa.

BookNow aimed to aggregate multiple bus companies in East Africa in a move to help users to easily search for and book buses to their destinations via their mobile phones. BookNow aimed to take this time-wasting and offline service totally online and it was a noble move.

88mph saw the move as noble too and together with various investors such as Mahendra K.D. Shah, Ravi Shah, Ritesh Doshi among others put in $75,000 in July 2014. Confirming to TechMoran on the funding, Francis Gesora, Co-Founder and CEO of BookNow said, “We have raised $75,000 from angel investors and the bulk of this is going to be used on hiring customer support staff and to accelerating growth and also improve our product offering.”

Earlier the firm had raised $15,000 from 88mph alone putting the investments into the the firm at $90,000. Withn the cash, the firm embarked on signing up as many bus companies as possible to allow its users get as much information about various trips and the charges from the various players in the market. They had information about bus travel, ticket booking and how to make payments, print your receipts and locate the bus before the journey commenced.

The firm also marketed itself as a secure marketplace enabling bus travellers around East Africa to view bus schedules, choose their best bus company, select seat, place their bookings and plan their trips anywhere in Kenya, Uganda or Tanzania.

What users needed to do was simply visit the site, search for buses that ply the route they plan to travel and by the date of travel. There were more than fifty bus operators in East Africa at that time and each operator had their own routes, fares and departure and expected arrival times as well as amenities provided en-route.

BookNow also had special packages for groups or corporates willing to book a bus to a different destination than normal especially during company functions such as weddings’ burials. competitions among others. With the cash, the firm set up a 24/7 contact center attending to customers via email, voice calls among others. Payments were done via mobile money during a reservations window. The passenger then gets his or her tickets via their mobile phones then they produce the message at the bus for verification before boarding.

Just why do you think caused the death of BookNow?

Software online

BookNow didn’t totally die. Though the website is still online, the company behind the software has gone into oblivion after being heavily hit by a failure to raise a follow-on funding to stay afloat. The platform’s front-end reservation engine works but no one is sure if bus companies still get the SMS reservation alerts or they have ignored categorically decided to ignore such reservations and there is no follow up or conversion of a reservation into a real booking and payment.

This makes a direct call to a bus company more effective. As a marketplace, BookNow can be used by one to search for available bus operators but no one is going to pay for this; therefore the business of BookNow is essentially dead even though the software is accessible online and 30 percent functional.

Dependency on data

Another reason and one of the biggest causes of its ineffectiveness is the dependency on data for both the bus staff and passengers and data was expensive then and there was no added value from book now apart from the promise of filling up bus seats.

Most of Kenya’s Bus booking industry is still offline because of a poor relationship between bus staff who are mostly semi-educated and the developer community which has a savior syndrome. Most developers see a problem and think of saving the industry than helping stakeholders cut costs, save time and become effective. A USSD platform would have come in handy.

Cash-based economy

To earn revenue from BookNow, the firm had to charge a commission on every booking. This means, bus operators had to hike the fares or lose some of the money in commission which they were not ready to. Commission scared many away from fully going online. The need for cash to pay touts, loaders and bribe police also makes the transport system a cash sector as its harder to pay such bribes or take home a loot if all the money is paid into a company account or an M-Pesa Pay Bill account; thereby making it hard for BookNow to really take over the whole passenger on-boarding process.

Bus operators are less interested in such sector reforms because of lack of time, fear of scrutiny by tax agencies and many of them in advanced ages and are rigid to change.  System breaches make automation a challenge to many  family owned businesses.

Advent of Lipa Na M-Pesa

The advent of Lipa Na M-Pesa for merchants opened a door for bus operators to do their own online ticket booking via their social media pages and websites minus relying on a third-party providers such as BookNow who needed to be paid a commission.

These buses also need cash to pay for fuel, bribe the police, buy stuff on the way and even do minor repairs and leaks which might occur on the road. by relying heavily on a cashless BookNow, most of these operations would be a nightmare; this led to slow and to almost zero adoption.

As the first bus booking platform in the region, BookNow aimed to avoid the congestion and commotion associated with last-minute bus bookings in the region by providing travellers with a pre-booking option but most of the bus operators profit from the commotion and chaos associated with bus booking.

Profit from chaos

It’s easier for bus operators to set up such an online system. However, bus operators do rely on goons and unemployed touts to fill their seats for their major trips. The chaotic touts force some of the gullible passengers to take a bus they have never heard of or one they never planned to travel with in the first place. By introducing such a system, bus operators think they would take a long time to fill their buses and they will have fewer trips a day hence reducing their revenues.

Read more about other startup deaths here.

Accommodation booking site SleepOut goes to sleep and it might be for good

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Launched in Kenya in May 2012, SleepOut.com was an accommodation booking site focused on Africa before Airbnb became known and commonplace on the continent.

The Kenyan-founded started was quickly spreading to other emerging markets and this made it to move its HQ to Mauritius in March 2014. It had boasted of  connecting thousands of guests and willing hosts to the tune of 150,ooo visitors monthly, had over 1,000 ”SleepOuts” in Kenya and had signed up over 500 properties throughout East Africa while still in BETA in April 2013.

In October the following year, SleepOut was declared winner of the  2014 Startup Battle of the Cities (SBOC) at IdeaLab! – The Founders’ Conference in Germany. SleepOut had castles, rustic holiday homes, italian villas, 5-star resorts and floating cabins and a year later, it was handling over 5,000 accommodation booking requests per month and over 150,000 visitors on average in Kenya alone.

SleepOut CEO and co-founder, Johann Jenson, an ex-UN staff member told TechMoran at that time that the most exciting feature of SleepOut.com is the all-star team of entrepreneurs that were both passionate about the travel industry and African tech comprising of the then CTO Paul Schwarz, a Zimbabwean software engineer with years of experience in the hospitality industry.

168843_395956997134117_1451596925_nIn May 2013, SleepOut had raised $200K to expand across Africa and Middle East. With such a start, no one would know the firm would go under a year later even with support from the Mauritius Investment Board. SleepOut had also launched an online magazine NOMAD and was among winners of PIVOT 2013.

What would have gone wrong?

Before we could ask ourselves what would have gone wrong, it’s better to know where and how SleepOut started.

According to Johann, he built Lamu.org in 2011 as a pilot project working closely with holiday home owners and hotel owners on Lamu Island, Kenya.

“At the time it was nearly impossible to find good value accommodation on Lamu Island. To add to this dilemma, pricing for many of the commercial properties was not consistent with the low occupancy which sometimes hovered around 25%,” he told TechMoran in an earlier interview.

Johann built a simple concept to place all the island’s accommodation options on a web platform and connect hosts with empty beds and potential guests looking for great deals. Within 6 months he says Lamu.org was getting great traction and while still at his UN job,  Johann got a few partners on board and began listing new accommodation throughout Kenya and relaunched the platform as SleepOut.com.

At the time the biggest challenges was building intelligent accommodation booking software in Kenya as it required a great deal of attention to detail and working closely with both hosts and guests to get the system right.

“In addition to drawing up the right specs, designing awesome software is expensive and in an industry as competitive as travel, you need to get it right,” he told TechMoran. “Our first goal was to build a product that we would use when travelling.”

Johann wasn’t building the platform for strangers. He himself is an obsessive traveller and has visited over 60 countries over the past 10 years therefore he was SleepOut’s customer number one booking “SleepOuts” and testing the platform.  So with SleepOut 2.0, he aimed at serving both  Africa and the middle East but there were drawbacks.

“The biggest drawbacks to scaling a startup in Kenya is 1) access to basic services such as payment gateways or reliable internet and power; 2) funding opportunities and 3) world-class software engineers,” he told TechMoran. “That being said, all of the above are quickly improving and there are several business opportunities which are uniquely Kenyan including access to unsaturated e-commerce markets, mobile payments, affordable skilled labour, low costs of living and a friendly and hospitable culture of customer service.”

Things didn’t seem to improve for SleepOut as by mid last year, operations at the firm were grounded and customers couldn’t get any support with some of them claiming calls to the firm went unanswered. Johann is now the head of Digital Customer Experience at Hilti and though the site is still online, a lot of funding would be needed to switch on the lights and assemble an A-team to run it.

Johann hasn’t responded to TechMoran’s requests yet and he might not but sources close to the firm say it run out of funds couldn’t sustain its operations. TechMoran is not sure if the firm was revenue positive but even if it was, the closure means the revenues weren’t enough to keep it afloat.

The expansion on Airbnb was also another major blow to SleepOut’s growth and success and though it was focused on Africa and the middle East, it would never have raised enough cash to effectively compete with Airbnb. Others think the firm scaled so fast so quickly. Closing shop is not the end of business but might open a bigger door to more opportunities and the lessons are never forgotten.

For startups in Africa to survive, the tech ecosystem will need to have more than just angel investors. It’s high time institutional investors, VCs and everyone else backed sensible startups such as SleepOut to stay afloat, make money and even inspire others to remain tenacious even during terrible times. Sister site EatOut remains strong and has made acquisitions across East Africa. EatOut is also announcing a massive funding round soon.

In the hotel booking space, Booking.com and JumiaTravel dominate the scene but Mark Essien’s Hotels.ng is set to launch a Kenyan arm to take them on.

Liquid Telecom rolls out IPv6 in Kenya to beef up user security ahead of 2017 deadline

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Outdated in most markets and set to run out in 2017, IPv4 addresses are still in wide use in Africa even though they trigger additional Internet security issues, and make it increasingly difficult and more expensive for networks to add new devices and users to their networks,

To encourage the uptake of newer and safer Internet Protocol version six (IPv6) across the continent, Liquid Telecom Kenya is rolling out IPv6 addresses to all its customers in Kenya, and Zimbabwe, then across its other markets in Africa.

“IPv6 has been rolled out seamlessly to our home user customers and we are working with our business customers to help them exploit this technology on their office networks to better harness ICT to achieve their business goals,” said Ben Roberts, CEO of Liquid Telecom Kenya.

Liquid Telecom sees the transition to IPv6 as urgent and mandatory for firms; as IPv6 will enable a whole new ranges of technology by facilitating the Internet of Things with end-to-end connections for devices interconnecting everything from kitchen appliances to automobiles.

Compared to UPv4, IPv6 has limitless IP addresses, at 2 to the power of 128 addresses (340 trillion trillion trillion): that is more addresses than there are cells in every human body on the planet and more than Africa’s growing population with Kenya alone expected to hit 62 million in 2030.

“We are almost eating into the last block of 16 million addresses of the IPv4 space that the regional internet registry for Africa, (AFRINIC) has available.  This means we are soon entering a new phase where getting IPv4 addresses will become far more difficult and eventually impossible – there won’t be any more to give. So it is important that ISPs start to deploy IPv6,” said Andrew Alston, Liquid Telecom Group Head of IP strategy.

Designed by Vint Cerf and Robert Kahn in 1981, IPv4 has just 4 billion IPv4 addresses, far less than the global growth in the number of devices which saw the world start to run out of IPv4 addresses, initially in 2011, in Asia, and then in Europe in 2012, Latin America in 2014, and last year in North America.

With a presence in 12 markets across Africa, Liquid Telecom is extending this roll out to the rest of the markets after Kenya and Zimbabwe commending the two countries for 2X uptake of  IPv6.

However, Liquid Telecom is not working alone to increase the adoption of IPv6, AfriNIC, Africa’s Regional Internet Registry has been working with governments, universities and corporations to drive up the rate of deployment, with the allocation of Ipv6 addresses to providers proceeding as expected, even though few providers are deploying them.

 

 

Don’t Cry for Ghafla!

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Sam Majani IMG HumanIPO
Sam Majani IMG HumanIPO

A family is having a conversation after dinner. On national TV a respected business reporter is interviewing an octopus-like business woman. Confused, Tim, a nine year old boy asks the dad what a socialite really is. But before the dad could answer, Tim’s mother, a fashion designer and business woman interjects.

“Son, a socialite is a classy model who is paid to attend events or create hype about products. She’s an influencer. Her presence gives weight and colour to whatever boring event it would have been,” her mom says.

Tim nods his head but prety much unconvinced turns to his dad, implying his mum has missed something in her answer.

Blame all that on one Uncle Chim, a self-proclaimed most-hated man in showbiz and Ghafla Kenya’s huge gossip king until his exit to PQ’s Mpasho. Chim wrote half of Ghafla and had its old testament at one time blocked to students in various local universities and even a number of family-inclined advertisers pulled out.

Not relenting, Baba Ghafla, Chim and the then Ghafla team brought several people’s lives to a standstill and as well made others shine. The most recent was when one radio presenter was dumped by her actor boyfriend, she was pregnant and low and in need of love. Chim blew the lid and eyeballs came online in droves reading. Some sympathetic, some jealous while the rest were too young to understand the magnitude, mostly just confused until deadbeat dad came on scene.

Chim’s altar had more touched and blessed than it could doom. As he ministered, his faithfuls gave more. More tips, more stories, more semi nude photos and more gossip and he also grew and grew. The socialites grew, Ghafla amassed traffic to millions of uniques, clients came in droves, more were even attracted by it’s cheap price point then something happened.

Money came calling.

Ghafla-Radio Africa in the good days!
Ghafla-Radio Africa in the good days!

South Africa’s Times Group bought nearly all of Radio Africa Group which owns Kiss 100, Classic 105, Radio Jambo, X FM, East FM, Relax FM, The Star newspaper and Kiss Television and almost every youth friendly FM station and other media properties in East Africa. PQ and crew got even hungrier.  They began courting Trinc Media and Ghafla. Having them at their premises for shows to maintain that family feel.  Trinc Media which was running various social media accounts for Radio Africa presenters and a couple of other corporates. The money had to be shared and Trinc was bought. The real price and stake of the social media outfit built at Sam Gichuru’s Nailab.

No one covered the story apart from our friends at the dreaded Kahawatungu and another one here. Kahawatungu has more info on the media itself than the paid reporters do. But it could have been vegetables had someone not messed up with Jackal News founder.

Now after acquiring 40% Trinc Media for just Ksh 3 million and PQ buying himself  20% according to reports, Radio Africa’s wise men went for Ghafla but Ghafla wasn’t an orphan as had investors with a significant stake who also believed in its potential. The sale didn’t go through. Ghafla says it would make all the marked price in just one year. And it was making some money and it still does today even though it looks like a mosaic of billboards cluttered together.

According to estimates the Gossip industry is worth $3 billion annually. Baba Ghafla knew this already and was the defacto king while other entertainment bloggers were sleeping on the job or too smart like Daily Post’s Tim Obare hidden from the public eye and not interested in advertiser money which comes with meetings and deliverables and takes several months to close and finally have the payments.

As Niaje died slowly (full story here today or and ressurected here), there were thousands of gossip sites creeping into the space. ENews was amassing some traffic, so was Nairobi Gossip, Buzz Kenya and just about everyone. As local tech companies still court print media and TV, tech bloggers were quitting tech to do something more lucrative. Gossip was huge. From the days of Grace Kerongo’s Hotsecret’s, the Gossip industry was growing at drop it like hot speed. The major problem most of the publishers were print. Star had (have) a brilliant entertainment section it ran, so was Zuqka then Pulse.

And as things were hitting up, Standard Group launched The Nairobian, then Aga Khan’s Nation Media Group followed with Nairobi News (RIP), but trying to go clean, away from the corruption in town and at his NMG campus itself, NMG’s Nairobi News tried to go after the heart of the reader with human interest stories but in a few weeks after launching it didn’t make any business sense and the Aga Khan’s money ought to be clean anyway. Nairobi News was killed.

FAREWELL-2-528x270The clean news thinking was also getting out of hand and got even worse with the launch of an evening news outfit called X-News (no relation to X FM). MediaMax’s The People also hired an old newspaper general to have a worthy second coming as a free daily newspaper and real saviour for the matatu loving Nairobians.

With all this developments, Radio Africa Group couldn’t be stopped. The group understood one thing. Gossip sales. It had the evidence and not just dry data from an international firm. It’s run lucrative entertainment/ gossip morning radio shows raking in millions monthly from advertisers.

Its appetite grew even bigger when Nairobi Now was killed before anyone could buy a piece.  Radio Africa Group’s huge obstacle-some guy called Sam Majani needed crushing. Majani, who like most entreprenuers, with no MBA became an easy targe. Radio Africa Group needed to move fast to save themselves the earlier embarrassment of failing to buy him out and probably teach him a lesson.

With just a little history for having founded a site for Kenyan music lyrics dubbed Kenyan Lyrics and dropping out of university, Majani was as vulnerable as vegetables and to some of his evangelist reporters, there salaries were their business. Their employment was their businesses and if they could get a better deal why not!

One meeting, the second and Radio Africa had its plan hatched. Get all those crazy noisemakers from top blogs, of course beginning with Ghafla, quickly customise a WordPress newspaper theme, pay them for tips, put them in great office with beautiful computers and women and even pay them more, launch a site invest in radio airtime, promise readers new iPhones and go out get advertisers as fast as possible promising them a 5-in-1 package of Print, Radio, TV, Social media and online before the first batch of reporters move on to start their own gossip sites.

And boom, Ghafla was touched and some of the writers and social media guys left. Some had already joined ad agencies for their social media prowess. Chim and his small crowd of elders left to start a new Ghafla clone for Radio Africa dubbed Mpasho which is first gaining traffic.

Though Ghafla says he is not moved with MPasho, there have been improvements since they launched. Each is struggling to break more news and have all the exclusives and inside the mind of the Ghafla CEO, quality content and SEO are still king and he still has the eyeballs.

Speaking to TechMoran in a mood only Ft: Kendrick Lamar’s song The City can descibe, Sam Majani, Ghafla CEO and founder said, “Ghafla has been rigged to survive any onslaught. Anyone in the company is replaceable, even me. Cabu Gah came in for Chim and I have Sue Watiri, Philip Etemesi just in case. Turning hiring into a process has been the key. You need to know what you’re looking for in people and how exactly to get it repeatedly.”

Radio Africa’s Mpasho and all the blogs tell us only one thing.  A whole generation has been converted. Kenyans will take their two or three socialites as attention seekers but overnight an industry is growing. Businesses will fuel the gossip blogs as is everywhere. Now worth $3 billion, the global Gossip industry is here to stay. Even without investor money such bogs will always have traffic and online advertisers want eyeballs not a nice family website with two clicks.

Gossip sells.

Mbugua Njihia
Mbugua Njihia

Mbugua Njihia, CEO Symbiotic, a mobile VAS firm based in Kenya told TechMoran, “Gossip has been the mainstay of human life since the days of old. With the drudgery that is the rat race humanity needs ways to take its mind of things and think or look at “other” people…a different reality. Hence porn, alcohol and gossip has a ready clientele. Think of Machakos “Airport” and the publications that move in the thousands at Ksh 20 printed on barely held together paper that can find easy use as an tissue paper thereafter; the headlines are ridiculous and some stories borderline unbelievable. You will pick a copy knowing full well it is rubbish, but hey…”

Majani agrees.

“Yes it’s true. The market expectation for an entertainment publication is to provide gossip. We are the supply fulfilling the demand. I cannot divulge what our biggest threat is. All I can say is it doesn’t exist yet. Who has anything close to Ghafla’s 1.4 million uniques, 10 million pageviews?”

Ghafla’s new high priest Gabuh Cah with several awards for his work is taking the site to where Majani has always dreamt of. Taking us back into history  of what Prezzo did to Caro Mutoko and Larry Madowo date some 19 year old socialite. It’s all fantasy though but it’s sticking up. As usual, both Ghafla and Mpasho have listicles are shared by both Ghafla, Mpasho, Nairobiwire and another outfit dubbed Enews Kenya.

Don’t get bored of the lists, just yet.

According to a report by the Wired, “Lists are everywhere. They’re the bread and butter of sites like Cracked and BuzzFeed, and regular content or sporadic filler at dozens more. (Yes, even WIRED.) From the multimedia gallery to the humble top 10, list-format articles — listicles — are rapidly becoming the lingua franca of new-media journalism.

They’ve met with no end of resistance from the old guard, cantankerous readers and old-school journalists convinced that listicles (and their admittedly unfortunate portmanteau) are rotting our brains, destroying our attention spans, and generally contributing to the decay of all that is right and good. Listicles have been picked apart, analyzed, attacked, explained, and defended.

Ghafla knows that with lists you’ll spend more time on the site, curious to see the next semi-nude photo of a socialite. The new media firm has also learnt to promote its content on social media and as well share it almost around the clock to populate your social media timelines so can’t avoid them.

Ghafla has also refused to remain a one hit wonder like the majority of musicians the new media startup writes about. The startup firm has launched Duwaa, a local social media and tech site, Tambaa a travel news portal, Mwalii, a relationship advice site and a MachoMoran killer and he’s trying his hand in business reporting. He understands the technology, has had some experience building his following on social media and pulling readers with misleading headlines. The writers he had, some of whom are at Mpasho might be a little competition but Ghafla seems to have something more for readers who flock the site everyday.

19-year-old architecture student at Nairobi Institute of Technology, Joe Karani Mpasho's first iPhone 6 winner with Carol Mutoko (IMG credits The STAR)
19-year-old architecture student at Nairobi Institute of Technology, Joe Karani Mpasho’s first iPhone 6 winner with Carol Mutoko (IMG credits The STAR)

Wondering why you shouldn’t cry for Ghafla?

Like Nairobi’s clubs and restaurants sitting next to each other and offering the same foods, the sites will co-exist and no one cares at the moment who will outlive the rest. Readers will flock one site then go to the other and media buyers don’t care which site they visited first before the other.

Its all about traffic and at the end of the day, who has more eyeballs wins. Online advertisers such as telcos, beer companies, cosmetic firms, dating sites, and even professional mentors and churches want eyeballs for their products. Daily Post, Ghafla, Mpasho, Nairobiwire, Nairobigossip among others will give them the numbers they need. Traffic is what feeds advertising and even though Kenyans might think there are too many blogs or new media companies, the Kenyan advertising market is way too young and unserious for any tangible business.

“The advertising market has to be big enough with enough being spent online by advertisers/brands in Kenya. Many still spend on billboard, TV stations and radio vs online. Online is 1-2%.  Needs to be closer to 5-10%. Brands have to know there are enough engaged and worthwhile users in Kenya to get a return on investment on their advertising,” says Mbwana Alliy- Managing Partner, Savannah Fund.

1908241_477586889031517_251499810_nGhafla, Mpasho and co. might be all smiles looking at Silicon Valley new media firms such as BuzzFeed raising millions with their GIFs. It tempting for them to think this might trickle down to Africa and bring fortunes in form of investor funding or advertising. However, experts this is a killer deception for anyone this side of the world.

“When you do the math, is the audience big enough for Kenya alone? Comparing with BuzzFeed when the context is different doesn’t help,  classic case of translating or cloning a venture without thinking about the Africa implications. Different business model for Africa might work e.g. Selling tickets etc. But must do the math on the business model. Not assume it’s BuzzFeed for Kenya and hence is bankable.”

Sam Gichuru, CEO Nailab
Sam Gichuru, CEO Nailab

Sam Gichuru, CEO and co-founder at Nailab, where Majani began his lyrics site before he got an investment from 88mph to launch Ghafla was unwilling to comment or be associated with Ghafla.

Tim is not done yet.

“Honestly Dad,” he calls out, “Who were the three big socialites in the 90’s? I can’t see them on any blogs?”

Cabu Gah has to publish the list just before Tim refreshes Ghafla.co.ke on his phone.

 

 

The Worrying State of Kenya’s Startup Ecosystem

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IMG:Innovationpop.com
IMG:Innovationpop.com
IMG:Innovationpop.com

Flash backwards. The year is 2007. Kenya is the premier country, globally to successfully pilot and launch mobile money transfers via (Vodacom) Safaricom’s M-PESA. This could be probably due to the failure of courier services, lack of access to banking services by folks in rural areas or due to the laxity banking institutions or courier service provdiers. M-PESA, build by British engineers from Vodacom PLC hits international headlines as a Kenyan innovation.

Money transfer & crisis reporting

And then Christmas comes; everyone says it’s time to re-unite with family and friends and it is a different kind of Christmas as it’s an elections year and everyone does their best. They turn up to vote in masses hoping to change their lives. Food prices are too high, so are prices for just about everything.

However, the unexpected happens, the once peaceful nation turns into chaos. Those who were once friend begin to fight, neighbours turn against each other and a full blown calamity ensues across the nation. Chaos, violence, fires, gang rape and murder and just about any gloomy evil happens. Neighbors turn against each other and it turns even uglier and cruel as friends hack each other to death with hacksaws and axes and machetes.

Amidst this bloodshed, a group of volunteers unite to start Ushahidi, to help report and map this chaos anonymously via mobile phones. And as voice ensued, so did the tenacity of the free agents reporting crimes in their areas. Ushahidi grew bigger and bigger. These gave birth to a community.

Community or marketplace

That community is what grew into iHub, a space for developers/techies, investors and industry stakeholders, who it seems, helped divert international media’s attention from domestic violence to the new crop of youth coding all day on computers. Ushahidi in the meantime, had grown to become a global tool mapping crises across the world.

And at iHub a new idea was born. Two young guys saw it better to incubate real businesses and instead of building a networking community of techies, stakeholders and investors launched Nailab, just next door to iHub.  Both are still friends were heavily depended on grants when they began but at the moment have devised various business models.

But as the iHub community grew, a new arm was born out of the need to incubate mobile startups. Mobile was the future of Africa and they were right, M:lab East Africa, the mobile startup incubator has seen a number of startups pass through its doors through its various training programs and help from various foundations and grants from both corporate firms and non-profits.

One of its largest startup conference and competition, Pivot East, has seen over 25 companies raises millions of shillings and expand globally. Such companies include KopoKopo, Eat Out, SleepOut among others.

iHub also instrumental for the birth of startup competitions outside its walls. One reputable and as well controversial was the ICT Board’s Tandaa Grants which saw some entrepreneurs win grants for their business, some of which died at idea stage and some of which never existed apart from the name and PowerPoint pitch decks. Luckily, a few others have gone to be as big as EatOut.

Y-Combinator Style

iHub was behind ipo48, a 48 hour startup pitching event that saw entrepreneurs make teams, conceptualize a business, develop and launch it in 48 hours and raise seed funding.

The ipo48 beneficiaries winners included Sematime (Tusqee Systems) a school SMS service for parents to track their kids performance and schools to communicate with parents; 6Degrees(Binary Science) a cloud phone contact back up service (which could have been acquired by Safaricom which rather launched its own service); PesaTalk, a web financial news startup since shut down; Ghafla, an entertainment site that grew out of KenyanLyrics.com-then a Rap Genius of Kenya and today’s Kenya’s top entertainment and gossip site and Futaa.com a web football news startup.

This lot made 88mph’s first cohort in its accelerator programme and then everyone knew they can raise millions with their web and mobile app. Youths took to Php, Django, Java, Android, HTML5 and others turned up with laughable WordPress and Joomla sites at hackathons expecting to win real cash and change their lives. We don’t blame them, they were all green then and competitions were the in-thing with fast internet in town, free coffee and sandwiches available during the day and pizza at noon and free beer and spirits to unwind in the evening.

No one had told this kids how firms like Cellulant began and grew. They probably had never had of Africa Online nor Wananchi Group. The kids were too blind of Vervaint Consulting, the firm behind PesaPal and TicketSasa. They knew little about Seven Seas Technologies, Craft Silicon, Africa’s Talking and Wananchi Group and others like True African and Mode and Movas Group.

Prize money, not entrepreneurship was the driving force. The washrooms were full with guys and girls practicing their pitches before mirrors and from event to event and campus to campus, you would see the same faces, same ideas, same hoods, with dirty stickers on their laptops smiling, others praying for lady luck.

Then down across the street another hub launched called GrowthHub, with an interest in social entrepreneurs focused on education, women, energy and agriculture. Then Strathmore University opened doors to its iLab Africa and BizLab, and every student knew what building an app meant. Cash in the bank and trips with corporate firms as a testimony or ambassador to preach to others to launch startups. Then Safaricom Academy opened doors at the same university. Jomo Kenyatta University of Science and Technology also entered the bandwagon with its own tech expos and recently C4DLabs at the University of Nairobi.

Quietly, Savannah Fund launched to accelerate African startups with a $25k seed fund for a 15% equity and at first guys in the tech scene thought it was iHub’s counter of 88mph, which had reportedly ‘used’ iHub to launch in Kenya and later ‘ignored’ them. However, Mbwana Alliy strongly declared they were a pan-African fund preaching tough love for African startups and were not just a Kenyan ‘Silicon Savannah’ fund.

Ambitious projects and competitions

Long before them, government technocrats were planning a tech city dubbed Konza Technological City to bring Silicon Valley to Kenya. It was both brilliant and laughable. Brilliant because we had just had fiber cables and the internet seemed underutilized and laughable because they didn’t know how Silicon Valley began.

And there was DEMO Africa and every startup at Pivot East wanted to be at DEMO Africa too.

And so much happened in between, corporate firms didn’t want to be left behind. Phone manufacturers brought in their phones, and so were big launch parties and partnership of things that never happened. Then there was something like Google Fibre in Nairobi, a nearly free-wifi service which needed just one last push to reach everyone in the city and IBM launched its Watson and Panasonic did a similar thing. And everyone took to Twitter and Facebook against Nigeria and South Africa. And even at events hype just build up like shit and snowballed to the mainstream media and the international media caught it too. And Vodacom’s M-Pesa worsened everything.

Tech tourism

With a string of success since the launch of M-PESA, Mzalendo, to Ushahidi, to Ringier’s Rupu, Nasper’s entry with dealfish and Mocality, iHub, m:lab, the climate innovation centre, the chandaria incubation centre, BRCK and ICC and Westgate, Startup Grind and Startup Weekend; all international journalists’ dream was to leave their boring newsdesks in their cold countries for a trip to Nairobi, then Maasai Mara to see the the big five and others went to the infamous Kibera and Mathere Slums.

Tourists who only used to visit Mombasa and Maasai Mara began visiting Nairobi too and the traffic didn’t bother them so much. Some came and left, others stayed to start an app or two then went back home to fundraise from friends, family and fools then send a fraction of these back for freelance developers to build these apps. Meetings were held on Skype for hours.

And as the Pesatalks and other Joomla and WordPress sites came tumbling down, entrepreneurs outside the hubs were silently building entreprise softwares and going international unfazed by the excitement surrounding the Silicon Savannah. Craft Silicon had sold software to almost every bank and retail store in Kenya and had expanded to US and other international markets. Seven Seas Tech was growing too to several countries in Africa and planning an IPO and TechnoBrain and Tezza Business Solutions were expanding too and so was Verviant Group with its PesaPal and TicketSasa among others.

Santa or vultures

And as fights began in the Savannah on who is real, who is Santa Claus and who is a vulture, Rocket Internet crept in silently. Took over e-commerce with Jumia, launched struggling Hellofood. Launched Lamudi which is steadily growing to be the best real estate vertical in Africa and then Jovago and then EasyTaxi and before Nairobi would realize that its hype was not bringing food to the table it was too late.

88mph had burn its fingers and put off investing in any startup in Kenya in 2014. Savannah Fund had thought otherwise and was putting in more energy into its Nigerian and South African markets than Nairobi and even moved to host Afrikoin in South Africa.

According to Nikolai Barnwell, 88mph’s Project Manager,”Nigeria is good for business as entrepreneurs have a no bullshit approach to tech unlike Nairobi though they have had less publicity. It’s a healthy environment for business and has no false promises or fluffy PR or NGO grants.”

Though not investing in Nairobi this year, 88mph has not moved out of the city. The fund has been busy opening in Lagos and has a fundraising fatigue from trying to raise funds from local investors in Nairobi.

Barnwell says he believes there are local quality Kenyan startups but he thinks they are not just big enough in the pipeline and it is not the startups fault. The fund is now changing its tack by looking to universities, banks and corporate firms as fishing grounds and not just hubs as it’s been doing.

He also says there was need to change their timetable. Having a DEMO day in December meant most firms were in holidays and even harder to raise extra money.

“We are also restructuring our internal systems so the next step will be the right one. Just changes from people involved,” he says.

NGOs & media hype

Away from 88mph, the closet accelerator to them in numbers is Savannah Fund, which is Africa-focused and picks startups from across the continent. The fund has also reduced its number from five annually to just 3 in its cohort this year. However, the firm also invested in two more startups recently in South Africa.

According Mbwana Alliy, managing partner at Savannah Fund said,” We have always said we are a pan africa fund a zillion times. Kenya is not the only place we look for startups- We look for the best startups in Africa, outside Africa addressing Africa wherever they are.

That being said we have invested in 4 out of 10 startups to date and we expect to another kenyan startup in the accelerator we are launching soon (we are still selecting)- which means Kenya still makes up a good 40% of our portfolio.
We will be publishing accelerator stats of our 337 applications we have had across Africa in the past 18 months across the 3 classes and Kenya represents half of it. We do 3-5 startups depending on the capacity of the team- we are not a sausage factory for startups, we would rather have a smaller class and focus on helping them than a bigger class and diluting our teams across too many startups for the sake of “living up the hype”.
Its hard to gauge returns of a fund in the early days- if 88mph is having problems, doesn’t mean we have the same type of problems. Even the best startups can still fail even after series A in Silicon Valley. In other words, looking for success after the first few years of operation is like asking for a marathon runner to win the olympics before their 10th birthday.”

And though Mbwana and Nikolai say it’s the NGOs and hype.

Some analysts think there is a problem with all of us.

Apart from Cellulant, Wananchi Group, TechnoBrain, Seven Seas Tech, Mode and Tezza Solutions Andrea Bohnstedt thinks startups in Kenya are overhyped.

“We need an assessment of Tandaa Grants, PIVOT EAST, DEMO Africa and several competitions. There are high expectations at competitions but lack of knowledge dealing with VC’s,” she said adding that, “There is need to grow local angel and VC networks and develop products to solve local problems. Lack of links with the local business community means there are no mentors, angel investors, employment and partnerships.”

“Entrepreneurship is not for all,” said Andrea Bohnstedt, a risk analyst and founder of Africa Assets. “Not everyone is an entrepreneur. Some of thse need to do internships to learn business processes and gain skills but they are expensive and leave quickly.”

Skills gap

On skills, most people agree with her.

A skills survey carried out a few years dubebd the Julisha report found that the ICT sector directly employs an estimated 27,000 professionals. Of the total IT employment in Kenya, IT support people represent the largest portion (27%), followed by Applications Systems Analysts and System Engineers (13% each).

Although an estimated 9,600 professionals are added to the ICT market each year, a third of the companies surveyed plan to contract external providers. The Julisha report reveals that software development and project management are the most in-demand skills for the 2011-2013 period and represent the areas with the widest skills gap.

But some firms are doing something about it. iHub has launched UX lab which trains develops on user experience design. iHub also has a research and consulting firm to help entrepreneurs up their products and also meet the needs of corporate firms in the market.

Microsoft4Afrika and Myskills programmes also promise to help improve the skills among entreprenuers.

But still Andrea that is not enough.

“Not everyone is supposed to start a company, some of these entrepreneurs need to get jobs to learn and get skills for business and no one.

Nikolai seems to agree to her line but the problem seems is not just skills but experience too firms to get entrepreneurs.

After getting the same caliber of entrepreneurs, the fund is looking elsewhere for entrepreneurs to fund. Though it is set to work with universities to help popularize its programs, it has set its eye on entrepreneurs from corporate circles, who are working at firms like Safaricom, orange, banks and NGO’s and not from hubs.

A reputable entrepreneur thinks those are minor problems but sees the country as the most unfavorable to start and run a business.

Unattractive  environment

Late Carey Eaton said the taxes imposed on startups setting up base in the country are so high and unattractive for anyone starting. Erik Hersman with his BRCK team also had similar problems with the tax authorities.

Hersman wrote on White African,

“FedEx called me with the news that a package we were waiting for had arrived. The true value of the components was listed on the package at $230. These were new plastic cases for the BRCK, as well as a couple modem and router components. The Kenya Revenue Authority decided that it actually should be valued at $300, and then charged 100% duty. To clear the package, we have to pay $300 (26,000 Ksh).

And as we speak, SleepOut, a hotel booking startup founded in the country has shifted its headquarter to Mauritius where the founder told TechMoran “on a more serious note Mauritius offers an excellent business environment for tech companies and the government has thus far been very supportive.”

And as the country loses the taxes, jobs for youth are going too.

As things deteriorate, these investors are not just sitting there and whining. Most of them are shifting base. 88mph’s Cape Town base looks to be lucrative. Just one of their last year’s startup has given them a worth exit and they are spreading their risks into many. They were also lucky to have a local fund partner with them in their earlier days of launch but their eye seems to be in Nigeria where they have partnered with a local partner to launch a new fund.

Nigeria’s debasing was another good PR and god forbid. PayPal’s setting up shop might be followed by Facebook setting up an office in Nigeria and business in Africa will change. Someone ought to start building the next Tencent or Alibaba than blogs for fashion football and fashion SMS apps for education and rent.

For nationalists however, not all hope is lost.

Local startups like Ma3Route, Able Wireless, Angani, BuyRentKenya, Chamasoft, eLimu, Soko,, Kopo Kopo, PesaPal, JamboPay, TicketSasa, CladLight are steadily rising. And to even count more blessings the investors themselves are beginning to look away from the hubs.

These however can’t be compared to IrokoTV, Wakanow, Paga, Konga, Takealot, Ubuntu,Healthcart, BidorBuy, Kalahari and a hundred others in Nigeria and South Africa.

Maybe worst is the reducing number of women founders in the country. Not sure if it’s a problem of sexism or just women fearing to venture out.

Sexism killing Kenya’s tech ecosystem

Ochieng Rapuro, the Managing Editor of the Business Daily speaking during the aftermath of the Next Big Thing competition, held at Strathmore University early this year said women never applied to join the competition and added that even during the Top40 under 40 women, few women nominate their friends or themselves unlike the men who come out in great numbers during their Top40 under 40 men.

True to what Rapuro said, most women disqualify themselves from some positions said Rachel Gichinga, a former iHub community manager and now Developer Outreach and Business Development Manager at Intel East Africa.

“I had no barriers, maybe just attitudes but I didn’t take them serious. I had great mentors like Orry Okolly among others and I think women should be trained to be more confident and need to be shown they can do it, though programs like Girl Rising, Girlscode among others. It should be done from high school,” Gichinga told TechMoran.

“There are women in prominent positions, but they are a small subset, say just 16 percent. Women need to be encouraged to take up more prominent positions. Women are traditionally influenced to submit. As founders, some meetings put down women CEO’s but in tech the problem is not as in the public sector. We just need to train women to be less risk averse,” Gichinga said.

Others think its not about encouraging women to stand out but teaching men to behave themselves. A 20 year-old who left Chicago for Nairobi was at first fascinated the hyped tech ecosystem in Kenya.

She bids her friends and family goodbye, leaving them in tears both of fear and of joy to come abd build an SMS education platform focused on non-profits and adult literacy programs.

True to her expectation, Nairobi was the tech powerhouse she had read about in international media. She went around a tour of all the hubs on week one. From iHub, the mother of all hubs, to m:Lab the mobile business incubator, to Nailab, to Startup Garage, to GrowthHub, iLab and iBiz at the Strathmore and everywhere she went, young entrepreneurs, boys and girls sat busy day after day building mobile and web apps to solve this or that problem. And Internet wasn’t so shitty after all and the Pizza was as great.

On week two, she gets herself set to start work on her SMS-based education startup. She meets a former school mate who joins her as a co-founder. A developer is hired, the site goes live and the USSD application, and then pilot begins in the slums. They go around talking to school dropouts in the slums, they sign them up to the platform and see if they can learn stuff they missed out in school. It works in the slums well. They then approach NGO’s, then corporates and  a business model gets on sight.

It strikes her that if they sign up just ten schools, it would be a great turn around. The idea of visiting the ministry of education comes up. A top down approach seems to be the quickest way for them to help impart skills to the youth, help them with homework and as well monetize, fast. They secure a meeting with someone senior at the ministry of education and they go back to their pitch decks practicing most nights, fingers crossed, ready to for a turnaround.

The meeting goes well. The officer looks convinced. He says the service is brilliant and of course, the deal is on but he is also has to talk to his seniors. And surely, he was ready to consult with his seniors; the ogas’s at the top as Nigerians say and everyone was excited. Then suddenly, before they could leave his office, he starts acting weird towards her, tells her how beautiful she is and offers to show her around, asks if they can do a drink sometime, and folks, that’s was the end of that partnership. We are not sure what happened to the business but we know the girl is now based in Jordan.

Stella Njoki of Zegetech told TechMoran, “The closest i have been to such a situation was with a client who threw words at me that were sexist and thought that I would be very desperate for the deal to entertain that kind of talk. He was the owner of the company but that put him into my ”black books as a person without integrity”.

Njoki says some women perceive tech company as a preserve for the male species as they think tech is hard. However, that is changing and an awakening is happening through initiatives such as Akirachix and more young women are becoming aware and are changing their mentality to think that tech is not that hard.

“First of all not so many women study STEM subjects in campus. Therefore you cannot start a tech company if you do not know about tech/have experience or classroom knowledge about tech to be aware of the opportunity to be a techpreneur. In my case, I personally did not study tech but I teamed up with people who were tech experts and I came in to bring in the non-tech aspect of a tech company which is business.

Njoki says she has never been disqualified because she was a woman. But has turned down a deal because the potential client had weird intentions. And though the industry seems more advantageous to men because they are the majority in the industry, women co-founders are advantaged especially with the latest government promise of giving youth and women priority in procurement and government funding.

“As a woman in tech and if you play your cards right you can get lots of advantages. Personally, there are opportunities that have opened up for the company and for myself because I am a woman co-founder. However, Njoki thinks culture and upbringing have a role to play in sexism.

“When men start to look at women as less equals and percieve that women are the weaker sex or that a woman’s place is in the kitchen and the attitude that women are not able to handle the pressure that comes with the tech industry, that’s bad.”

However, Njoki is happy that this is also changing as women become more educated and empowered, more respect is being given to Women in general and also women in the tech scene.

“I see more female founders coming up in the next few years but in order to get a head we have to work twice as hard as men because we have to prove ourselves through our work and to get the acceptance and validation that we are equally good enough,” says Njoki. “It will take renewal of the mind for respect is a choice. Men have to choose to respect women. I think more success stories on women that are doing great should be sought for, and told. As more stories are told to bring down the walls of sexism, the perception of the men will continue to change and they will choose to respect.”

But at times it’s not the bad bro mentality that’s dragging women but a lack of inspiration.

Speaking at iHub during a Startup Grind conference, Ory Okolloh said women needed to learn from other women in business to grow their business. She mentioned women in business Cynthia Nyamai, Ginadin Kariuki, Keroche’s Tabitha Karanja and technologist Njeri Rionge. She also urged women to partner with men and do businesses together and also learn to make decisions from them.

 Too high equity

And yet some entrepreneurs say raising $25,000 for a 10 to 20 equity stake is ridiculous and they would rather go to kickstarter or indiegogo. However, in an ecosystem without any success stories, it might be hard for an investor to pour half a million or more for a minority share. Firms like Kopo Kopo which raised $2.6 million, Soko which raised $700,000 from RIO Partners and others, Sleepout which raised $200,000 from African Media Ventures and recently BuyrentKenya’s recent raise are an exception.

There is hope though.

Savannah Fund has began Waterhole to curate resources for entrepreneurs. It has also partnered with Cape Town’s UCT to train entrepreneurs on VC funding. Savannah Fund will also train PIVOT East finalists on the same. There are several pHDs among the tech community too unlike in the past when IBM couldn’t get any PhD computer science research in the country to run its research lab.Nairobi Dev School and Akirachix have won some substantial grants to train and encourage girls to get into tech. One Africa Media is also set to start investing in local entrepreneurs in memory of the late Carey Eaton, its founder.

Apart from PIVOT East and some other competitions, entrepreneurs are choosing to stay in stealth to build their companies than court media without even figuring out their business model. Startups also know that 88mph, Savannah Fund and others are here for businesses and not into competitions and prize money.Platform’s such VC4Africa are also empowering entrepreneurs on VC funding, business models and fundraising and various other aspects both through the online platform and offline meetups and have helped several firms connect to investors, raise money and scale. Others are learning to bootstrap. For hardware guys, iHub’s GearBox is looking for guys who really want to get dirty and build stuff.

 

 

The Rise & Rise of Kenya’s Kopo Kopo

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Ben (L) and Dylan (R)
Google's Eric Scmidt, iHub's Eric Hersman with the Kopo Kopo team
Google’s Eric Scmidt, iHub’s Eric Hersman with the Kopo Kopo team

When M-Pesa launched in 2007, many Kenyans didn’t give a fuss about it, it was just a convenient money transfer service, more convenient than the services of the day.

Seven years since it launched, M-Pesa has recorded numerous deposits and withdrawals, amounting to millions of dollars. The mobile money service is now used by over 70% of Kenya’s adult population and moving amounts of over 30% of Kenya’s GDP. Merchants, banks, public service vehicles, restaurants, websites and companies see M-PESA as  a golden goose. That’s Kopo Kopo’s partner by the way!

Kenya alone recorded over 25 million mobile transactions from just some 88,000 agents. With introduction of cashless payments, Kopo Kopo will be play a big role in many types of mobile money transactions, be it for school fees payments, hospital bills or for restaurants offline or online. M-Pesa remains significant, puts food on the table in hundreds of thousands of homes and will continue to do so and just like the launch of M-Pesa, Kopo Kopo’s start wasn’t glorious.

Lipa na M-Pesa
Lipa na M-Pesa

Rooted in M-Pesa

Founded in the summer of 2010 by Dylan Higgins and Ben Lyon, Kopo Kopo enables SMEs to accept mobile money payments, a move that is set to drive East Africa’s offline and online commerce. Kopo Kopo’s first stride to success was when it emerged a finalist at the Pivot25 in 2011 in the mobile commerce and mobile payments category, Kopo Kopo didn’t win, Lyon knew his mission wasn’t to win prizes but to change payments and eCommerce in Africa forever.

When I first sat down with Ben in late 2011, I had no idea if Kopo Kopo had a future but in his voice I could see a man out to do everything to succeed. Like young David facing Goliath, Lyon was already sure Kopo Kopo would be part of all our daily lives, on majorly all transactions, apart from just at restaurants and retail shops.

Media courtship or product development

Away from Nairobi, the global payments sector is not miniscule, according to global management consulting firm the Boston Consulting Group,  by 2022 payments and transaction-banking revenues will reach an estimated $1.1 billion, a compound annual growth rate (CAGR) of 8 percent. The revenue mix is expected to  shift toward account-related revenues as yield curves steepen and as pressure on transaction fees persists. The value of noncash transactions will reach an estimated $712 trillion by 2012, a CGAR of 7 percent.

As noncash transactions grow, so does Kopo Kopo’s clientele, its technology and the team; plus the quality of their services.  On its report card the firm passed 10,000+ retail merchants nationwide, making it Safaricom’s largest merchant aggregator, and one of the largest merchant aggregators in Sub-Saharan Africa. Add to these school fees payments, Matatu and websites this year and the number is set to more than double.

Unlike other businesses, Kopo Kopo has focused more on product development than having courtship with the media.

Lipa na M-Pesa
Lipa na M-Pesa

Steady business growth than lifestyle entrepreneurship

As it becomes one of the largest merchant aggregators in Sub-Saharan Africa, Kopo Kopo recently raised $2.7 million from Javelin Venture Partners and launched in Rwanda and Tanzania. While most local entrepreneurs shy away from VCs due to strict accountability, Kopo Kopo’s knows that building a living company means you answer to someone who has been there, done that and conquered than doing it all on their own.

The firm strategically occupies the corner of a modern office building on Ngong Road in Nairobi, a long way from the mere single room it had at m:lab and the single table it had at the iHub. Next to it is a cafe, serving drinks, snacks and fast foods to the building’s occupants. The cafe is a perfect meeting place for quick business meetings and that’s where I meet Dylan for our interview.

$2.7 million funding

Just behind the counter is a Lipa na M-Pesa notice allowing clients to pay for their orders by M-Pesa. I take out my recorder and order for an ice-cold Sprite as Higgins, the CEO Kopo Kopo, walks in. It’s a few minutes past eleven and I have 45 minutes with a man running a firm that’s already changing lives.

Awesome teamwork

Impressed by his friendliness and charisma, and his utmost simplicity, I put aside my notebook, forget about my recorder and like a student, literally digest every word from this man behind East Africa’s fastest growing payments startup. The story of the launch begins, I nod to this. Nod to that. And half into his second sentence I note his love for the team.

“We have over 40 fulltime staff members in our Nairobi office and a reasonable number in Rwanda and Tanzania. Kopo Kopo’s success is not a Higgins or Lyon’s doing,” Dylan says. “We have entrusted the company’s vision to each individual. Every one of our staff represents us and the company’s success is our entire role as a team and not as individuals.”

“Our various departments are passionate about what they are assigned to do. From our excellent developers, sales teams to account managers, we make up Kopo Kopo,” he adds.

He emphasizes that the entire team is instrumental in the company’s growth by saying growth would nearly be unachievable had it not been due to its great team.

Kopo Kopo hasn’t had a cozy rise to success and unlike the founders who have received grants and went on tour of the world; Dylan and Ben are frugal and have invested more into the firm than themselves.  No fancy cars, no weird parties and no yacht or exclusive dinners, as is the custom with expat counterparts in the country.

Focus on customer not competition

Higgins with his partner Lyon left the US after trying the product in their garage in the US. They piloted in it Sierra Leone before moving to Kenya where they settled.

KopoKopoThey began work on Kopo Kopo full-time at iHub and toiled with a team of three for nearly a year, sharing the iHub with hundreds of others. They then secured incubation at iHub’s sister arm m-Lab East Africa, with an own office plus constant guidance from Mbwana Aliy and Erik Hersman, managing partners at Savannah Fund. In the one roomed-office, Kopo Kopo grew until its team wouldn’t fit in that space.  The firm moved to a bigger office on the same building to accommodate its growing sales and IT team.  They kept growing. After a few months, they moved to where they are now.

Higgins does not talk about the funding. Neither does he mention any competitors, the firm’s focus is on customer satisfaction, he insists.

“We focus on the customer not the competition. We know that if we satisfy our customers, they’ll keep coming.”

Sinking home the old saying that the customer is king, a statement which has become a cliché among entrepreneurs but hasn’t lost its power yet.

savannah-fundLocal partnerships

With a skilled team on board and money in hand, and a virgin market, anyone would want to go it alone. But Kopo Kopo still believes in friendships. And they have at times been bad mouthed for courting Safaricom too much. Safaricom is their lifeline.

“ Kopo Kopo did a good job of “coptitition” with Safaricom, a deal that is helping it accumulate a lot of the value even up to today,” says Mbana Alliy, a managing partner at Africa-focused Savannah Fund.

“ Though “dancing with Safaricom” is risky, Kopo Kopo played correctly for a win-win.”

Higgins agrees. ‘We are who we are because of our partnerships. Like a marriage we spend many hours on these relationships making than work for both parties.”

“I think there is misunderstanding in the market.  We are not breaking up with Safaricom, they are not breaking up with us. We have a mutual partnership that will expect to deepen and widen in the months ahead.”

Look beyond Africa for Financing

With reports that Nigeria’s Konga.com has just raised $25 million, the biggest Series B on the continent to date from Sweden’s Kinnevik and South Africa’s Naspers. Higgins tells me startups in Africa can raise money anytime but the CEO’s need to look beyond Africa. They should be prepared to travel out of the continent to raise substantial amounts of funding, as the (East)African market is not as fully grown.

“It still is a matter of us finding those investors than them finding us as the marketing is still emerging here. There hasn’t been that many traditional series A’s. To all other startups in East Africa and sub Saharan Africa , be prepared for traveling and be prepared to have your CEO to spend a lot of time outside the continent, but that’s gone to true for sometime but not forever.”

iROKO-PartnersSome local examples

Though not close to what is happening in Silicon Valley, especially along series A and Series B financing, there’s an increasing growth of funds in Africa, with beneficiaries doubling by the day.

Rupu Kenya, SleepOut , EatOut, Nigeria’s iRoko Partners and One Africa Group of companies like Cheki, Jobberman and Private Property are some of the startups that have received funding from foreign investors. More angel investors are expected in this year. However, the funding does not validate that the continent’s mobile payments sector is lucrative, says Mbwana, especially for startups vs those that control the platform, (but) it validates getting on a growth path in financial services in Africa is valued.

“Iroko is in Nigeria, serving a lucrative LARGE diaspora and local market that is driving the business with what people really want and willing to directly pay for – online African entertainment,” Mbwana says adding that though, “startups in Africa can get funding anytime, it will only happen if they can prove to achieve scale in growth and/or revenue. This means serving multiple markets if a country is small or competitive with other players, lots of users and growth traction.”

168843_395956997134117_1451596925_nInflux of international players

African startups are is also getting major financing from as far as Europe with renown players such as the Berlin-based Rocket Internet which has heavily invested (and exited to MTN) in Africa and Asia, majorly setting up ecommerce portals across the continent such as Jumia, Kaymu, Lamidu, Jovago among others.

Rocket Internet is working with Millicon, Swedish Kinnevik, Summit Partners, JP Morgan and recently South Africa’s MTN Group. On the other hand is Tiger Global, Red Capital and South Africa’s Naspers investing in the likes of Iroko, Konga, One Africa Media Group among others. The two camps seem to be fighting for e-commerce in Africa. Ringier and SCM Ventures are on their own and are majorly into classified portals doing deals, jobs, news and marketplaces competing with OLX.

Local players are also many, represented by EvaFund , 4Di capital,  and seed funds such as Silvetree Capital, Savannah Fund and 88mph Africa with investment portfolio’s in just about every field and country in Africa. French and Arabic-speaking Africa has also not been left behind with funds such as Wamda Capital among others.

538332_489043051158844_309410937_nLooking into the future

The ecosystem improves every year on all fronts like most things in Africa, though in investing, caution ought to be taken as there are now corporate investors playing in the early stage (but) who are trying to tie in their own strategies or product/platform goals that startups should be wary of, warns Savannah Fund. Being too one-sided and sticking to investors that add value to build their businesses will help them focus on growth and revenue.

Looking into the future, Kopo Kopo wants to simplify lives through partnerships with mobile operators and banks across the continent that will make it easy for merchants anywhere on the continent to accept electronic transactions, move their money to the account and institution of their choice and do it all on one easy-to-use and accessible interface – Kopo Kopo.