17 December 2012

Rwanda: Why Rwanda's Startups Didn't Make Forbes List


Last week I shared Forbes' list of top African tech startups which showed a glaring absence of Rwandan startups. We have reason to be disturbed by this, especially since most African nations don't have an enterprising by-the-people-for-the-people government like ours - one that is investing heavily in human capital through initiatives like attracting Carnegie Mellon University, setting up an innovators hub at kLab, galvanising young entrepreneurs at YouthKonnect, to mention a few.

And yet, we still didn't make the cut. This could be why:

Capital, capital, capital: "The bank won't give me a loan because I have no collateral"; this is a familiar lamentation continent-wide. In Rwanda, it is even more difficult because there are few angel investors willing to invest in tech startups (when they can put their money in real estate!) and even fewer venture capital funds. For one, startups could tap into Diaspora for talent and access to fundraising prowess as opposed to waiting for grants or competition funding.

Not relevant to this but it is interesting that in the US there is a law to encourage small business by easing various securities regulations and allow crowd funding called Jumpstart Our Business Startups Act (JOBS Act). How sweet would it be to have something similar here?

Even geniuses don't fly solo: There's two kinds of entrepreneurs, the kind who have the technical background to be significant to product development (think Mark Zuckerberg) and those with business acumen and the capacity to bring together the right people to do the job for them (think Charles Ferguson). But one thing both entrepreneurs will always have is a team of highly-trained employees who do the job with or for them. Strong technical trained/experienced developers are a bit of a rarity in Rwanda. Or so I have heard...

Few preceptors: A strong, experienced 'mentor' to guide a budding entrepreneur is invaluable, in the technical world, more than ever! There are few mentor-kinds in Rwanda, even fewer tech industry giants to set the bar for aspiring entrepreneurs. Entrepreneurs out of University in Kenya have people to look up, and resources to tap into from Intel, Google, Samsung, GE, to name a few.

Partners: Mbwana Alliy (founder of Savannah fund) wrote a compelling piece about why African startups need to seek partners to help them grow. Mbwana points out the potential in partnering with multinationals to deliver tailored enterprise market solutions, a rapidly growing market in Africa that is largely hoarded by foreign multinationals; he also points out that the onus is on mobile developers to create strong partnerships with mobile operators as a means to attract heavy weight investors. I don't know of such partnerships in Rwanda...

Passive media: Rwandan media has taken a backseat when it comes to playing an active role in creating a vibrant startup ecosystem as one of the drivers of the economy.

The push: Rwanda's tech scene is painted colorfully by government initiatives to emulate Silicon Valley success by creating a conducive environment for tech startups and encouraging growth of the private sector. Should the push come from the opposite direction? In Kenya, Nigeria and South Africa the private sector pushes the government to create initiatives to foster business growth, and not the inverse. One could counter-argue that government is laying the groundwork for the private sector to flourish in the future - that's up to debate. What do you think?

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