In 2012, while working in the financial market in Paris, the Cameroonian Christian Kamayou, created the service Financetesetudes.com, a type of online brokerage specialized in bank loans for students. The free tool helps students and banks come face-to-face, thereby decreasing red-tape and cutting costs. Two years later, he realized that the African continent is growing, despite the lack of visibility for ideas such as his, innovative but without visibility in the media and in need of investors. hen, came the idea of founding the organization MyAfricanStartUp
With more than 70% of the population under the age of 30, Africa is a relatively young continent and should remain in that condition for decades to come. In 2025, one fourth of all young people under 25 years old in the world will be African , according to forecasts from the United Nations Economic Commission for Africa. Young people like Christian have been thinking of innovative solutions for everyday problems and seeking to transform these solutions into businesses. As a result of that course of action fertile ecosystems are arising for entrepreneurship and as a proof of that, there is the proliferation of countless startups — business models seeking to explore innovative activities — as well as coworking spaces, whereas dozens of these companies are joining forces, such as iHub, in Nairobi, Leadspace, in Lagos, and JoziHub, in Johannesburg.
“Initially, it was necessary to operate two strategies. One was to create a platform where we could help startups gain visibility and connect them with investors. The second strategy was holding an in loco event”, explains Sathiaya Nathan, from India, marketing director of MyAfricanStartUp. The first event took place in 2015, sponsored by AfDB and other large institutions. “The Startup Bus was something special that took place at that event. We traveled through Africa, beginning in Nigeria and selected groups of startups and these startups were setup on the bus and, then during the trip, they continued developing their ideas. There were also experts traveling on the bus to help them develop ideas more efficiently”,he tells. Recently, the organization launched a publication listing 100 startups for investments in Africa focused on achieving more visibility for startups and also attracting foreign investments. The model used by the organization is being implemented in India by Nathan himself.
Seeking angels
Entrepreneurship is not an easy task. And innovating is not easy either. For this reason, startups need support from organizations to help them to enhance the development of each idea, such as business incubators and also angel investors. The entrepreneurial environment, despite being very competitive, it is quite challenging. “One of the main challenges is becoming familiar with the market where one is going to operate. It is very common to meet entrepreneurs who think they had a brilliant idea and they dream about doing something innovative, but they were not familiar with the nature of the market. It is necessary to study, meet many people, become capable of understanding finances, marketing, the technical aspects, and also find partners who supplement and complete your qualities”, believes Cassio Spina, founder of “Anjos do Brasil” (Brazilian Angels), a Brazilian organization dedicated to motivating the angel investor and support innovative entrepreneurial activities in the country. “We do screening with the entrepreneurs and share with the members, who, if they are interested, they will get directly in contact with these entrepreneurs. “We have a group of investors spread across Brazil, who speak directly to the entrepreneur”, explains Spina. He says that before the entrepreneur goes after an angel investor, it is important to study and understand how the business operates. “This is fundamental for achieving success. And do away with that myth of the great idea: the most important thing is the execution. The biggest challenge, therefore, is to make entrepreneurship a reality.”, he states.
The best environments for entrepreneurship on the continent
This new moment for African enterprising is registered on the recently published report Global Startup Ecosystem Report and Ranking 2017, drafted by two important international organizations, Startup Genome and Global Entrepreneurship Network (GEN). Although no African country is ranked on the 20 most entrepreneurial countries in the world, three cities in the region were honorably mentioned in the document: Lagos, Cape Town, and Johannesburg. The startup ecosystem in Lagos transacts US$ 2 billion and it is considered the most valuable on the African continent. The Nigerian capital city was also mentioned for the fact that 93% of the startup founders have a technical background, the third highest rate in the world.
“These are exciting times for the rapid growth of the ecosystem of startups in Lagos. We see good and innovative startups through the local and international system of investors supplying startup capital for the entrepreneurships. Certainly, there are still a great deal of challenges facing the ecosystem, but that is expected since that ecosystem is just beginning”, celebrates Collins Onuegbu, director of Lagos Angel Network, a nonprofit entity that unites angel investors and entrepreneurs. It is estimated that the city has between 400 and 700 active startups. That number is high due to the strong rate of connectivity. The report states that, “Nigeria adds six million new internet users every year and the feverish entrepreneurship energy in Lagos supplies new useful technologies”.
Cape Town, on the other hand, boasts the greatest startup ecosystem on the African continent, as there is an estimated 700 to 1200 active startups in the city. Although, the entire ecosystem is evaluated at US $ 172 million, much lower than Lagos and Johannesburg. The number of innovative businesses is mainly due to the solid academic institutions of the city. “Ideas are easy, implementation is difficult, so we help startups think of expanding their business models, getting to the ‘why’ faster”, explains Lianne Du Toit, ecosystem manager at MTN Solution Space, at the University of Cape Town Graduate School of Business (GSB).
The largest overall connected ecosystem on the African continent is Johannesburg, transacting US$ 1.36 billion. This city has the third highest percentage of startups acting globally (67%) much greater than the overall average, which is 51%, harboring from 200 to 500 active startups and hosting 180 events last year. The most important of them was held last March: the Global Entrepreneurship Congress. This was the first time it was organized on the African continent, attracting over 6,000 participants from all over the world for one week. “Johannesburg is the financial and corporate epicenter of the continent and it is considered as the New York City of Africa by many people. With all major corporate headquarters here and great connectivity across the continent, it is the ideal place to build corporate partnerships and expand across the continent, “said Marcello Schermer, director of the Swiss organization Seedstars World.
Besides Nigeria and South Africa, Kenya has been displayed as one of the technological leaders on the continent. Over half the population from the largest economy has internet access in Eastern Africa. This country is also the home of the growing number of cell phone users. Besides that, there is a complex network of incubators and appropriate spaces for starting up. “Nairobi has emerged as a technological center and it may become the African leader”, wrote Eric Schmidt, executive president of Alphabet, the holding company of Google, stated in a post in the Google+ social network, after traveling through the Sub-Saharan region of Africa in 2013. “Mobile connectivity is one of the greatest things Africa has. Internet access in Africa is mainly mobile”, he adds. “Information is power, and more information means more available options.”
Young people on the AfDB agenda
Last November, the African Development Bank (AfDB) launched a partnership with the European Investment Bank (EIB), named the Boost Africa initiative to foster the entrepreneurial potential of young Africans in creating innovative and attractive companies. The concept is that these companies are able to compete regionally and globally, attract direct domestic and foreign investments, create new jobs, and contribute to inclusive and sustainable economic growth. “Boost Africa will help the young population in Africa to get increased hope and confidence, so that they can succeed in accomplishing their dreams and aspirations”, believes Akinwumi Adesina, president of AfDB.
The focus of the initiative will be on sectors where innovations can directly improve the quality of life of people, particularly the poorest households, by providing access to affordable products and services. “This is a concrete way of tackling the long-term factors that fuel poverty, instability and brain drain,” said Werner Hoyer, president of EIB.
One of the cutting-edge differences is using the partnering network from both banks, which will be used for accelerating the growth and development of startup companies. There is joint initial investment of up to € 150 million and this initiative forecasts leveraging that up to € 1 billion in additional investments in an eight-year period. “The future of Africa will be determined by the young people nowadays and it is crucial we believe and sponsor entrepreneurship opportunities for young people to generate success stories, using them as examples for other young people”, states Akinwumi Adesina. If African entrepreneurship had a soundtrack, it probably would be driven by the Rolling Stones song that says “If you start me up, I’ll never stop”.
Examples of regional innovation
VeriCampus, from Nigeria and Wayaa Taxi, from Somalia are among the startups that have introduced novelties to the African market. This first one created a mobile solution for managing communication among schools, students, and their parents. Recently, it was given a contribution of US$ 60 thousand from BPI France investment bank which will allow expansion to France and Francophone Africa. The recently launched Waryaa Taxi application in Somalia allows passengers to book taxis from their smartphones, a service common in major European and American cities but not yet available in Somalia. The service features regional language support, such as Amharic, Swahili, Somali, English, and French. Currently, the company is looking for investors to increase its staff and speed up its growth and also to expand to neighboring countries, as Djibouti, Kenya, and Ethiopia.
The case of Santos Dumont Incubator
Santos Dumont Incubator was created in 2006 and developed inside the Itaipu Technological Park (PTI) to supply the technological demands of the Itaipu Binacional itself. In 2013, the project started operating outside of the PTI, supplying the necessities of the market. “We do the entire restructuring of the incubator process, updating it by using new technological tools, in order to supply the needs of startups but also traditional companies employing an innovative nature”, tells Angela Cristina Mensch, manager of the company incubator.
For three months, the entrepreneurs participate in validating the idea, through workshops, and afterwards go into the actual incubator period that last three years. “They are common people who have a business idea or concept and we try to help them develop it”, says Angela, who also points out that the project works with ideas and not with ready-made companies. “Our process is marked by incubation, whereas we evaluate if there is potential or not to become a feasible business”. We have a company of R $ 1 to 3 million per year of revenue and others that, of course, end the activities and do not continue”, tells Angela. The “Santos Dumont Incubator” is expanding to other cities in the southern region of Brazil and these are already operating in Marechal Cândido Rondon and another in Toledo, according to the manager. “We are working to make it possible for companies to invest in PTI and have a greater share in our businesses”, she concludes.
A Specific Brazilian Law
The Angel Investor is a given person who is going to help an entrepreneur in the growth period of a startup business. It is unrelated to any philanthropic nature, the investor normally is an executive or business person who believes in an idea and invest his/her own capital in an entrepreneurship. Besides that, the interaction of the angel also benefits in his/her own experiences in that field of business.
In the beginning of 2017, the Investment-Angel Law was passed in Brazil and added more benefits to the investor and the entrepreneur. One of the biggest changes was to do away with the greatest risk factor. The angel is protected from any eventual liabilities that could take place. This means, they are no longer liable for the companies’ liabilities and they can no longer be sued to pay the debts of startups. Thus, the angel investor does not become a partner anymore. “Any investor who was afraid to invest in Startups previously, but now after this change, he/she can no longer be held liable, of course, legally. These changes in the law provide more investors and more access to capital”, commemorates Cassio Spina, founder of “Anjos do Brasil” (Brazilian Angels).
Innovation and Technology will be the theme of the 5th Brazil Africa Forum that will take place in São Paulo on November 22nd and 23rd.
For further information see www.forumbrazilafrica.com. The event is organized by the Brazil Africa Institute, the publisher of the ATLANTICO Magazine.