Victor Asemota wrote an interesting post. In summary, he was responding to another post in which winners of an African Startup competition were being congratulated/celebrated because they were “heading to Silicon Valley”.
He asks several important questions which I thought I should answer in a blogpost rather than as a comment (ironically, his post was as result of finding it difficult to comment in the original post)
So here are some questions Victor asked:
- Are there no mentors and investors in Africa that these startups should “head to Silicon Valley”?
- These are African startups solving African problems and meeting African needs so why do they have to travel to Silicon Valley?
So let me help answer from my own point of view.
First of all there are extremely few mentors and almost no investors for web based businesses in Nigeria. No, I do not categorize people that want to effectively buy startups for the price of a business class trip to UK as investors.
The answer to the second question is simple is hinted from the first. Money.
First let us go back to that article from the Economist.
“Indeed a plethora of online platforms have emerged in recent years: Jobberman helps you find a job; Dealdey gets you group deals; Pagatech deals in mobile payments; Wakanow brings you travel offers. Iroko, which offers online films and music, boasts half a million registered users and more than 5,000 paying subscribers.”
Then I would throw in Eskimi, Jumia, MIH – (DealFish/OLX), Mocality, Kuluya, Spinlet, VConnect, Naij.com etc.
Let us play a little quiz. Do you know what ties all our ‘biggest’ Internet tech players together?
Before you shout Spinlet, know that the company was founded in 2006. They are more or less Silicon Valley. As for Jobberman, it was foreign money that gave them the leverage they needed.
So here is the sad truth, there is no local money here for internet based startups. The only serious incubator CCHUB, is possible only because of foreign money.
The REALITY: if your business relies on raising money, get prepared to “shaki shaki bum bum” where you will be sprayed.
Now let us move to the most comprehensive database of Angel investors I know. You know what is a common theme/thread? They all have done startups. Quite successful ones at that.
Yup I nearly forgot, there is a database for African investors. I have met the awesome chaps behind it and they helped organize that DEMO event in Nairobi. You know what is common between them?
I do not mean foreign in a bad way at all. All I am saying is that while “there is money on the continent”, we need foreigners to bring a foreign event to help our tech entrepreneurs. Thanks guys!
The way forward?
For me , I do not see any way forward as regards to getting local (African) financial support anytime soon, especially at the seed stage, which is the MOST IMPORTANT and fragile period. We do not have enough of the people that understand and are willing to take the financial risk on early stage internet startups.
Buying land in Ajah and erecting a building to ‘decking level’ will double your money. Confirmed. So why do you tell someone that has not done stuff to take that risk?
Here’s what I think will happen, for the next few years. Foreign money (not exclusively I hope) will be behind the first set of African based entrepreneurs that will make it big after their first exist. After then, those entrepreneurs would then invest in the next set of startups.
So until then my dear African entrepreneur, any time you get the chance to go dance konko below on Sand Hill road, celebrate it.
- Reblogging Linda Ikeji’ blogposts and plastering it with ads is not a startup.
- Grant and competition money is not really seed funding. Na dash.
- Not every startup needs to raise money
PS: forgive typos and let me know if you come across any. I just don’t see them.