OoTheNigerian

sometimes, I make a lot of sense.

Tag Archives for: startup

How I’ll Run an African Technology Incubator

01 December 2014 by Oo

Introduction

There has been an uptake of tech incubators/accelerators in the African techosystem™. While I applaud the great work that has been done so far, I am yet to see an incubator on this continent run the way I’d love to do it. Rather than just criticise, I’ll use this post to give my own perspectives and suggestions using an example.

I have to point out that this is merely postulation and in real life, things hardly turn out the way you postulate.

Between the Incubator and the Accelerator.

There seems to bit of confusion between what incubators and accelerators are. My own definition is simple: the incubator takes the idea to product/market fit; the accelerator takes it from product/market fit to where it needs to scale.

I am talking about running an incubator.

Guiding Principles.

The incubator will be pro founder and looking to fund commercial viable businesses.

I am not one of those that ridicule MBAs. But there seems to be a difference between business and tech head founded startups. My guess is the tech heads are better placed to empathize with a fellow tech head. While pure business heads are guided solely by numbers.

In addition, I see a lot of incubators that view their investor position as being benevolent. They see it like they are doing the entrepreneur a favour. I see it as a partnership at worst and at best, the founders are doing me a favour helping me make money.

In reality, we both need ourselves to make money while solving problems.

The set up.

I like the Y Combinator setup. If I were running an incubator, I’d have a core partnership structure. The partners made up of “specialist generalists” e.g operations would all have a stake in the incubator and must have contributed to the fund.

I am not a fan of incubators/accelerators that stockpile “mentors”. It ends up confusing people. There are many ways to cook soup. What ends up happening is each mentor in a bid to justify their existence insist their way is the best. Of what use is a mentor that tells you “what that other guy said is good enough”

The partnership will have one primary person that covers an area of expertise. e.g Product, Finance, Technology, Design Legal and Operations. The partnership will not be bigger than 6 people. Of course industry experts will be welcome to play an ad hoc mentoring role but it will be after the startups have been selected.

More on that in my example to come.

Idea Selection

We’ll focus on ideas that are relevant to the continent but applicable globally, generate revenue from the very first user and can scale to millions of dollars in revenue with a team of 20 or less and at worst can survive without follow-on funding even if it does not succeed in scaling.

Founders will be able to apply with their ideas or ours.

Founder Selection

Since we will be focused on incubating, we will be looking for teams that are “complete”. The core tech must be internal and part of the team. Same as the core operations (more on that in my example). They must have proven at some point in their past that they have the resilience and focus to execute a project for a long period of time.

We will also recruit our founders. The best employees are sought out and not waited on to apply for the job. I believe same applies to founders. I see most incubators putting out application forms and waiting for the applications to roll in.

Like the CEO of a startup, I as the promoter of the incubator will use applications but will also spend a lot of time trying to recruit founders. Many of the best people are already doing something else with their time. That does not in anyway mean that those that apply are not good more like there a lot of great people that will not apply.

We’ll look to cap it at 5 teams per set and 2 sets per year.

The Incubation Period

There will be a residential place available for all founders. This may not be a big deal in other climes but here in Lagos, having a place where you have 24 hours light is luxury.

Providing only an office that has the resources is not enough when most of your founders will be spending 4 hours daily commuting and most likely will be operating at 50% capacity during “office hours”.

For the 3-4 months incubation period, every other distraction will be taken care of. At least it will be an offer left for you to take or not depending on circumstance.

Scope and Funding

Once of my biggest criticisms of African incubators is that they do not begin with the end in mind. They have this idea of holding on to the startup from the beginning to IPO. I view the startup funding funnel more like an assembly line. Before starting, it has to be clear who you want to hand over to and pitch those people before you start. After hand off, you move to the next batch.

Y Combinator’s accelerator program ends with them handing over to Venture Capitalists and Seed investors on demo day. Were I to do an incubator, my plan will be to hand over to the accelerators and that means discussing with the likes of YC, TechStars and co before I start to know the type of metrics and growth that will get them interested.

Sometimes, the startup might scale beyond your next planed step. In that case you work and hand them to the VCs. But at worst they have great accelerators to be handed over to.

For the above to work, there has to be a clearly defined time scope. If startups think they can stay forever they will work like they have a cushion. Like strict and loving parents, they have to know the nest is available for just 4 months. That’s it. It would help them have an urgent mindset. It does not mean after 4 months you kick them out in the rain if they are stuck.

Equity and Financing.

Off my head I am looking to spend $25-35k per startup for 10% “founder shares”. $15-20k cash and $10-15k for facilities/operational expenses depending on team size. I think it is fair because we’ll be acting as co founders taking practically the same risks as founders.

For the funding of such a scheme, we’d will be looking to raise about $2 million that will last over 4 classes (5 startusp per class) and 2 years. A fraction of the money (say $100k) would come from the partners, much more(say $400k) from the promoter i.e me and the rest, from strategic Limited Partners. e.g Venture Capital firms and accelerators interested in deal flow and say telco companies interested in not being left behind.

Raising money from external parties is the hardest part. But then, that’s why we have the finance person in the startup :). Also see epilogue.

A Quick Example.

Idea

Funding a startup that wants to build an on-demand platform for building artisans (painters, plumbers, etc). Customers request jobs and the startup gets a trained artisan to do the job and takes a part of the revenue.

Founder Selection

The team would need to have someone that can build the platform but more importantly, a person that has practical industry experience. Say whose parent or self is/was an artisan, or has experience in the industry e.g has worked in a building maintenance company.

If we do not see such a person applying we’ll seek them out. Maybe someone doing such a business on an analogue scale or sweet talk that person out of their building maintenance job where they do all the work but the owner takes all the upside.

I am not saying a founder without such experience cannot learn on the job. I just believe the risks of failure are much higher without practical experience.

Scope

Our work as an incubator is to ensure that at the end of 4 months, there is traction which we’ll define in revenue terms before the class starts.

In the first few days, we will work with the founders to define the scope. e.g focus on painters and painting jobs in Lagos.

As a product person in conjunction with our tech partner (say Ope Obembe), in two weeks, we can work hands on with the technical guy to get the version one of the platform ready. Our operation partner say Mark Essien (top lad) will work with the operational co founder to work on recruiting 5 painters that will execute the first jobs and maybe a strategy for scaling recruitment and training.

Everyone will work hand in hand to get the first set of jobs.

At the end of the incubation period, we would expect that 30-40 painting jobs must have been done with say 8 new jobs a week coming through and growing weekly. Growth is extremely important.

That will be the core focus. That is what we will hand over to be accelerated. If per chance it is moving much faster, then we’ll seek higher level of funding or if sustainable, no funding at all.

It all depends on circumstance.

Mentors

After selection of such a startup, we’ll seek mentors that have experience in the building maintenance space. Say an executive in Berger Paints or someone that has executed on something similar in a different country like Adaora, the co founder of HomeJoy (no, she’s not Igbo) . Such people can be a source of finance or important strategic partnerships later on

This differs from the popular model of pooling mentors for the numbers before knowing if their skills will be relevant to the starups selected. Although someone that has scaled and exited a web hosting company is cool to have around, that experience is most likely irrelevant in the case of building an artisan on demand company.

Conclusion

The above captures the high level of my general idea. While still very theoretical and easier to write than execute, it is the way I’d try to do it if I were doing it.

Epilogue

My retirement plan was always to fund and run an incubator after my first exit. It is so much easier for two reasons, I would have the money to kick-start the process and secondly, I would have the authority and trust when speaking and convincing founders, potential investors, partners and most importantly myself.

But since that is taking much longer, I’ll brain dump my theory until it’s time :)

PS: Do check out Callbase, one of the products of the startup where I’m co founder.

Thanks to Ope, Banke and Mark for feedback.

6 comments | Categories: Startups, Technology | Tags: , , , ,

Another Roll of the Dice

29 November 2013 by Oo

As some of you may know, my friend Ope and I have launched a new company, it is called Fonenode. We are building a telephony infrastructure on which solutions that simplify communication for businesses and individuals can be built easily.

The last year has not been easy. A few ups and a number of really deep downs and I always wonder if I should have taken this road at all. Getting a proper and stable job would have been obviously much more straightforward for me.

I always tell my fellow entrepreneur journeyman and women, “we are playing the startup lottery” because of the amount of uncertainty and risk involved. This time around though, I have that niggling feeling that “this is it”. That all lessons have been learned and would be applied this time.

But isn’t that what the gamblers all say?

To my family and friends that have supported and rooted for me all this years. Especially my mum, dad and my cousin Namo. Without whom, I would have given up a long time ago.

*Thank you!

Here’s to successful and fulfilling journey.

PS: What is the status of GBEDU.FM? It is officially my expensive hobby.

*Yes mum, I know the only form you want my thank you to take. I am searching hard. I will find her soon. Promise.

11 comments | Categories: GBEDU.FM, Self, Technology, Uncategorized | Tags: , , ,

Just Fucking Launch? Ok.

22 February 2012 by Oo

I’ve heard you Joel, Yomi, Od, Victor, Namo, Seyi, Ope, Nmachi, Tim, Obinna and you that my tired brain forgot to mention. I have fucking launched.

Been a while. 5 years in the head two trying to bring it to life. Several failed starts and here I am, hoping and thinking “this is it”.

GBEDU.FM Logo

I’ve launched my “This is it” startup. Simply put, Spotify is the GBEDU.FM  of the west (take that Daniel Ek!). There will more to speak of in subsequent posts. The why, who, how, what, when will be answered.

Popsi, Momsi, you can stop worrying. Your son is not going to waste. Thanks for the patience. Roland, I owe you gazillion. Thanks bro.

I can now stop worrying about the “so, what do you do?” JAMB question. The real challenges begin now. Bring it on!

*Od and Yomi Black no let me hear word at all. Yomi was worse. Waking me by 5am everyday saying “Guy, you dey fuckup o! Launch this thing!” .. but I digress.

Oya, check out GBEDU.FM and tell me what you think.

Please, there will be lots of issues, I will appreciate all feedback. Holla your boy oo [at] gbedu.fm so I’ll know what you think.

PS: I wanted to wait until tomorrow, “when it is finished” then I thought… “fuck it”.

29 comments | Categories: GBEDU.FM | Tags: , , , ,

A Sad Startup Idea :( $$$

06 October 2010 by Oo

  • What will be your last tweet after you die?
  • Do you want your Facebook still functioning after you are gone? Any last cheeky status update ? e.g “I can seeee yooou. hahahaha *ghost laugh*”
  • What happens to your blog? Do you want a final post to tell the world goodbye? What about your hosting? Do you want it to last forever?
  • What about your emails? Do you want your Family to go through them?. Any auto responders to those that email after you have taken leave of the earth?
  • Will you want to cancel any subscriptions?
  • The documents, agreements, and all the important stuff in the cloud (email, pictures, digital invoices, etc), how will those that need them get access?

I know people do not like thinking about death but times have changed and some things have not changed with it.  A lot of our valuables are in digital form and there is no succession plan I know of  that takes care of this stuff. I would like to have control over the thinks I have enumerated above after I have gone. I certainly do not want the hosting on this blog to die and the thousands of pictures I have in Picasa to be lost forever.

Now here is how money is made from this sad idea.

There should be a middle man you leave all these instructions with. Say an insurance company or a law firm that would carry out the instructions after you have gone.  You pay a premium  of $10/ year and you are sure your AwesomenessReminders subscription is cancelled when you do not need it anymore Smile.

 

 

This is the first in the series of my blogging about my ideas

6 comments | Categories: Ideas | Tags: , ,

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