How could Hypercube Fail?

We tend to obsess over the use of buzzwords, without actually understanding what they mean in a real world context. A start up is basically a new entrepreneurial venture and like all businesses, it needs a plan, strategies and individuals who execute decisions.

In the world of tech/innovation driven startups there exists hubs and co-working spaces that provide incubation services for aspirant entrepreneurs. The funding or business model of these hubs differ from place to place and is usually determined by the maturity of that tech/innovation community.

Silicon Valley and Kenya/Nigeria/Ghana/SA all have different incubators for start ups, with finding that emanates from different sources. Some of the most successful hubs are purely commercial interests with a business model that is self sustaining. Venture capital and Angel investments are also a source of funding in more mature and developed markets. Zimbabwe is not at this level, yet.

The recent developments at Hypercube Hub, touted as one of Zimbabwe's most successful hubs is one that has broad repercussions for local start ups, particularly in technology and software innovation. Whilst I'm not privy to the details of the intended goals of Hypercube Hub, the intentions of the funders were clearly aimed at helping local entrepreneurs succeed. In essence, Hypercube Hub was not set up for failure.

The hub had three investors who had committed funds for its establishment. I assume this was based upon a premise that the Hypercube team would generate sufficient cashflow to enable future viability. Further, the hub model doesn’t threaten any well-established powers who were able and willing to crush it. Hypercube was of interest to the media and thus able to garner free PR. Creative/ tech innovation startups are a narrow target market that can be identified and reached easily at low cost. Many local entrepreneurs run frugal bootstrapped operations unreliant on the use of low cost labour. The mandate of Hypercube had potential to be scaled to support numerous startups across Zimbabwe. All these are factors that were in favour of Hypercube's success.

Zimbabwe is country with many innovators who are interested in building technology to make change. A lot coders, tinkerers and geeks exist in back rooms and back yards possibly building or thinking up ideas and products that will change the world. The biggest constraint for many of these entrepreneurs is accessing funding, resources and support. I know this first hand.

However, there exists institutions and organizations who are interested in these undiscovered innovators. This is more amplified in Zimbabwe. Investment in a hub that supports innovation and entrepreneurship can only be gainfully productive. The downstream effect of these hubs of innovation is what has driven Silicon Valley and the world’s most valuable companies today.

Equally, a lot of bootstrap companies have succeeded without early venture capital. These ideas have gone on to change the world, disrupt the way we communicate, work, play, live and employed thousands. Locally, Strive Masiyiwa has gone to become an African billionaire and even he established Muzinda-Umuzi hub to help local start ups. The success of a number of African hubs means that Hypercube is the exception rather than the norm. It baffles me how they could have closed down where ;

  • ccHub: Lagos, Nigeria
  • Jozihub: Johannesburg, South Africa,
  • iHub: Nairobi, Kenya,
  • iSpaces: Accra, Ghana

and Outbox: Kampala, Uganda all succeeded.

The importance of early stage funding and support to start up entrepreneurs can not be over emphasised. Given that most start ups will fail for varied reasons, a fair number will successfully launch viable enterprises. Zimbabwe needs success stories to emerge from technology driven innovation in farming, mining or communications. This will help inspire a culture of innovative thinking to solve local problems.

However, if we are to consider the apparent collapse of Hypercube Hub and its failure to secure new funding, then the future looks bleak for local tech driven entrepreneurs. Hypercube Hub had access to a board of advisors chosen by the funding organisation. So how did the hub fail to successfully procure new funding from the organisations that had in effect been the initiators of Hypercube Hub? This points to bigger issues at play.

There was a lot of press coverage and blog posts dedicated to the establishing of Hypercube Hub. Media attention and the public disclosure of funding is an indication that the funders of Hypercube were willing to face the challenges of funding a crucial cog of the start up ecosystem. This has profound implications: accountability and transparency have become a globally accepted measure of good practice.

Therefore, Questions have to be asked as to how the funding advanced to Hypercube Hub could possibly have failed to guarantee the success of the individual projects, individuals and entities it was incubating. I was a participant at StartUp Weekend Harare and this gave me an opportunity to receive support from the team at Hypercube. Their enthusiasm and dedication to helping our team during the entire event was admirable.

As such, I was left with more questions than answers as to why the hub had to cease operations. The realities of running a business in Zimbabwe are cutthroat and demand agility in thought and action. It's quite possible that Hypercube succumbed to a failure to pivot and adapt their business model to the local market. However, it remains inexcusable that with initial access to over $177,000 they couldn't secure any future funding.

$177,000 is a lot of money and in Zimbabwe it can be a far-reaching lifeline for a big business in need of recapitalization, a turnaround or saddled with debts. It's inconceivable that Hypercube could have gone through that much money with no prospect of future returns or used it all up with no supporting model to keep them operational for the future.

I have no doubt that with careful oversight and committed advisors, Hypercube Hub would have fostered the growth of several new business ventures. The loss of funding will no doubt have ripple effects on other start ups seeking funding and support from corporates and donors. That is the reality of Zimbabwe's start-up ecosystem.

Hypercube had a good idea, and presumably a good team to run the hub so where did it wrong? Unfortunately, that information is not in the public domain. I believe any good idea can be executed within reasonable limitations and hubs have been replicated globally, with many having succeeded on the strength of locally relevant business models. As such, the reasons for the failure of Hypercube need honest interrogation.

So far, the major local technology focused blogs and writers appear to have an indifferent attitude towards the developments at Belgravia. There have been a few articles and posts that are a mere regurgitation of Hypercube's official statement. Sadly, the close knit tech community shows no willingness to ask the hard questions about the closure of the hub.

Perhaps most important is the diclosure in an email from Hypercube that :

" The truth is that Hypercube has been facing challenges for quite some time including, ensuring we had the right team to execute of our mandate, underestimating the turbulent Zimbabwe economy, implementing adequate policies and procedures, significant delays in the little income we were receiving to cover operational expenses, and adapting our business model quickly enough to reflect the realities of the Zimbabwe marketplace."

Ultimately, Hypercube Hub failed in executing its mandate and exhausted the funding of generous benefactors. Failure is a pervasive characteristic of start ups and its not unique to Zimbabwe, the shame for Hypercube is that they failed when the odds (and over hundred thousand US dollars) were entirely in their favour.