What startup Eco-System?
The chart below shows a comparison on an average amount of early-stage funding startups raise across different cities in the world. I am curious, where do you think Dar es Salaam would fit?
Are there even Startups here? Show me please…
There are entrepreneurs for sure, there is no shortage of young founders, determined, hustling and working hard to build something. But there is really only a few actual startups. See, the trend I am seeing is most of these guys switch from being startups into being “tech consultants” just after a short while, most of their ideas never transform into actual startups. The lack of a supporting Eco system is the cause of this.
What I am arguing here is that there is no Startup Eco-system in Tanzania.
What even makes an Eco-system?
Think of a Startup Eco-system as a machinery that produces valuable companies, basically it takes inputs in form of founders and ideas and it churns out valuable companies.
A typical story would work like this; An entrepreneur forms a startup and formally joins the Eco-system, they recruit talent, build a prototype, prove their concept, raise seed funding, perfect their product, reach product market fit, raise further rounds of funding, scale their operations until further down the line where they perform some sort of an exit (IPO, Acquisition etc). Obviously in any typical Eco-system there would be more inputs and only a few companies that actually reach the exit stage, but that is okay, startup failure is an integral part of an Eco-system.
Now you can see that we don’t have that sort of set up here in Tanzania, and what is sad is that we are not even working to build that sort of thing, we are headed the wrong way.
So, what does everybody mean when they talk of our startup Eco-system?
It all comes down to “Where is the money”, most advocates of the Tanzanian Startup Eco-system do not want to face and talk of the fact that there is no Tanzanian startup ecosystem, this is because of the way their business model is structured, they are mostly grant funded. Think of people who run hubs, incubators and conferences. All these are great and all, and they are an important part of the Eco-system, but focusing solely on these has and is failing the local Startup community. Because they lack a profit motive they mostly focus on props, events and showcasing of some few, mostly unsustainable, social good projects that mostly never turn a profit for the hub/incubator. Since their investors’ ROI is mostly reports and photographs, they never worry about actually building an ecosystem. This is why from over 300 hubs across Africa, only one has become sustainable beyond grants.
This article shows how the Nairobi Eco-System, the so called Silicon Savannah, has suffered from this model and is currently making necessary changes; “Silicon Savannah’ is refocusing on profit and revenues, going beyond social activism”
Do you want to build an actual startup ecosystem? Do this:
Dear person who wants to, or are currently working in the innovation and startup Eco-system in Tanzania, how about you do this;
1. Start with the founders.
Seek out, and work with really smart founders who are actually determined entrepreneurs. They need to have insane dreams and crazy enough to think they will succeed. Aim to genuinely work with them, build their capacity and raise their game. I highly recommend going for college students and early graduates.
Do not use them as props to raise your KPIs in your reports. Do not focus on numbers, quality is more important than quantity on this.
2. Be for profit.
Even if you are funded by grants, aim to be profitable. Take equity from the startups and aim to actually get your startups further rounds of funding. This will require you to focus on commercially viable projects and patience on both your end and the founders. Again, the startups are your “products”, they are not props for your donors, do not use them as such.
If you cant invest in your founders because you do not believe that they can grow their startups to become valuable companies (And wait to get your returns then instead of only focusing on immediate grant funds), then you are lying to them for your own personal benefit, and that is just evil.!!
3. Get serious with your mentors and trainers etc.
Get actual entrepreneurs to be mentors, people who have done or are doing it. Young founders tend to be very impressionable, they are anxious and they want to learn, they need to learn from people with actual real world experience. Don’t announce positions and interview potential mentors, Get people who have pitched investors, built teams and failed/succeeded in building startups. It can be expensive, but its the only way to really get your founders ready to face the music.
4. Connect with regional and international investors and Venture Capitalists.
With the aim of eventually getting your startups funded, connect with VCs, Accelerators and investors from across the world, help your founders meet them, get them ready to pitch. Help them prepare decks etc. Constantly put them in situations where they need to raise to the occasion. If they are to build world class companies, get them in there right now. I have met entrepreneurs from across the continent, and some from Europe and US, believe me when I say, we have people here just as smart and determined.
For a few years I have been working with founders and entrepreneurs in Universities across Tanzania, so I am pretty confident that there is no shortage of smart, determined and hardworking entrepreneurs. The gap is what I have outlined above.
Well, those are my 2 cents.