Being an entrepreneur is hard, especially in emerging markets

Outside a mobile money stand in Kigamboni, Tanzania

Entrepreneurship offers enough challenges to smother half of the startups within the first four years according to the Global Entrepreneurship Monitor. Developing a successful startup isn’t easy no matter your geographic location but when you add poor internet connectivity, political uncertainty, and limited access to finance — like you see in emerging markets in Africa and South Asia — your startup becomes harder to manage. It’s true that access to finance is a challenge for startups in developed markets too, but there’s a 68.9 billion dollar difference in investment between the US and the entire continent of Africa just in 2016 alone, according to Disrupt Africa and KPMG International’s Venture Pulse report.

Entrepreneur challenge: access to finance

DFS Lab, an early stage accelerator, works with and invests in fintech entrepreneurs in emerging markets in Africa and South Asia. We know the challenges of these markets because we work in them, shoulder to shoulder with talented entrepreneurs. We identify the most promising startups and invite them to a one-week intensive design sprint bootcamp. Entrepreneurs start by identifying a core problem their team is facing and then spend the week mapping challenges and opportunities, building a prototype to test with real customers, and getting feedback on their product from these real customers.

Pelumi Aboluwarin, CTO of Kudi.ai and part of Y Combinator’s winter 2017 cohort, joined DFS Lab’s most recent bootcamp in Tanzania as a mentor.

“I was a part of Y Combinator earlier this year. I think the key difference is on one hand, the stage that the companies are in and on another hand the level of local and domain expertise that DFS Lab has. They have people on the ground here who know what’s going on, they understand the context of the market, they are not just trying to copy and paste something that’s working in Europe or in the States here in Africa.”

Mentor, Susan Oguya Kutalek — Senior Designer at Dalburg Design New York — along with DFS Lab Director, Jake Kendall, performs user testing with potential customers in Kigamboni, Tanzania during DFS Lab’s bootcamp.

The bootcamp offers invited entrepreneurs a chance to work with our team of experts and a carefully crafted team of world class mentors, like Pelumi, to help crack some of the toughest challenges in fintech. At the end of the bootcamp, DFS Lab selects the most promising entrepreneurs and invests up to USD 50K and provides them with six months support in our accelerator program. To date, we have invested in nine companies across Africa and South Asia and are preparing to invest in a number of other startups from the most recent bootcamp held in Dar es Salaam, Tanzania, in December 2017.

By investing in African and South Asian fintech companies, the Lab helps generate a system for entrepreneurial success in emerging markets. The startups we invest in create innovative solutions to help bring financial services to the two billion people excluded from formal financial services, ultimately helping small business owners, entrepreneurs, and people within their markets.

Cherehani, a company from our latest bootcamp, leverages mobile-based technology and uses a chatbot to distribute financial literacy content to women owned micro-enterprises and provides them with credit. By increasing their customer’s understanding of financial services, their customers are empowered to make smarter business decisions, contributing to their overall success.

Ben Lyon, DFS Lab’s EIR, has noticed a trend growing out of the bootcamps.

“We’re seeing more and more of an interest in a duty of care and in protecting customers, making sure that they can actually afford credit products, making sure that they understand the terms of what they’re agreeing to, protecting them from over-indebtedness. That’s a trend that we care about and that we’re starting to see emerging more here.”

Cherehani wasn’t the only company invited to our third bootcamp that is working on transformative digital financial service products. Of the nine teams brought together in Tanzania, each was working on something unique, making this bootcamp our most diverse yet.

Stephen Deng, DFS Lab’s Investment Officer, provided insight on this diversity.

“This is one of the most diverse groups in terms of the problems they’re trying to tackle as well as one of the most experienced groups. We’re seeing that the depth of experience these entrepreneurs are bringing is the best it’s ever been and we’re excited to see how ideas cross pollinate given that they’re subject matter experts in their own sectors.”

Kenneth Kinyanjui, co-founder of WeCashUp, works with DFS Lab Director, Jake Kendall, at the bootcamp held in Tanzania.

Here’s an overview of the teams that participated in DFS Lab’s third bootcamp:

• BiasharaBot aims to increase sales opportunities for small businesses in Kenya using new technologies like chatbots to make digital sales easy. They provide a simple to use UI/dashboard where users can manage the inventory, track orders and manage the chatbots.
• NALA is building East Africa’s first digital bank. They are redefining the way people transact digitally in Tanzania. Initially with a simplified payments interface and eventually diving into blockchain.
• Nobuntu is an insurance company, based in South Africa, offering a digital peer-to-peer pension alternative for low income populations which administers a mutual annuity fund. It’s a community driven savings product which pays you more as you grow older.
• Peaberry digitizes business-to-business payments from large businesses in developed markets to small businesses in emerging markets. The platform then uses the data from those payments to expand access to credit and other digital financial services.
• Fearless Health creates innovative insurance solutions to meet the untapped demand of emerging consumers for risk mitigation.
• TaniFund is a crowdlending platform to connect groups of farmers in need of capital with lenders — individuals and institutions — that want an alternative investment instrument with high social impact.
• WeCashUp is a Universal Payment Platform that enables digital companies around the globe to accept any cash, mobile money, cards and crypto-currency payments on their web and mobile apps via a single REST API integration.

The cohort from DFS Lab’s third bootcamp, including entrepreneurs, mentors, and the DFS Lab team.

DFS Lab and our investees are helping reshape Africa and South Asia’s financially inclusive future by supporting fintech startups in emerging markets. DFS Lab will announce which of these companies we will be investing in next month. You can follow us on Twitter @TheDFSLab, or on Facebook @thedfslab, to hear final results for investment.