• Innovation Funding in Africa Are Impact Investors/VCs taking enough Risk
• 7 Steps to Raising Angel Investment in Africa

Rather than keep stating the problem, we should ask why it exists and if it really does exist?

Take this tweet yesterday- “RT @africatechie: Africa: long on opportunity, short on capital bit.ly/L1nlGI on @VC4Africa“

And Today the Mara Foundation in Kenya tweeted.

“is lack of capital just an excuse for #startup failure in #Africa or truly a fatal factor?“

This is an excellent question. I think it depends on how efficient you think the African (or Global) market is in allocating capital to worthwhile (African) startups. Note the brackets in the last sentence. How efficient is good? Well let me anchor you back to situation I had in Silicon Valley about a month ago. I met a startup focused on Africa I am an advisor for a routine meeting- basically we met at a coffee shop that we both like and when I showed up and I noticed that the startup was spending a huge amount of time applying for grants. This is how the conversation went:

• Mbwana: “STOP IT! Find real investors!”.
• The startup: “but its free money!”... Point well taken.
• Mbwana: “But it takes you so long to fill out these forms to AID organizations who don’t even get your technology and even longer for them to respond- you could be building out your prototype and making tangible progress”
• The Startup: “But we still need the money! Oh and its free”- Point taken again… (Note this startup had an excellent prototype and I noticed the team was well rounded with an engineer and business development who had just quit her job to join this startup).

Sounds familiar right? I call it inefficiency. As I left the coffee shop I suddenly remembered someone I met a week earlier who loved the domain the startup was in, not only that, she had a soft spot for women led startups AND she’d been to Africa a few times and knew the environment pretty well. I immediately made the intro via my smartphone. Less than a week later the startup had secured further angel investment from this person in one meeting. This is how efficient Silicon Valley is. I have heard of stories of startups being flooded with money on AngelList the moment they post on the website. Silicon Valley is incredibly efficient- or you could argue its now a bubble and the pendulum has swung way too far that money is being thrown at everything that moves. Are there amazing startups in Africa that deserve funding and are not getting it?

Lets try the other side: Kauffman foundation told me to be cautious of a certain big startup initiative focused on Africa. I was confused. Why? Surely any efforts to help startups in Africa should be welcomed? A staff member told me “Do you think African startups are ready for that kind of exposure- one startup can ruin the entire market when the ecosystem is still not ready yet”

This story made me pause and I started to understand- it reminded me of another story of a gentleman who wanted to take some startups from Kenya to Silicon Valley on an investor roadshow, take equity cut of each startup plus the startups must pay for their entire travel expenses to come to Silicon Valley. When we quizzed this person further, he had no Linkedin profile or online presence whatsoever and he didn’t even mention any reputable investors he’d be introducing these startups to. Had he even been to Africa? Should we have made this arrangement happen? I think not and we did not. The kenyan startups may show up to Silicon Valley, deplete valuable cash they might not have and meet investors who are not even reputable but probably have never set foot in Africa! And then when inevitable disaster strikes, the word will go round that Kenya or African startups are terrible (ruining it for others in future)! Worst of all the startups would have wasted time vs building out their startup.

I have also heard of the rich African elder making a $100k investment in a friend or relative’s startup and the startup totally failing or that person is engaged in multiple startups or projects and fails. Now this elder person will never invest in tech startups again- firmly deciding it’s better to invest in real estate to support the future of his or her family. Sometimes if the money comes too easy, it makes a startup clumsy- this is true even of Silicon Valley, it just happens at a bigger scale with bigger burnouts.  But from failure also comes a sharpening of the saw and the market learns to allocate capital just a little bit better and take on less risk next time…

So what’s the moral of the story? There are clearly market inefficiencies in the startup funding process outside of Silicon Valley and especially in Africa. Fund Managers/Venture Capitalists/Impact Investors may not be taking enough risk because they don’t know the technology domain, region or startup team characteristics. On the other side- startups may not be ready to absorb large amounts of capital and exposure for multiple reasons (talent/skills being one and focus being another). The African startup ecosystem is still developing… African founders need to focus on getting stuff built and building skills along the way and focus- a do or die scenario, not half attempting a startup when someone has betted their savings on you… Investors/Grantees need take some risk but learn from their mistakes but not flood the market with money. Back to those grants and impact investing… Even they are aware that their involvement might lead to a risk to the ecosystem they are trying to help. So yes, even grants can be bad for the ecosystem- look up Crowding out effect as a cautionary example to NGOs, AID givers and Governments.

Ultimately when we have more bigger tech startup successes, it will begin to wake up both the investor and founder side and the market will become more efficient and maybe Africa may enter into a boom and bust business cycle we see even in Silicon Valley and across the globe where one period founders have all the power and awash with cash and another time there is little funding available as investors got burnt and have showed poor returns.

I leave you with a concluding comment from Ernst and Young on Africa business confidence which captures the tension that exists in the stories I tell.

“Despite this growth, there remain lingering negative perceptions of the continent — but only among those who are not yet doing business in Africa.”

Let’s see if we can set a foundation and context for the event later on today…

Perhaps I should start off by observing that this ecosystem is in a state of flux (not just in Kenya but in many other centers of technology innovation around the continent). As I have said before, I believe these are the formative days, the few million years post big-bang, if you would. So there are many questions and many gaps that need to be filled as we seek to learn from other innovation centers around the world, while at the same time setting the rules that will work best for our context all while actually building this thing. In a sense, it’s like setting about building a structure while figuring out what the actual structure should look like in the end and not just that but also how to build it, while building it!

One of the gaps that were observed out of that last event was the apparent lack of the ‘business dimension‘ in many of the startups that these investors talked to. Many had cool ideas, many had great ideas, many had the technical part sorted out – they had the skills to code their product – but few had a solid foundation in terms of the actual mechanics of taking those components and turning them into a viable, marketable and profitable product and overall profitable business.

One part of this problem relates to having a sound business model that works for what you’re trying to do. What’s a business model? A business model describes the rationale of how an organization creates, delivers, and captures value (economic, social, or other forms of value). This ties in aspects of defining what your product is, how you will go about making it, who your customer is, how you will reach them with your product, what it will cost you and how you will make money in the process and the specific activities and resources needed to make it all happen.

Let’s set aside the actual conversation about what a business model is, what classic business models exist and how to define the business model that works for you (we will be tweeting and perhaps even livestream) and try to put this whole discussion within our context. This is quite simple really and Mbwana already did a great job with his article about copy/to strategies by noting that you can’t lift already existing strategies into the African context and expect them to necessarily work exactly as they do in their regions of origin. This includes business models.

Mbwana gives a great example of FlipKart in India. While FlipKart could be called the Amazon of India, at the execution level, they are very unique to their context in terms of how they execute the payment and fulfillment components of their model. For FlipKart, Cash on Delivery offered the ideal mechanism for dealing with this and that’s because in India, they could not succeed at doing more or less the same thing that Amazon does (e-tailing), in the same way that Amazon does it. The ‘what‘ is similar to both, the ‘how‘ is different.

This does not just apply to just how to capture value from your customers (one aspect of a business model), but to the entire framework of all that goes into your business model.

So join us this evening at the Nairobi Innovation Hub to explore business models and put them into your own context. We’re also honored to have Mr. Liko Agosta co-founder of PesaPal and Verviant as part of the event sharing real world lessons from his experience in starting and running two tech companies. Karibu

Willstream tackles the problem of migrants remitting money back home to their families in their countries of origin in Africa for specific uses. Simply, the issue is that migrants need to send money back home frequently for all sorts of things – paying for a family members medical fees, or school fees or some construction that they are carrying on back home. Well, many times all sorts of issues can arise in the process, for example, quite frequently the money sent may end up being used for a very different purpose than it was originally intended. Willstream allows the ‘remitter’ to create a ‘stream’ and allocate funds for specific services at partner businesses that then the family member can go to and use (kind of like redeeming a voucher for a service). Toffene says that Willstream is not a money transfer service, but a payment service.

I recorded a chat with Toffene in which we discuss Willstream and what they’re doing particularly in Senegal, Africa, tech, running a tech startup, product development and delivery and many other things. Here’s a short summary of our chat with some of the lessons learnt

Check this out on Chirbit

Starting Willstream:

Toffene started Willstream to solve a problem which he faced himself as a migrant living in France but having to frequently send money back home. He quickly realized that many other people in his situation faced the same problem. Sensing an opportunity to provide a solution to the shared problem in a profitable way, he set about building what had been simply an idea in his mind. Interestingly, he did not set about starting Willstream immediately he had the idea, instead he kept talking with people and getting feedback for sometime before starting – why? One reason is that he says, having been in the telecoms industry and particularly in mobile payments, he knew the market was not yet ready for what he wanted to offer.

Lessons learnt:

1. Creating a product that provides a real solution to a real world problem beats creating a product to solve an imaginary one – do your groundwork/homework e.g. market research to ensure you have something real
2. Observation is a key quality for entrepreneurs. Toffene was keen to observe and realize that his problem was a shared problem, not only that but observing the intended market is crucial

Building Willstream

Toffene set about building Willstream largely leveraging his past experience in the mobile and mobile payments world (Toffene has experience working for companies such as Redknee and Alcatel-Lucent), even getting people he had worked with before to build his company. One key area is product development. Toffene emphasized the importance of getting great people on board and a huge focus on product development.

At the same time, keep a close ear to what customers are saying, and keep an eye on how they’re actually using your product. For example, Willstream launched a product called Willstream Clubs for which they had an idea of which market and what use cases they intended it for, but upon launch they found people from other markets finding it out and using it for interesting purposes, and they had to adjust their thinking to take advantage of the opportunity.

As for the actual product development process, Toffene says he follows the Lean Startup methodology, they did not set out to build everything at once. Instead, they identified what the most important aspect of their offering was that they could produce (minimum viable product) and present to their market and built that as fast as they could and launched it

Lessons learnt:

1. Leverage past experience (Read: Why it might be a good idea to be employed (first))
2. Get the best people in the business
3. Focus on product development – create a great product, then refine it till it’s best of class
4. Listen to your customers
5. Keep an eye on how the product is actually being used

On Funding

Toffene and his colleagues set about building their company on their own resources and skill base. He says that it may be a burden for a startup to get external funding too early in its history. In addition, it is worth having something to show first. Create something, build something whose value can be quantified in some way and then you can leverage that to bring on board valuable funding partners.

Lessons learnt:

1. Invest yourself first, before you can get others to invest in you

Africa, tech, entrepreneurship

It’s time for Africa!

Africa’s future lies in exploiting it’s human resource, not just the natural resources. It’s a unique moment in time for young Africans to leverage entrepreneurship to achieve their dreams.

Then again, we find many tech companies have weak business models but are often over-valued, in comparison to the revenues and profits they’re bringing in.

The business model is a critical component that investors look for when evaluating a potential investment. What’s the value of having a sound business model? Is it necessary to have one? What is a business model exactly anyway? What are classic business models you can implement? How do develop one if you don’t have one? Or how do you strengthen your existing model?

As part of the event we’ll also have Mr. Liko Agosta, co-founder of PesaPal and Verviant give us his own experience in founding and running tech companies.

Join us on Thursday, May 10 2012, at the Nairobi Innovation Hub (iHub) from 6.00 PM to 8.00 PM as we explore these issues and more.

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Product Management & Marketing evolve to African Growth Masai

In a previous post I highlighted the pitfalls of adopting a copy to/clone strategy for building a startup without revisiting the market and customer assumptions. The same applies for roles and hence skills in startups. I think every African startup needs to first figure out how to productize (be able to scale) a product or service (finding a market niche, willing customer to trial and eventually pay) but then also scale the business to multiple markets and languages. The last being the most challenging for whoever is tasked with this growth role. I am calling this a “Growth Masai”- I use the Masai term here to illustrate a point. Borrowing from the Growth Hacker and adding African elements- like the Masai (who historically is not bound by geography- they can be found in Tanzania AND Kenya), this role involves someone who is nomadic in nature “explores new pastures” and looks after his/her goats (aka customers). One term I will never forget that I learnt from Microsoft is “Sell what me make and Make what we sell“- this adequately captures the inherent tension that happens between engineering/development and Sales depending on the dominant culture. Textbooks will say that you should listen to customers first then give them what they want- that makes sense, but sometimes, customers don’t even know what they want (enter Steve Jobs visionaries). In western markets, the Product Manager (PM) takes the CEO’s vision and makes it happen day to day within the different functions. In Africa, this means a PM must figure out the link between product and sales in highly uncertain and often unproven markets when you are likely the first one to try radical new solutions (markets often not definted!), these can include:

• What value promise is the startup selling? Is the startup serving the right problem?
• What are customers using right now instead of your solutions- are you in the business of making things “more efficient and better” or a total new product or service in the eye of the customer (e.g. have they ever used mobile payments in any manner, a CRM or marketing solution, a new energy alternative.
• What customer educational programs work in the face of low literacy and tech adoptions?
• What local partner do you need to provide “customer credibility” (i.e. don’t just show up with your urban look and rural africans to trust your solution). Or in some markets- connections to Government officials to get things done fast and accurately?
• What are the best distribution channels and business models to reach and serve the target segment “mobileweb, SMS, USSD/, Android Marketplace, Billboard/Newspapers, Social Networks (Mxit, Facebook?)”?
• What are the best pricing and payment mechanisms? Pay in full, pay as you go, carrier billing, credit card or COD?
• How often does the customer need handholding and what are the particular needs of their business?
• What are the drivers behind retaining customers and why do they leave and go to the competitors or alternatives.
• Should you be adopting a lean approach, constantly listening, iterating and releasing frequently, learning and failing fast- or is your industry such that customers cannot tolerate and a more traditional “waterfall” (shut yourself in the bunker and code for months for a big release?)

Adjacent Markets Provide Additional Areas to Discover of Growth- The Masai exploits

Many startups might be able to conquer their home market and a specific product, but to reach true scale they need to scale to multiple markets and sometimes branch into multiple products to achieve growth. Sometimes I hear folks say “I’ll just own my own market”, our neighbors don’t know my market! That may be true now, but it may not be true in the future- Growth Masais from other countries who can handle multiple turfs will start to invade your terroritory with not only superior products but better ways to sell and delight your customers. For example, in Tanzania, Customer Service is notoriously bad at some of the mobile operators- this provides an opening for new service centric competitors. Another one is mobile payments/m-commerce, It becomes very clear that one can’t live of payments alone- you need to have additional value. In the first wave of tech startups- many customers will learn first hand what is lacking in their teams- many will fail because they can’t identify or fill these positions from the available talent pools in Africa. The best way is to recognize that these skills actually exist and form industry associations and companies can contribute in creating training programs for the industry. Yes, surprise, surprise it comes back to good old education and training. I was very excited at the iHub to see that not only are the creating a Research Unit, UX lab, have a thriving mobile lab, but they also are now installing a super computer- hubs play a key role here and some of the best hubs on the continent will have leaders who will identify what skills they want to develop not just what skills are good in their community to reinforce (good incubators/hubs will act and invest accordingly).

I have decided that this strategy is not as easy to implement as it sounds, even though it does work in some cases. Why? Here are the reasons I have come to realize how, why and when it can work or not work. But often it comes down to the need for local or incremental innovation:

Tech Adoption Cycle is not necessarily the same Everywhere- Focus on fundamental Need
Job sites like Jobberman in Nigeria are in many ways direct clones of other job sites around the world. I recently met Paul Bassat, who founded the leading job site in Australia and then actively cloned or invested in other job sites across Asia. Why does this work so well? Job search is a fundamental need all over the world and the profile of job seekers looking for high value jobs (i.e. entry positions out of university etc..), for instance- many speak english as the language of business and many recruiters are somewhat global and standardized in nature. But the key thing is that both sides of a 2 sided marketplace are pretty technology savvy and can use a computer to both post a job and search for a job. Paul Bassat understands what it takes to make job sites work, no matter what context- so he is perfectly positioned to act both as a cloner and investor.

When does this not work? When there is a fundamental mismatch in tech adoption and assumptions on business models. I see a ton of social media and SMS marketing startups in Africa and even mobile commerce. I am currently in Tanzania after 9 months away from Africa and I find it’s easy to assume western notions as a given for African consumers and businesses, but even resident Techies in Africa and all over the world often forget their target customers are not like them. Some companies have never used traditional marketing before- or they believe that a billboard ad is by far the most effective way to advertise because “big gorilla company next door” does it so it must work! Attention can sometimes be the number one issue for companies trying to deliver marketing solutions to businesses- try live in the african business’s shoes for a while before you try push your whizz bang social meda, SMS marketing solution- you’ll find that small businesses in particular are very busy running their business to spend up to a day learning your technology for a benefit they can’t quantify yet.

I spent 2 weeks in Alaska installing my friend’s Point of Sale (POS) system on the iPad and learnt first hand how hard it is for small businesses to adopt tech even in America. In Africa, although people are used to paying for utilities, airtime and some services with mobile payments, the leap to do so for things like travel tickets (i learnt first hand with yellowmasai.com) etc… comes down to trust/fraud fear factors in commerce which are still lagging behind the technology’s actual effectiveness. Its a matter of time till this changes as everyone gets used to it. On business models, as an example, transaction fee models may not always be the best way in Africa because the initial volumes needed can be very high. At yellow masai- I quickly realized that it was hard to negotiate lower transactions costs online when the payment infrastructure does not support it- but there was simply not enough volume currently to make it profitable to lower transaction fees to an acceptable rate.

Another way to look at this is through an economic lens- customer acquisition cost and time. This can be very high or lengthy since you are actually investing a ton in customer education of say “why SMS marketing is effective”- then once customers adopt your solution and finally get it 6 months later, they may stick around forever and their referral to their friend’s or relatives business becomes easier. So in many cases, its a “last man standing” play- at some point the adoption picks up and whoever is left around wins and wins big dominating the market. Add a payment wall and you often increase your adoption barrier- Why do you think- “freemium”, models are so popular? You don’t need to get paid at the same time that your customer has to “learn” that your solution is worth it.

Design Thinking and Focus on Product

The other big one is simply a back to basics focus on design. Just because Groupon works around the world- doesn’t mean it will work the same way everywhere for mobile first Subsaharan Africa. Even for the normal web, when you analyse commerce sites in India and China, they look very different in style from their western counterparts. Smart startups trying to clone or copy understand this, take the obvious feature phone ubiquity and importance in designing for bandwidth constrained environments. We see this first hand with the growth of mobile social networks such as Mxit. There is a reason I spent a few hours at Stanford’s Liberation Technology group a few weeks back, where I learnt that Professor Josh Cohen spends time in Kenya understanding local contexts and leading design sessions- and was even more delighted when I saw a Kenyan Computer Science Masters Student as the Teaching Assistant! A strong focus on design for unique environments can help foster better products that can get adopted faster.

Local execution is often Key

Back to commerce- when you look at India, you quickly realize that the Cash on Delivery (COD) model is an essential ingredient for ecommerce in that market- even though many indians own credit cards, there is still a huge trust factor. Whilst we have mobile payments in Africa- m-commerce on a scale to Amazon or ebay won’t be fulfilled until we sort out the fulfillment part of the equation- India solved the payment, fulfillment, fraud in one go- one company to watch is FlipKart and how they succeeded. So a clone of say ebay or Amazon even with mobile money simply won’t work in sub-saharan africa until the complete fulfillment puzzle is solved in the way India solved it. One could ask can COD clones to sub-saharan Africa be the solution to kick starting a bigger m-commerce revolution? Yesterday, I was impressed to learn that in Tanzania a form of COD (more like product on delivery) + mobile payments exists that actually mirrors a traditional western style e-commerce transaction- you can order Dodoma Wine from the vineyards by calling and paying with M-PESA and it would be shipped by bus and you’d get alerted to pick it up from the Bus Station. This already works and is in use, with more careful design could it be scaled up for the masses (not just Tanzania wine addicts) and for other goods? Not sure, but its easy to fall into the trap of assuming it might without questioning all the assumptions and going through a more investigative design process.

Of course these factors are in fact intwined. A compelling product designed for the right audience in africa and executed in a local manner is what works and simultaneously lowers acquisition cost and time- or face a long process of educating your customer “how the west does it and so you should do it too..”- as we well know, Africa is not Europe or America.

So does the “Copy to” Strategy work? Yes, but I think technology adoption for many countries can lag due to the fact that many consumers and businesses don’t live on their computers for the length of time the west has as well as other factors such as literacy and a fundamental belief that ICT can actually improve their lives or deliver return on investment or business efficiency. Some startups don’t have the funding, expertise or patience to sustain this and often get impatient and distracted and open other business such as a consultancy (I see this time and time again). Some of the smart and persistent ones actually figure out the bottleneck that is slowing down their business and directly solve it for themselves, sometimes discovering a whole new business there as they realize it’s a problem someone else has. In the end it actually comes down to innovation, even if incremental can make an idea in one context work in the other.

Not only that, but the power of mobile has created even more opportunities for creation and distribution of content, democratizing and consumerizing the tools needed to create digital content. On the distribution side, increased bandwidth and access to it, has allowed ordinary people to efficiently upload their content to web based content platforms for all kinds of digital content, be it audio, image & video or text based, on platforms  such as Flickr, YouTube and Facebook that have then opened up a global audience for content creators.

A huge problem for local film makers has been the actual distribution of their work. Film makers have largely depended on showcasing their work at festivals with the hope of attracting some attention for their work at these events. In addition, it would appear that the work of many African film makers, for example, is more widely known and appreciated outside Africa than in Africa. How can these problems of distribution and awareness be fixed?

Buni Media, the originators of popular Kenyan political satire show, The XYZ Show, have created a new internet video platform – buni.tv – specifically focused on content created in Africa or about Africa, their aim: to revolutionize the distribution of African video.

We talked to CEO and co-founder, Marie Lora-Mungai about Buni Media, Buni TV and digital content in Africa:

Afrinnovator: Please introduce Buni Media to us.

Marie (Buni Media): Buni Media is a multimedia company based in Nairobi and in Los Angeles, California. I co-founded the company with Gado in 2009 to produce The XYZ Show, which is now about to start its 6th season and reaches more than 8 million people on its various platforms (television, radio, buses, web, mobile) every month.

Since 2009 Buni Media has grown tremendously and besides The XYZ Show, we now produce documentaries, we publish books, and we’re in pre-production on a new pan-African children program. “Buni” means “innovation” in Swahili, and the mission of Buni Media is to use innovative techniques such as puppets, satire, animation, social media and mobile technology to produce top-quality content that entertains and challenges audiences both within and outside the continent.

Afrinnovator: You recently launched buni.tv, tell us about that

Marie (Buni Media): Buni TV is our new pan-African web and mobile video distribution platform. It is probably our most ambitious project to date and we’re very excited about its potential.

One of the main challenges we’ve had on our journey to produce The XYZ Show has been its distribution. We’ve been pretty good at it – 8 million is a huge number. But it’s been difficult and sometimes frustrating. You have to deal with a broadcasting industry that does not have the interests of producers at heart. And the reality is, most talented filmmakers on the continent will never have the opportunity to show their work and to find their audience.

Today if you produce a fantastic film in Africa, the best you can do is to take it to festivals around the world and maybe get a European television station to buy the rights for that territory. But African audiences will never see it. From the audience’s perspective, you might know that there’s better content out there than what you’re being served on TV, but you don’t know where to find it or how to access it. Buni TV proposes to bridge that gap.

Afrinnovator: What are you trying to achieve with this new platform

Quite simply, we’ve set out to revolutionize the distribution of African video.

Buni TV will first source, select and showcase the best, most innovative video content being produced in or about Africa. We clearly have an agenda here, which is to show audiences on the continent and the rest of the world that there is some really great work being made by African filmmakers, animators and artists – a fact that festival curators have known for a while but that has not reached the general public yet.

Buni TV will then leverage the upcoming mobile video revolution to bring this content directly into the hands of the audience. Buni TV is accessible both on the web at www.buni.tv and on smartphones at m.buni.tv. Our platform is built on top of a video manager service which allows us to both host this content and stream it to a whole range of devices from computers to tablets to mobiles, while automatically adjusting to the speed of your internet connection. Basically if your phone can play YouTube videos, it can play Buni TV.

We strongly believe that tablets and mobiles are how people in Africa will primarily consume entertainment in the future. The continent will skip television, satellite and cable to jump straight into the era of personal entertainment devices. Getting relevant content directly to those who want to watch it will allow us to create new revenue streams for filmmakers and help support the creative industry.

Afrinnovator: Tell us about the opportunity for local digital content development in Kenya (and Africa)

Marie (Buni Media): First of all, a precision: what you call “digital content”, I simply call content.

We used to talk of digital content as opposed to film or analog recordings – it was a technical matter. Today 99.9% of the video (and same with sound or photography) content being produced in Africa is made using digital technology, like the Canon 5D for example. So let’s talk about the opportunity for local content development in general. It is our position at Buni Media that as producers of content we should not see Kenya as our market. The world is our market.

One of the challenges of the Kenyan media industry is that it is talking to quite a small local audience, and very often that market alone cannot sustain quality productions. Kenyan filmmakers have to look beyond their own borders and create films that can appeal to at least the whole East African region, if not Africa or even the world. That’s where the opportunity lies and that’s how you can find good numbers. A global platform like Buni TV will help create these trans-border markets.

Afrinnovator: Where do you think Kenya (and Africa) stands in terms of the quantity and quality of digital content being produced in the country (continent)?

The Kenyan film and television industry has made some tremendous progress in the past few years. Some of it has to do with the proliferation of affordable, quality equipment, which has allowed Kenyan filmmakers to practice, learn and experiment. The Kenyan animation scene is particularly interesting – and Buni TV will be featuring some fantastic Kenyan animated films like Kwame Nyong’o's The Legend of Ngong Hills, which is nominated for a 2012 Africa Movie Academy Award for Best Animation.

But in general there’s still a long way to go, and some years are better than others. Distribution and funding (both are irrevocably tied) are always major challenges, and this is where Buni TV comes in. If we can fix distribution, then all of a sudden funding will become available. If we look at Africa in general, there is definitely a good amount of quality content now out there. African films keep getting noticed at big international film festivals and ironically, Western audiences might know more about independent African cinema than audiences on the continent. Again, Buni TV proposes to be the solution to this problem.

Afrinnovator: What can be done to promote more digital content development from the country (or continent)?

Marie (Buni Media): Fix distribution, which will dramatically increase people’s exposure to quality content and help create new audiences. Then the rest will follow.

Afrinnovator: How do you read Africa’s digital future? What can we expect?

Marie (Buni Media): The future lies with mobile technology.

What many Kenyans do not realize, is that Kenya is the world leader in that domain. What Kenyans have come to see as every day things like M’Pesa or even call-back ringtones are still at the very forefront of innovation in terms of the global mobile industry. When I talk about Kenya’s mobile landscape to tech people in the US, they are extremely impressed. And Kenya is showing the way for the rest of Africa.

There are currently more than 600 million people on the continent who own a mobile phone. That’s double the total population of the US. Out of these 600 million mobile phones, about 18% are smartphones, which is quite a small share. But with the arrival of affordable devices like Huawei’s Ideos, this is rapidly changing. That is a massive opportunity, and Buni TV is in an ideal position to take advantage of it.

By showcasing the best, most innovative and visually arresting content being currently produced in or about Africa and distributing it new audiences on the continent and abroad, Buni TV (www.buni.tv) aims to become the premier destination for independent African video.

At launch, the platform will offer the entire 5 seasons of the very popular Kenyan political satire The XYZ Show (produced by parent company Buni Media), award-winning Kenyan animation films like Kwame Nyong’o’s The Legend of Ngong Hills, documentaries by Egyptian filmmaker Abu Bakr Shawky, Nigerian children TV program Bino and Fino, music videos from across the continent, as well as content provided by its partnership with Scotland’s Africa in Motion film festival. Buni TV will also act as a curator, showcasing film trailers and other videos already existing online but notoriously hard to find.

“There is actually quite a lot of remarkable, high-quality African content out there, but it’s often scattered over niche sites and very difficult for African audiences to find. Buni TV editors will do the leg work for our audience and select only what is worth their time. Buni TV wants to become the number one destination to watch modern, creative African content online and on mobile,” said Marie Lora-Mungai, CEO of Buni Media.

Whereas others African video platforms seem to target only the diaspora market, Buni TV wants to bring its content in priority to the continent’s under-served audience. Anticipating Africa’s upcoming mobile video boom, Buni TV developed a light, user-friendly mobile site that works on most smartphones and can be accessed at m.buni.tv.

Buni TV’s platform was developed by Asilia and designed by Barbara Muriungi. “Buni TV comes at a timely stage in the telling of the African story. Rather than outsiders making films about Africa, Africans are also able to do so, and showcase them not just to the outside world but to other Africans”, they said.

Streaming videos on Buni TV will initially be free with advertising. Buni TV will share the revenue made from advertising around their work with the filmmakers on a 50-50 basis. In the future, the platform will develop a subscription option to allow access to premium content.

“Buni TV has been developed by filmmakers for filmmakers and film lovers. We know what it means to be independent creators. In Africa like everywhere else, distribution is a major challenge: how to find the right audience for your work, how to get your work in front of that audience, and how to generate revenue from that audience. We’ve built Buni TV to provide a solution to that problem,” said Marie Lora-Mungai, CEO of Buni Media.

About Buni Media:

Buni Media (www.bunimedia.com) is a multi-media company based in Nairobi, Kenya and Los Angeles, California. It is the production outlet behind The XYZ Show, Africa’s first political satire program featuring life-size latex puppets. The XYZ Show (www.xyzshow.com) reaches an audience of more than 8 million people every month through its various platforms.

SMS Aggregators have high setup costs and often inflexible for Startups

For something that is so important it can be incredibly hard to setup. SMS aggregators are quite active in Africa and they do very well on the whole, but the bar for anyone to get going is too high so they end up serving corporate clients and NGOs with big budgets who are more focused on marketing campaigns and notifying their current customers, some are certainly better than others, but there is a high commitment one must make to play in the space which discourages its wider use. Even then when dealing with an SMS aggregator, messaging delivery is not assured- you just can’t blast a 100,000 users whenever you want- you have to plan for it based on carrier capacity etc (atleast that is what one aggregator told me in Tanzania)… One of the major advantages of going with an aggregator is the cheaper per SMS pricing as you scale- but startups and many small businesses don’t need that scale to begin with. Another advantage of using an aggregator are the premium billing features to collect payments which then turn SMS into a revenue channel- but this has a lag in payout and the SMS aggregator often takes a big cut- nevertheless, when it set up correctly its a win:win:win for the client, aggregator and carriers. Finally there is the initial distribution, some aggregators have huge SMS mailing lists they can target based on their relationship with carriers and past clients engaged in mobile marketing. One has to wonder what will happen to these aggregators as the web and app stores become more ubiquitous across Africa.

The need for APIs and cross border flexibility

APIs are crucial, developers live and die on APIs (we all wish there was a robust M-PESA API!), so developers can build interesting applications for themselves or clients. But even SMS aggregators don’t really serve this well until to you pay to play – how can a developer with little capital create a working prototype, or do a proof of concept for a client? Even when you do get an API, some are not modern enough to play with the latest and greatest on the web. FrontlineSMS is typically the solution that comes to mind for some of these use cases, but that architecture, whilst it works for some, is overly dependent on using a laptop connected to a phone or stick modem as a hub vs remote automation. And whilst FrontlineSMS is certainly extensible, it only supports HTTP triggers out of the box and you have to be a pretty savvy developer to extend it. Enter infrastructure app services like Twilio and Tropo, which make it easy for developers to hack together SMS and other telephony apps quickly in a Software as a Service model- you get free credit and can rent a number starting at $1/month. The problem is that these services originating out of the US don’t translate well across borders especially in Africa. The web was built for global scale, telephony still has border bottlenecks and regulatory hurdles such as getting a local number- you have to strike deals with carriers and regulators around the world (harder to do in Africa) the same way SMS aggregators do (which have a local connection advantage), its still a way off until the global infrastructure telephony app services make a big splash in Africa, maybe they don’t see the potential right now compared to other markets where they have better connections such as India. So aside from FrontlineSMS, there is a clear market oppotunity for commercial easy to set up SMS services that taps the creativity of local developers…

Telerivet is a paid service that is easy to set up and scale for developers

So like my last post on SMS- my prayers (and many startups) have been answered: Enter Telerivet, the team from Envaya decided to solve their own problem rather than rely on SMS aggregators, FrontlineSMS or Twilio which doesn’t do everything they need. Telerivet powers EnvayaSMS and they realized it was so important they decided to spin it out as a separate service and unleash it to the world.

FULL DISCLOSURE: I am advisor to Envaya and they are doing great work where I left off helping the Tanzanian COSTECH incubator.

Telerivet takes a distributed approach like FrontlineSMS with a unique twist- by using an android phone with app as a remote relay of messages that talks to their servers- effectively circumventing the need to centralize and go through regulators and aggregators with the high setup costs and long time to setup. My friend at Twilio tells me this set up is what they use internally to test and develop their services. So instead you can get going with the price of an android phone ($100) which can handle 1000 messages an hour. Now this may sound “strange”- but actually its very smart… It challenges the FrontlineSMS model, as this approach does not require laptop, but pushes the capability into the smartphone and back to server-removing the need for a laptop- the rest can be controlled from the web. But there’s more… Think of the android phone as a “mobile SMS server” on increasingly commodity hardware and software, with the advantages that it has a battery (important in many parts of Africa) and can connect over 2/3G and Wifi. Just lock it in a secure location with reception and simcard of your choice. The phone can go on as long as 3 days before it needs charging- heck if its that mission critical, attach a solar charging unit to it. One big advantage is being able to control the phone remotely to add airtime to it at will and even enable it to accept mobile money via USSD commands- I will leave readers to their imagination of what this enables you to do.

I coded a simple app in less than 20 mins- their API supports modern languages, the team created easy code examples in PHP, python, ruby and curl…. They support modern web services including REST and the ever popular web hooks. Basically, Telerivet is built with developers in mind and for local and internationally minded communities and organizations- dramatically lowering the bar to get up and running. When I talked to Joshua Stern this week, a founder, he mentioned many organizations are taking a look and switching over. But really this is absolutely what startups need and is an example of a textbook disruptive service that applies to the African context as recently explained by Will.

Decentralized model for Mobile app development enables more innovation.

By using android phones as message relays, it cuts out needing to work aggregator and dealing with regulators for startups that are innovating on SMS. Not a developer? Not a problem! Their rules bases system allows anyone to create rules to direct messages with their wizard- it is really easy. As a “SMS mobile server”. You can connect any number of these phones- why not choose different networks to take advantage of better reception, SMS rates and internet deals? You get redundancy and modest quick scaling, you can also increase the number of SMS you can send with each phone. What is Google’s infamous server farms but a collection of commodity components in a huge farm? Or Commodity Computing. Why not buy 10 Android phones for $1000 and set up a small “Distributed SMS mobile server data center” and be able to send 10,000 messages/hr? Or 87M messages a year? Of course the downside is the cost per message with this approach- but you can scale it up as needed- a sort of “private cloud model” until you are ready for other solutions- but you may never want to go a centralized model again if it works and you have full control. For example- Afrinnovator is built on WordPress, which is a PHP stack- we could easily just connect up the newsletter signup via SMS now by simply adding the webhooks plugin and write a script to handle the interaction- or some other variation. We could get an android phone for kenyan subscribers and a US number (via twilio) for US subscribers. I tested this with Twilio ($1/month + $30 credit), since I didn’t want to dedicate my android phone just yet as I am not currently in Africa. Telerivet is trying to make it really easy for developers and non developers alike to not recreate the wheel and create standard packs that can be easily configured on the web for common components, similar to how wordpress works with themes and plugins. Also on the Android app side you can download versions of the app that are expansion packs that can do things like access the USSD commands allowing you to do the remote access of the phone airtime or even mobile money. For example, they are working on automating USSD commands for Airtel Money and MTN, so you could deposit mobile money directly into a normal bank account. Already startups can use Telerivet’s API to accept mobile payments from customers in their app so they can easily charge for their services…The telerivet team clearly don’t just want to only deal with SMS only. There are so many use cases for anyone I could go on forever. If you can dream it, you can now build it…

How does Telerivet stack up against other options? No one solution is perfect right? The table below helped me layout and assess the different options- feedback welcome, lets make this table useful for everyone building SMS in Africa! Word of warning to Developers: Please be careful that you don’t end up creating spam for African consumers. Have clear optin and optout policies to respect privacy. The last thing we want is to become almost like India, where SMS became a spam channel and the regulators had to step in. It hurts everyone.

One of the questions that came up is that of local tech-focused investors, or the lack thereof. The tech investor ecosystem in Kenya is still taking shape but even in these very early days of what has been called the ‘Silicon Savannah’, it is evident that in Kenya, much of the funding for tech startups is by foreign funds and VCs. In fact it could well be that in the recent past, the majority of funding for tech startups locally has been from the government through initiatives such as the ICT Board local content grant.

Source: angelblog.net

While the country is seeing a lot of private sector investment in other areas such as real estate, we’re yet to see the same scale of investment in tech – highly focused and specialized investment. Why is this so? And how can the situation be remedied?

A different ball game

Investing in tech startups is somewhat of a different ball game from investing in other areas. Firstly, tech is a fairly risky business. And the earliest investments in a tech startup are the riskiest, yet the most critical. This stage is critical both for the investor, risk-wise and for the startup as this is the point where they’re working on the foundations of their company and their product, if they get it wrong at this point, their chances of success go down dramatically. Yet, it is in this stage of developing a tech startup where the largest gap exists for relevant investors.

Whearas for local investors, traditional investments such as real estate are more predictable and hence the investor is able to manage risks better, tech has a certain level of uncertainty at the beginning. Will the founders create a good working relationship and the team dynamics needed to push things forward? Will their product be well received by the market?

Secondly, investing in tech takes understanding tech. Especially when dealing with software based startups – web, mobile, applications – since the product is intangible. When dealing with other types of business, the product (or service) is very evident, you know who your supplier is, you know who your customer is, you can workout the logistics of acquiring the product or the raw materials, manufacturing the product and distributing it. On the other hand is a knowledge based, intangible product that is often delivered over an intangible channel (the World Wide Web) and the monetization at times is not as straight forward as a customer paying up front for a product in exchange for the product.

Building on success

Perhaps another challenge that faces potential investors is that there haven’t been some major locally-backed successes that create the precedence necessary to attract other investors into the field. In Kenya, there’s a tendency for people to just wait in the wings while watching and waiting to see if someone else will take the risk. Then, once someone risks and succeeds, they’ll flood the market.

It wouldn’t be a surprise if at some point in the future, once a few startups have gone wildly successful, the tables will be turned and local investors will be making a rush to invest in tech.

The question is, who’s going to take the plunge and risk the success or failure of making major investments in tech startups? As you may have read before, there’s an upcoming fund called the “Savannah Fund”, that may just be the one to fill this gap. (Stay tuned for more about this fund in the near future)

Tech investor community

Well, it would be hard to have a tech investor community minus a good number of tech investors to form the community in the first place. Tech hubs have done a great deal to not only create physical spaces but to create the overall environment necessary for the growth of the tech community already.

And whearas few actual startups have broken out and are on their way to success, there’s much more trial attempts than was previously the case. And this is the right approach, investment follows innovation.

The more innovation we see, the more startups keep trying and trying and ultimately making some success, the more attractive tech will become for local investors. And eventually will draw them in. At that time, it will be critical to form the right kind of community on the investor side of the table.

A word of caution

As it stands, the largest proportion of investment in tech startups is coming from outside the country. If potential local investors don’t watch out, they may come in late in the game and miss the greatest successes, and hence the greatest potential returns.

We’re trying to build something that will benefit the country first. If local investors do not come together and start investing in tech the gains made from those startups that will go wildly successful may end up benefiting others more than ourselves. A typical case of Africa’s best resources benefiting foreigners more than the continent itself.

Foreign investment is all well and good, and it is very welcome. At the end of the day, for the startup, what matters for them is getting the necessary investment to work on their company and make a success of themselves. But it would be a shame if local investors missed out.

It can be done

For the most part, the capital requirements for tech startups are pretty low compared to most if not all other kinds of investment. It would not be astronomically difficult for investors who are used to massive capital investments to put money in tech with a fraction of their typical investment and yet investing in multiple startups, hence spreading their risk. If any one of those startups succeeded, they could easily multiply their investment given that tech can provide the uniqueness of disproportionately large returns to relatively small investment.

But, given that, as we have noted, this is not your typical investment in real estate or whatever else. There’s a need for either investors to get educated on the dynamics of tech in some kind of forum perhaps, or for them to reach out to people in tech who can help them understand the area and make the right investments while bearing with the risks and patience sometimes required.

The Ron Conways of the ‘Silicon Savannah’ will be made in these days, and the opportunity is wide open.