The Silicon Savannah
September 18th, 2012Arriving to Kenya couple of weeks ago, I was super excited to learn first-hand if all the buzz about the “Silicon Savannah” (as Nairobi is often referred to) was true or not. Are startup companies really taking off in Nairobi or is it yet another hype soon to explode? On a personal level, I was also particularly interested in comparing the entrepreneurial scene in an emerging economy like Kenya to the one in the Silicon Valley or Europe. Over the last couple of weeks I have been getting closer to answering those questions by meeting a broad spectrum of entrepreneurs, listen and learn.
Big human needs
One of the first things I noticed when on the ground in Kenya was how different the problems being solved are from those in the Silicon Valley. Overhearing a conversation at a Philz Coffee in the Bay, I would probably hear something like “mobile-social-local-gaming” sticking out. Whereas at Pete’s Coffee (no, not Peet’s!) at iHub in Kenya, I hear something like “mobile-money-food-health” sticking out.
Now, of course one shouldn’t stereotype and there are obviously social gaming startups in Nairobi as well as health and agricultural startups in the Valley. But the general trend is clear. In Kenya, more startups are trying to solve some really big human needs – but with the same (mostly mobile) technology.
Nascent but fast-growing
After hearing so much about the tech scene here, the second observation came somewhat as a surprise. Although there are certainly some indicators of early success stories, most of the startups here are very early stage and still have a long journey to go. As one young entrepreneur put it “Kenya is selling its future when it comes to tech entrepreneurship. There is a great potential but a long way to go – we are kind of faking-it-‘till-we-make-it”.
To some extent this is true but I think there is definitely some real potential being built up in the region. Not only are startups, incubators and seed stage VC’s popping up all around but the large multinational technology companies are also moving to the region to attract talent. Google, IBM and Nokia which all are moving (or expanding) to Nairobi are such examples. On top of these private initiatives, the government has an ambitious plan to build a technology city named Konza for $7bn just outside of Nairobi.
Generation - and Geographic - Gap
The third notable observation I will mention here is the generation gap on one hand and the geographic gap on the other hand. The younger generation in Kenya mostly dominates the technology scene while the “elders” are more focused on tangible assets such as real estate and manufacturing. One of the reasons, I believe, is simply the fact that very few people have yet to make real money out off technology ventures and hence local investors are conservative.
This brings the questions to where all the influx of startup investments is coming from - and there’s plenty of it if you ask me! There have been a number of seed funds popping up as well as a handful of VC’s and PE firms – but to my knowledge almost all of it is foreign investment. Having these foreign investors, who hopefully also bring knowledge and good contacts, will definitely help bridge the gap until the young locals will exit their first companies and start investing themselves. Let’s just hope these foreign investors are not all “drive-by investors.”
Finally, back to my original question of whether startups are really taking off in Kenya or not. The willpower, determination and potential is certainly there, but most companies still have a long way to fully exploit their potential. The same goes for the technology scene in Kenya in general but given the fast growing ecosystem, foreign investment and ambitious young startups, I can’t wait to continue following the Kenya’s trajectory and see the potential unleash in the years to come.
- Andri Kristinsson, MBA ’13, SEED Global Management Immersion Experience Fellow