Startup studios are booming everywhere. But can you use the approach to build-up an entire startup ecosystem far-away from well-developed startup hubs? Not so long ago an entrepreneur from Uganda, Ck Japheth reached out to me to talk about their startup studio, The Innovation Village.
I got curious and bombarded him with questions. How is their startup life, what challenges are they facing in the middle of Africa? And how are they able to use the studio approach to defy the traditionally low odds of startup success? Read the below interview if you are curious about how to lay the foundations of a startup ecosystem. And how to uncover and benefit from the MASSIVE economic opportunity that Africa has to offer.
Enter Uganda - the most entrepreneurial country on Earth
Attila: Give us a birds-eye-view on the Ugandan startup landscape.
Ck: The Ugandan startup ecosystem is booming but still early. We are excited by the promise that startups bring. Starting a startup looks like an exciting option for our youth. We have the youngest population in the world. About 75% of the population is under the age of 30. Unemployment among them is at 83%. Success rate of new startups is still low. The main reason of this is our short history and lack of support frameworks. Yet we do have significant notables who have endured the challenges and disrupted the status quo.
Our startup life is not so different from the traditional startup life. Only more challenging I guess. This is because the ecosystem is early. We do not yet have the relevant pillars that compliment a complete ecosystem.
We have some global and regional accelerators and a few well placed local incubators. These include: Unreasonable EA, Growth Africa, DEMO Africa and Seedstars. They focus on running multi-year cohorts that mostly select best out of the rest and move on until the next year when it is all repeated all over again. We still need to motivate local investors to invest into startups. As a result, we are building an Angel Investment Network to activate and motivate local investors.
You mention a young population. What's their motivation and thinking? Do they want to stay in Uganda or move abroad to more advanced countries?
Their motivation and thinking is driven by the need to survive given the limited options. A good number of them would jump the opportunity to get work abroad because of the perceived access to resources. Although they would be looking to come back to share their new fortunes. But this is a long-shot. Many of them have decided to stay home. They are exploring options on how to make it work with what they have and where they are. Fortunately, the trends are shifting. More and more opportunities are opening up with global companies coming to Uganda.
But why would any investor want to go to Uganda? Africa might be the next land of opportunity, but isn’t it still too early for startups?
Yes it is too early. But that is also our strength. Most interventions have imported the typical accelerator model. And that is not producing the desired results. We are emphasizing the startup studio, also known as venture builder model. This can be attractive for an investor as a way to reduce early-stage startup investment risks. It can also provide the relevant ingredients for success in an early market for startups.
One of the signature strengths of startup studios is the strong hands-on approach. And in a country that was named the most entrepreneurial, this approach can and will exceed expectations. Through the studio framework investors have solid guarantees on startups' performance. We are at the stage of building an ecosystem of opportunities. The investors who reach out for these first will have the advantage of defining the trends for a very long time.
Innovation Village - birthplace to a hundred ventures
How and why did you become an entrepreneur? How did you come up with the concept of the Innovation Village?
My story is that of every other youth in my country. I had to apply for almost a hundred jobs before I ever got my first one. Fast forward a few years I got the opportunity to do innovation competitions with a corporate accelerator. The nature of all such competitions is they support the top three ideas with $3,000, $2000 and $1000. This is not enough to scale these ventures and then sooner or later they die off. It goes without saying that the rest of the applicants usually also die off. This is sad because many of these ideas could represent the next advantage for our economy.
I wanted to do something about this. I started my first company called IDEA, standing for Innovation Drives Entrepreneurship & Achievement. The story of Idealab inspired me and thought to myself - “This is it. This is my call!” Unfortunately unlike Bill Gross, I did not have $100M, not even $100,000. Later one of my mentors challenged me to stop doing ideas for ideas sake. Instead, he told me, I should build ideas for the value they deliver to industry and community. The Innovation Village was born out of the need to appeal to a wider base of people and drive inclusive action. Linking to the gap of the corporate accelerator we are now a home to the ideas that would go to the competition but never win. We get great ideas. Then we explore how these can offer repeatable services or products. We spin them off into companies. Being in a market too early, we are enroute to create a hundred ventures in the next decade.
Could you please share one or two of your favorite examples of the ideas - concepts within Innovation Village?
So far my all time favourite is one called MAP. It is a maker product and alarm system for home and car. 98% of thefts that happen for cars is for the accessories like lights. Although car thefts are also rampant. If anyone touched your car, MAP would place a call on your phone. Should you reject the call the car horn will go off scaring off any intruders. You also have the option of answering the phone call. Then you can listen in the conversation within 10 meters of your car. If the car is being stolen you can send an instruction “stop car” and nothing will move the car until you send another message saying "start car". The device uses GSM technology and so doesn't depend on internet connectivity. The same works for home automation in case someone touched any access points. We are working with security agencies such that the phone call goes straight to them. Production cost is $50 and the cheapest device on the market is $250.
Tell us about the early days. Who were the first entrepreneurs working in the I.V.? How did you convince them to join your initiative?
As I mentioned it is still early days. We have had very many highs and very many lows. Most of the highs are from the excitement that this is new and this is possible. But as startups we are usually the first ones to do things. And surviving in this environment takes GRIT, purpose and determination. Attracting entrepreneurs is the greatest challenge amidst strained resources. Nevertheless we do it by focusing on how they compliment each other. We are also building a community. One that creates serendipitous connections and harnesses the power of community.
What are the entrepreneur’s main questions and concerns about the I.V. concept, and how do you resolve these?
The immediate confusion is trying to compare us with incubators or accelerators. It is almost as if anything else is not acceptable. We resolve this by exploring how we ended up doing what we are doing and how it guarantees startup success. We explore the difference between a typical accelerator model and why it is not ready for our market. We show how the IV concept can either compliment accelerators or offer a different path for our ecosystem.
Breaking the fundraising ice
How are you funded? What’s your experience with fundraising from local or international investors?
Our initial seed funding was from angel investors who believed more in the people than in the idea. First, we thought we are saving the world and it would be easy to get partners to save it with us. We had to realise that our preferred partners are also saving themselves. Then we took on an approach of self-sustainability by building startups and solutions that can generate revenue. But we are also cultivating local investors through Kampala Angel Investors Network (KAIN). Our early victories include activating two local investment clubs. We convinced them to abandon the traditional investment models and begin focusing on the startup ecosystem.
Can you tell more about these investment clubs?
The two investment clubs are local professionals who formed investment vehicles together. This is a common phenomena in our country. Groups of 10-20 people form a club whose sole purpose is to pool resources to invest leveraging the power of the numbers. For long these groups invested in real-estate, trading land and property. This is fast becoming a thing of the past as the investment clubs are now transforming into companies. We are taking advantage of this transformation by presenting new opportunities for them to invest in. The two clubs have been forth coming and are leading this transformation.
It is not easy raising funds from international investors because they are not aware of the vast opportunity in the market. We see it as a process where we first have to create awareness while putting in place local structures that create this confidence among them.
What kind of portfolio companies did you already built within the Innovation Village?
The portfolio companies are defined by their ability to scale given the limited resources. We are not restrictive on sector/industry, given we are building from the ground off. We have had a few successes in the makerspace, digital media and in edtech. The limited resource base means we adopt a flexible approach of modelling ventures that ready to scale. Then we attract investors and partners with mutual benefit so we can scale these ventures.
Startup lessons and next steps
What were the main lessons you learned since you started I.V.?
1. Innovation by its very nature is a slow gruelling process. This is because it entails telling people to give up what they are so used to. Im sure Ford was told he would have it better by building faster horses.
2. Do not go at it alone. You cannot do everything in a startup. So let in people in the space that are better than you and let them do their job.
3. Another important lesson is the gestation period you need to give the market and your ideas. People will not warm up to you because you have a $10M solution. Remember they have been used to something different. Keep focusing on the 1% of troublemakers and pioneers.
4. Question everything, even the most normal or obvious. The only way I could discover startup studios was by choosing to believe that there must be a better way to build startups.
What is your long term vision for I.V?
IV has a long way to go. Given the stage of our ecosystem we have to deliberately pursue a multi pronged strategy. One that will activate players within the ecosystem. While this is happening we must continue building ventures in a challenging ecosystem.
Ultimately we are enroute to build 100 ventures in the next decade. We can do this if we motivate stakeholders to converge as one force for good in a more connected ecosystem. IV will be a destination where every idea counts as a driver of social and economic transformation. Through repeatable processes we will build viable ideas and turn them into services and products and spin them off into companies.
How do you plan to expand in Uganda or abroad?
We are already building links regionally. We pursue partners who we can harness possibilities with. For example as part of our model we build Labs that can converge entrepreneurs within sectors. These include an Edtech Lab, Fintech Lab, Agribusiness Lab, Climate Lab, HealthTech Lab & a media lab. These labs attract and converge entrepreneurs and provides collaborative formats for their ideas to come to life. Our Edtech Lab is already in collaboration with Edtech Nairobi enroute to form Edtech East Africa. This is a regional move that can only create multiple opportunities.
There is more than one way to get involved and contribute to the mission of The Innovation Village. IF you happen to be an investor, then do invest. You might just put your bet on the next big African startup thing. Or, if you buy the book through the following affiliate link, 50% of all revenues will go to fund the next batch of ideas at I.V.
We just sent you an email. Please click the link in the email to confirm your subscription!
OKSubscriptions powered by Strikingly