The UK’s Department for International Development is currently conducting research into a new programme, tentatively called Start Up! As the name would suggest, this new programme could see DFID starting to support entrepreneurship and start-up ventures in a big way for the very first time. I say ‘could’, as the programme has yet to be officially approved and is still in research and design phase. Last week, interested parties (including Indigo) were invited to an initial meeting to find out about and comment on this exciting new programme. As it currently stands, the programme will work to support intermediaries who support individual entrepreneurs and start-ups, rather than directly investing in start-ups themselves. Quite wisely, DFID feels that there are other (commercial and grantmaking) investors better placed to support individual enterprises. The programme would likely start in Ghana, South Africa and Kenya, although as with everything else that is still subject to debate.
To date, DFID has commissioned two pieces of research work into the entreprenurial ecosystems of Ghana and Kenya. While full reports will be published shortly, here are the headlines from each:
Koltai & Company were commissioned to conduct the research in Ghana. They understand the entrepreneurial ecosystem to consist of six key pillars, which can be used to measure all aspects of the ecosystem and thereby identify gaps and opportunities. The six pillars are as follows:
- Identify entrepreneurs
- Train them
- Sustain and connect them (hubs, incubators, labs)
- Fund them
- Enable the policy environment
- Celebrate them (media coverage etc.)
Foreign organisations, such as Stanford Seed and MEST, dominate the ecosystem there, while government involvement lags. The middle ground, which contains organisations like Indigo grantee I-Space, is most interesting and offers the greatest opportunity for development and investment. Despite the fragmented situation and the fact that some of the pillars are considerably weaker than others, Ghana promises a lot of opportunity.
GSMA conducted research with the aid of iHub into the entrepreneurial ecosystem in Kenya. They looked in particular at the mobile development space, where they found some interesting – but not entirely unexpected – results around hackathons: prizes of less than $2k has quite negative effects, while those at $10k+ had much more positive results, as did staged release of funds and non-financial rewards. They believe that VCs and angel investors offer most hope for Kenya. In Kenya, only 11% of start-ups had commercial partnerships. In the UK, meanwhile, mobile developers have ready access to app stores with standardised revenue sharing schemes and legal agreements. That environment doesn’t exist in Kenya and so mobile developers must seek individual partnerships with operators. What’s more, lots of start-ups there are building on the wrong platforms that have limited user numbers in country, e.g. iOS. The good news, though, is that there are plenty of players in Nairobi who would stand to benefit from a programme like DFID’s.
For now, it’s a case of watch this space, but it’s great to know that DFID are interested in supporting entrepreneurs and those working to help strengthen, sustain and train them.