Africa Media Blog

Thoughts and updates from @brutuz

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Promoting Africa Interactive at #BFMA



This week I attended the Broadcast, Film & Music Africa 2012 Conference in Nairobi with my colleague Kennedy Odhiambo. As media-partner of the event we were having a stand to promote our media-company Africa Interactive and showcase our different productions and TV-series. 

It was an interesting event, although I was expecting more content producers. Together with A24 Media and African Visuals Media we were in the minority - as the hardware companies (camera’s, microphones etc) were many. Even the special room for Kenyan filmmakers was mostly empty - maybe they were all busy - but it seems to me that these kinds of conferences are a good way to meet investors and possible broadcasters.

Just as I experienced at DISCOP Africa last year it is very clear that there’s a big need for local content. I spoke to different parties that are interested in our two TV series; Spark Africa and Aid or Trade.

The director of the Kenyan Film Commission explained that the free to air TV channels in Kenya are obliged to have 40% local content in their schedules. KISS TV has aired a Kenyan film every day for a long time, although the quality was not high as apparently the big producers did not want to sell their movies for a low price.

One of the major topics during the conference was the migration to digital broadcasting in Kenya. The deadline has been postponed twice as the consumers are not making the shift due to expenses for new TV’s and decoders. It is clear that the broadcasters are eagerly waiting for the digital era as it opens up many possibilities such as ‘TV on demand’ and an expansion of channels.

It was good to attend the event to meet new people and organizations, although I found it disappointing to see that there were not many filmmakers, musicians and (TV) production companies. AITEC, the organisation of the conference, should make sure they are attending next year to make this the ‘not to miss’ annual conference for the Kenyan media industry!

 

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An inside look at the emerging startup scene in Nairobi

Kenya’s capital Nairobi is on the forefront of Africa’s tech-revolution. With the fast adoption of new mobile money services, and the dropping prices for a reliable 3G mobile internet connection, many starting entrepreneurs and investors see the enormous opportunities. But as this is a new game for both sides of the table, there is still a big information gap. Here are some observations from an outsider.

Since I arrived here in February I’ve attended three events in Nairobi on which I base most of my experiences, Mobile Web East Africa, Startup Weekend Nairobi and the first Afrinnovator meet-up Kongamano. I could really feel the excitement in the air about what is happening and what is going to happen here in the coming years. There has been so much talk about the Internet becoming faster and cheaper, but it is now becoming reality! At the same time people start asking themselves the question; which companies coming out of the various hubs have really made the big step after the initial hype?

Having followed the African tech-scene for about 5 years now, I’ve seen many ideas, competitions and companies emerge, but when you visit their website or Twitter profile after a year they are dead or deleted. The question that comes up is: why? My impression is that there is still a lack of understanding between the entrepreneurs on one side and the investors on the other.

Investor’s frustrations

Investors that are active in the African early investment space say that many entrepreneurs have no clue how to value their proposition. They explain: “An idea, how brilliant as it may sound, is worth nothing.” Often they meet people who think that they can ask $200k for 20% of equity, without having a proper prototype and customer base in place. So where does this valuation of $1m come from?

The lack of knowledge about seed funding and venture capital deals in general came up during the recent Afrinnovator meet-up when many questions from the audience revealed the low level of understanding for how these deals work - and it took me some time as well! During the Mobile Web East Africa conference it was often said that good programmers are not necessarily business savy, and there remains a need for good business people.

Bad term sheets

On the other hand, there are examples of investors who are letting entrepreneurs sign term sheets that are skewed in their benefit, often in the attempt to rule out any risk in as far as that is possible. A story I heard was about a sheet that indicated that the investor would become 100% owner of the company if a certain number of milestones were not met within a specific period. As some entrepreneurs are desperate for startup capital they unknowingly sign these kinds of deals.

Grants versus Venture Capital

An issue that came up several times during conversations with entrepreneurs are the numerous grants and business competitions that are, in a way, serving as a seed-stage investor. The rationale is; you don’t need to give up equity and can still receive startup capital. It is said that ‘free money’ kills creativity and it takes away the accountability of the entrepreneur towards its investors. Another story that I’ve heard is that winners of a Ksh1m competition do not invest their money as they could or should, instead they are making sure they keep their money on the account so they can pay their own salaries for the coming years. Nonetheless the World Bank announcedrecently to make $55m available as grants to ‘Kenyan web innovators’…

VC’s are often doing much more than just investing capital. They are guiding entrepreneurs and they use their networks to be sure their investment will come back with a profit. Some investors I’ve met said that this part is often overlooked by the entrepreneurs who are seeing funding as their end goal instead of as a starting point.

Local investors?

Where are the local investors who fund Kenyan start-ups? This is another question that keeps coming back. But as different people who I spoke to have said, there are no outstanding examples of successful exits in Kenyan (tech) startups. That’s why the local investors remain focused on ‘old fashioned’ sectors such as real estate and agriculture.

When we see the first ‘round trips’ in the Kenyan space, it will change the perception, and who knows, we will see local internet millionaires setting the example for many others. After all, some of the best investors today were the most successful entrepreneurs yesterday. At the same time, there are more and more seed-stage funds with a presence in Kenya. Among them are Innovation4Africa, Silicon Savanna Fund, 88mph, Growth Africa, Sinapis and Invested Development. Behind most of them you will see foreigners, but there are Kenyans who are behind the scenes participating in these funds.

Gaining experience on both sides

All actors in the Kenyan startup space have to get used to this new situation, and over time both sides will gain experience in closing deals that are beneficial for all. And as Kenya is a frontrunner compared to other Sub-Saharan countries, the observations as described above must be even more evident elsewhere. It is exciting to see things change so quickly here and I’m sure Kenya will continue to set the example for the rest of the continent. It will take time as clearly the vibrant ecosystem of Silicon Valley did not emerge in the span of 5 years, right?

This article was originally published by VC4Africa on 18 April 2012.

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One month Nairobi in retrospect

Today exactly one month ago I arrived for the second time in Kenya’s capital Nairobi. During a short visit last year the most populous city in East Africa already made quite an impression, but living here is just something else. The first month in retrospect!

While following the African media- and tech-space for the past 5 years, it was already very clear to me that Nairobi is one of the places to be in Africa.

Business-wise it is also one of the most important hubs on the continent, and that is one of the reasons why we decided to open the third Africa Interactive office here - besides the existing ones in Amsterdam and Accra. Together with my colleagues Kennedy and Lily I’m now running Africa Interactive Kenya Ltd, a subsidiary company of the main office in The Netherlands.

We are creating content (mainly video!) for clients by working with local media professionals all across Africa, and increasingly in Asia and Latin America as well. See the interview Balancing Act Africa did with me in the first week:



Of course I needed time to get used to the temperature, (35 degrees difference with Amsterdam!), driving in this traffic (still not used to it, crazy matatu’s!), the slow Wimax internet connection at the office, and the food (great Indian food!). But there was not much time for adjustment as the calendar filled up quickly with interesting events and meetings!



In the first weekend we joined my Ghanaian friend MacJordan to a SandBox Network meetup at a colonial horse race track where we met with Sebastian Lindstrom and his What took you so long video-production team. A great initiative that shares many of the same values as Africa Interactive by focusing on the strength and opportunities in developing countries. The main difference is that they do the filming themselves, but they live with the people they film before they switch on the camera. Check this cool video they made about iLab Liberia.

During the same day we got to know Lino Carcoforo who is, together with Nancy Wang, setting up Innovation for Africa, a seed-stage fund for tech-startups. Great stuff!

During the Mobile Web East Africa conference it was just great to meet so many people I only knew virtually. During the conference the excitement about the opportunities (infographic) broadband (mobile) internet is bringing to the region was tangible. Kenya has waited so long before the speed of internet went up and the price down, but that time is here! (I bought 1,5 GB mobile data from Safaricom for 999Ksh = 9,08 euro)

Great to see many examples of inventive ideas that solve problems of ordinary Kenyans through mobile solutions, I’m sure that ‘posterchild’ M-Pesa will get a lot of brothers and sisters in the coming years!

An example that Kenya is not there yet followed that weekend when a ship’s anchor in front of Mombasa’s harbor damaged the TEAMS undersea internet cable… TIA! A weekend without connection and a week with a slow Zuku connection followed. That’s why I bought a 3G modem of Safaricom, a great relief!

Two weekends ago the first Startup Weekend Nairobi took place at the Nailab. A great turnout of wannabe entrepreneurs showed up and on Sunday evening 14 ideas and demo’s were presented. Read my report with videos for VC4Africa.

It is exiting to see that the example of the iHub and Nailab have set on Ngong Road have resulted in many other hubs popping up in the city. I was impressed by the enormous 800sqm space of the ‘Startup Garage’, set up by the Scandinavian initiatives 88mph and IPO48. Another tech-focused space will be the GrowthHub, to be opened in April.



But it’s not only freelancers in tech that are looking for a co-working space. Last week I visited the recently opened PAWA254. The initiative derives its name from a combination of “power” in Swahili and 254, Kenya’s country code. Photographer Boniface Mwangi, who started it, is building this hub that will facilitate the use of visual and graphic arts, independent and citizen journalism, documentary film and photography, and digital and social media as means of civic expression and social action. A great initiative and… they have a great view from their rooftop terrace!



Looking back at the past month I start to realize how much has happened already! Adina and I start to feel more at home every day and I’m looking forward to month two!

Are you in Nairobi? Let’s connect!

Filed under nairobi kenya africa interactive africa media tech first month