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Tour of the iHub Tech Incubator in Nairobi Kenya

December 30, 2010

Today I visited the iHub, the “innovation hub” in Nairobi. It’s a tech incubator for developers. I met with Jessica Colaco, the iHub Manager. I got in touch with Jessica through Erik Hersman (@whiteafrican) of Ushahidi and Nathaniel Whittemore of AssetMap.

Take a look at this tour of their space I filmed this afternoon.

What is iHub?

iHub is an “open innovation space” with 2000 members. They have three levels of membership, white, green, and red. “White memberships” include virtual community access and are free. Green memberships are also free and include access to the space and events. Red memberships cost 10,000 Kenyan Shillings per month (about $125) and include a dedicated desk and access to conference rooms.

iHub has one of the fastest internet connections in Nairobi. When I visited at 3pm in the afternoon on the day before New Year’s Eve it was pretty busy with about 20 young developers working away, some in relaxing bean bags and other at open desks. I loved the feel of the place with a coffee stand, Matatu route map, high 20 foot ceilings, DJ-like booth for Jessica, programming book library, comfortable seating, and an outdoor terrace overlooking Nairobi.

Jessica says the purpose of iHub is to be a “encourage collaboration and be a physical nexus point between investors, academia, the tech communities, and tech companies.” iHub has fireside chats with tech entrepreneurs once per month. They recently had the CEO of SafariCom Michael Joseph do a chat. They also hold BarCamps, Designer Meetups, Research Meetups, and Hack-a-thons.

iHub recently hosted “Random Hacks of Kindness” which gave developers 36 hours to develop a software solution to problems that were submitted by the community. They also hosted Apps4Africa in conjunction with the U.S. State Department and Ugandan incubators Appfrica and HiveCoLabs.

iHub operates as a non-profit with the support of Erik Hersman’s Ushahidi and earns revenue from memberships, sponsorships, and event space rentals.

iHub reminded me a lot of LaunchBox, BullCity Forward, and JoystickLabs in Durham.

Happy New Year 2011!

-Ryan

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The Entrepreneurs I Met in Uganda and Kenya

December 30, 2010

(If you haven’t yet read my last post on investing in Africa you can read it here)

The Journey to East Africa

I left my parents’ home in Bradenton, Florida on Sunday afternoon and after a 30 hour journey through Tampa, snowy-D.C. and Istanbul, Turkey I arrived at 2:15am Tuesday at Entebbe International Airport in Uganda. I was so happy to be back in Africa for the third time.

I got through immigration and customs and by 3am came out of the arrivals area at Entebbe to meet Roey Rosenblith and Abu Musuzza, two solar lighting entrepreneurs in Uganda who run VillageEnergy. They very graciously picked me up at such an early hour in the morning.

Roey and Abu have been working for a year and a half now on bringing affordable solar lighting to the 80% of homes without electricity in Uganda. They began their sales back in September 2010 after a year of R&D and production and are now rapidly building out their distribution model for their $60 home solar lighting systems.

I had invested in VillageEnergy back in January 2010 through a personal investment fund the Humanity Fund. There was much to discuss!

We jumped in Abu’s Corolla at the airport carpark and began the hour drive back to their apartment in Kampala. On the way I got an update on Village Energy’s operations. We arrived a little after four back at their place. After a quick demonstration of the VillageEnergy solar lighting system and a heated cinnamon bun (definitely not the first thing I expected to eat in Uganda), I crawled under the malaria net and fell asleep by 5am. We had a busy day ahead!

Tuesday – Kampala, Uganda

I rose at 9am and after a shower and some fresh chapatti and Kenyan tea the three of us went to the Kabira Club for a buffet breakfast.

There at the Kabira Club I met with tech entrepreneurs in a series of meetings Roey had set up.

Here’s are the entrepreneurs I met with  in Uganda.

  1. Roey Rosenblith and Abu Musuza from VillageEnergy
  2. Charles from Wifi Cloud who is starting a wimax phone routers business in Kampala
  3. Saidi Bakenya from One2Net is setting up a digital internet connection service over the TV spectrum
  4. Peter Kimuli from Carnelian who is building a micro hydro power plan in west Uganda
  5. Peter Benhur Nyeko from Benconolly Pess Ltd, who is in the bus and generator business
  6. Charles Kalema, who run a garbage and disposal business with 24 employees
  7. Dennis from Dmark Mobile, a mobile apps company with 23 employees
  8. Revence Kalibwani, a mobile app developer

Around 4:30pm we went to the Village Energy sales center to meet with their employees Aggie, Alex, Alex, and Charles. We then went to dinner at a local hotel to get feedback from the team on how to improve Village Energy.

At eight we visited Olga, a VillageEnergy customer who lives in area without electricity and has 3 VE units installed.

We capped off the night with drinks at 9:30pm at Cayenne in Kampala with Roey and Abu and their friends Simon, Jennifer, and Dennis. Dennis runs Dmark Mobile, a mobile apps company with 23 employees.

Wedneday & Thursday – Nairobi, Kenya

On Wednesday I woke up at 8am. Roey, Abu, and I drove to Entebbe to have breakfast with Revence Kalibwani, a mobile app developer. Then we went to the airport and I was off to Nairobi on Air Uganda.

Yesterday and today In Nairobi I met with:

  1. David Kuria from Iko Toilet, has 50 environmentally friendly pay toilets throughout Kenya. Has raised funds from the Acumen Fund and works with my friend Amon Anderson at Acumen.
  2. Elizabeth Myyuiyi from EcoBank Kenya to discuss SME loans and credit. Secured loans are going here for 14% per year and group guaranteed microfinance loans are at 25-30%. (Though the annual inflation here is about 9% so the real interest rates on these loans are lower).
  3. Gaita Waimuchii of NetBlue Africa, a web marketing agency, and AfricaPoint.com a 21 employee travel booking company in Nairobi
  4. Ben Lyon and Dylan Higgins of KopoKopo, mobile money backend integrator, API connector between MFIs and multiple platform mobile money solutions. Ben is from FrontlineSMS and Dylan is from Savetogether.org. They’re received investment from FirstLight Ventures and Presumed Abundance to date.
  5. Jessica Colaco from iHub Nairobi, tech incubator
  6. Wiclif Otieno from Kito International, non-profit that employs street-youth in Kenya
  7. Morgan Simon, founder of Toniic Impact Investors Network

During these discussions a number of other Kenyan and East African tech firms were mentioned that I’ll have to check out.

I’ll be posting next a report and video from my time this afternoon at the iHub, the tech incubator and innovation hub here in Nairobi.

Asante Sana,
Ryan

Tuesday – Kampala, UgandaIf

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Why Invest in Africa?

December 30, 2010

Jambo from Nairobi Kenya!

I’m so energized. I’ve been in East Africa for the past three days visiting tech entrepreneurs and tech investors.

While I spend about 95% of my working energy focusing on building iContact into a high-growth purpose-driven business, I like to take a couple weeks each year to travel and explore what’s going on with tech companies in other parts of the world.

This week I’m in Uganda and Kenya to find investment opportunities for the Humanity Fund, a personal investment fund I have for investing in African and American tech companies.

Why Invest in Africa?

There is so much economic opportunity in Africa, support for IT investment, and entrepreneurial energy. There’s an opportunity to make a lot of money investing in great companies while creating lots of jobs and doing a lot of good at the same time.

Africa is the least developed continent in the world. There are 1.03 billion people in Africa. Of this 1 billion (source) 65% of Africans live on under $2 per day (source) and 59% of African households do not have electricity (source),  and the number increases to 69% if you only look at Sub-Saharan Africa.

But Africa is no longer about famine, poverty, and war. That was the Africa of the 20th century. The 21st century Africa is about opportunity, technology, and entrepreneurship.

You may read about Sudan, Somalia, Zimbabwe, Eastern Congo, and the Ivory Coast in the New York Times and hear about these countries on the nightly news. But these are only five of the 54 countries in Africa.

The real, untold, narrative of Africa is what’s happening in the other 49 countries. Tremendous economic growth, investment, and rapidly rising living standards. What happened in South East Asia from 1950-2000 (rapid growth and poverty reduction) is now happening in Africa from 2000-2050. Most of the world just hasn’t realized it yet.

Why Invest in East Africa?

Here in East Africa (Kenya, Rwanda, Ethiopia, Uganda, and Tanzania) the GDP has grown at an average annual rate of 7.6% the last four years compared to just 0.5% for the USA. Africa will be the economic lion of the 21st century as McKinsey proclaimed in their July Report, “Lions on the Move: The Progress and Potential of African Economies.”

Take a look at these average annual GDP growth rates for 2006-2009 from the World Bank Development Indicators GDP database.

  • Uganda: 8.75%
  • Rwanda: 7.925%
  • Kenya: 4.375%
  • Ethiopia: 10.45%
  • Tanzania: 6.675%
  • USA: 0.5%

Uganda was the first country I came to in Africa back in 2008 and so I decided to start investing here in East Africa and expand later. I hope someday to run a fund making investments in high-growth socially responsible companies all over the developing world.

Investing As a Way of Making a Positive Impact

This is my third time in East Africa. When I came for the first time in 2008, I held the view that the way to best make positive change was to give money away to NGOs and non-profits.

I come now with the perspective that it takes all three sectors of society (government, non-profits, and for-profits) working effectively to create sustainable economic growth and that the private sector has a huge power to make positive change in the world.

The best way I believe I can contribute to positive change is to help high-growth companies that are creating jobs expand and create more jobs. At the end of the day, the cause of poverty is a lack of jobs and productive capital. Low education, low health care, and low nutrition are the symptoms of poverty, not the causes. If you increase someone’s income they can afford better education, health care, and food for their family.

So now, I believe the best way I can use my experience and resources to make an impact in reducing extreme poverty is to invest in high-growth companies that are creating jobs in developing world.

What I’m best at is figuring out how to grow technology and internet companies. Over the next two years I hope to invest in about ten more privately owned high growth African tech companies as part of dipping my feet into the water and beginning to create a model for eventually building a private equity fund some years down the road.

I hope to be able to eventually show that it is very possible to build a microequity investment firm that gets above market returns investing in high growth socially responsible companies in the developing world.

The field of impact investing is developing rapidly and I’m glad to slowly be learning about it. To learn more check out this Impact Investing Primer from the Rockefeller Foundation and this one from the Federal Reserve Bank of San Francisco.

Existing VC Funds in Africa

In my time here and in talking to people at the Skoll World Forum in April I’ve come across the following funds that are actively making venture capital investments in tech companies in Africa.

  1. InReturn Capital
  2. BusinessPartners Kenya
  3. TBL Mirror Fund
  4. eVA Fund
  5. Flow Equity
  6. FirstLight Ventures
  7. Humanity Fund
  8. Fanisi
  9. Grassroots Business Fund (non-profit fund)
  10. Acumen Fund (non-profit fund)
  11. RootCapital (non-profit fund)

A more extensive list can be found on the African Venture Capital Association (AVCA) web site. Other resources include the VC4Africa and BiD Network

How You Can Invest in Africa

If you want to invest in private African companies, then you could contact the above VC funds and express interest in investing as a limited partner in their next fund. They will likely require you to be an accredited investor and be able to invest $100,000 and up. You can also find private companies yourself and invest in them directly or join an angel network that invests in African start-ups like Toniic.

If you want to dip your toes into the water of investing in African companies without putting tens or hundreds of thousands of dollars at risk, you can invest directly into publicly traded African companies. There are even Exchange Traded Funds (ETFs) that allow you to get index-fund like exposure to African markets. You can invest as little as $75 in these funds through your broker or your TD Ameritrade, E*Trade, or Scottrade account and participate in the growth of the African economy.

You may want to check out:

  • AFK – The Market Vectors Africa Index ETF seeks to replicate the performance of the Dow Jones Africa Titans 50 Index. The fund represents a broad range of sectors and African countries, including exposure to some less traditional, frontier markets. Up 23% in 2010.
  • GAF – SPDR S&P Emerging Middle East & Africa ETF. Seeks to closely match the returns and characteristics of the total return performance of the S&P/Citigroup BMI Middle East & Africa Index. Up 22% in 2010.
  • EZA – South African ETF, up 29% in 2010.

You can also call your broker and ask them to invest directly in publicly listed firms on the Ugandan Securities Exchange or the Nairobi Stock Exchange.

For proper disclosure, as of this writing I do not own any of these ETFs but might in the future. I am definitely not a qualified securities advisor in any way and past performance is not necessarily indicative of future performance.

Thanks for reading. I hope you enjoyed this post! Please share and comment.

Next, I’ll be posting about the entrepreneurs I’ve met in my first three days here in Africa…

- Ryan, Nairobi, 30.12.10

Filed Under Africa, All Posts, Entrepreneurship, Investing, Thoughts, Travel, Venture Capital · 14 Comments