Johannesburg - While multinationals such as Microsoft and Samsung are investing heavily in start-ups on the African continent, an African player, Adanian Labs, has entered the space with a warning for would-be entrepreneurs: it’s a minefield out there with numerous pitfalls along the way.
If you’re looking to launch a greenfield business enterprise, you’re likely under no illusion about the task that awaits you, even if it’s not your first entrepreneurial venture, according to John Kamara, the co-founder of Adanian Labs.
Warning of the tough road for tech start-ups as disruptors in the holistic empowerment of the ecosystem, Kamara says that in 2020 the average start-up failure rate in Africa stood at 54%.
Business intelligence publishers Mondaq, citing 2019 research from UWC, reported that between 70% and 80% of South African start-ups fail within five years.
This poses a huge development challenge for the country, reinforcing the reality that without quality, scalable solutions, resilience and sustainable growth remain beyond the reach of many early-stage entrepreneurial ventures.
This is the stage onto which Adanian Labs has stepped, bringing with it the enormous and diverse experience of its founders in launching and nurturing new business in productive sectors of the economy.
Therefore, with more than half of start-ups launched on the continent failing, it’s important to have a dedicated business-building partner to guide you through every step of the process and enable you to avoid the common pitfalls that make you fail.
And Kamara knows what he’s talking about. Since its launch in 2020, Adanian Labs, founded by Bendon Murgor, Irene Kiwia and Kamara, has incubated 14 tech start-ups across different sectors and raised seed funding for some of them.
The lab incubates, builds, nurtures and launches scalable technology start-ups for sustainable impact in Africa with a model built on the UN’s Sustainable Development Goals.
The programme is active in five African jurisdictions – Kenya, Nigeria, Tanzania, Zambia and now South Africa.
Kamara says their mission is to build 300 impact-driven tech start-ups that are commercially viable and scalable across the continent and beyond, with a vision to create exponential value for the African economy through youth empowerment. The Adanian Labs model differs from its peers in the incubation process through its focused approach to providing advisory services to start-ups: technology teams to build their solutions, support functions to build frameworks for structures and processes, and fund-raising.
Adanian Labs Venture Building Programme offers a blend of technology development, technical support, business mentorship, access to market, partnerships and up to $120 000 pre-seed or seed funding. The programme is open to start-ups with a prototype that can be further developed.
Ideal start-ups should have high-impact potential.
Unlike start-up funds and accelerators – themselves necessary for the venture ecosystem – the Venture Building Programme favours innovation as an approach to building successful companies.
The Adanian Labs model draws on its learnings from working with new and established start-ups to inform its approaches to early-stage business development and apply it to structural challenges in the start-up life cycle.
Africa is ripe for investment in start-ups making a difference in the tech space.
“There is huge potential for Africa to become a thriving hub of digital innovation on the global start-up landscape. Our ambition is to see an explosion of local invention that will contribute positively, not just to Africa’s digital economy, but to global society,” said Wael Elkabbany, managing director, Microsoft Africa Transformation Office.
Microsoft announced on March 3 that its recently established Africa Transformation Office (ATO) plans to launch new initiatives to speed up the growth of 10 000 African start-ups and fast-track investment in Africa’s start-up ecosystem over the next five years.
To enable start-ups to rapidly scale using investment funding, Microsoft is establishing industry alliances and partnerships with venture capital investors that will facilitate access to $500 million in potential funding for African start-ups. This funding will come from a network of venture capital investors, who will dedicate a portion of their financial support to start-ups in the Microsoft network.
Microsoft believes the vibrant African start-up market is well placed to become a cornerstone of the continent’s digital economy, supporting local innovation through relevant solutions to societal challenges.
“Investments into Africa’s start-up ecosystem are growing at an exciting pace. According to the Organisation for Economic Co-operation and Development (OECD), there are more than 640 active tech hubs across Africa, accelerating innovation and creating employment, particularly among the youth,” according to Elkabbany.
But Elkabbany says “currently the African start-up market represents less than 1% of total investments worldwide.
“Our partnerships with key African accelerators provide crucial support to accelerate growth-stage start-ups with their business development and market expansion plans,” said Gerald Maithya, start-ups lead, Microsoft ATO.
Microsoft will partner with B2B-focused start-ups, scale-ups, “soonicorns” (businesses with the potential to become unicorns) and unicorns across a range of leading African industries, and those concentrated on working with SMEs.
“We understand that each start-up is unique and exists beyond the limitations of a one-size-fits-all partnership model. Therefore, Microsoft will tailor each partnership to the needs of individual start-ups, providing support and access – whether to technology, markets and co-sell opportunities, funding, or digital skills – to enable them to grow and contribute to the wider economic growth of Africa,” said Maithya.
South Korean multinational Samsung SA is mentoring 19 South African start-ups as part of its employee volunteer programme. The initiative is also part of Samsung’s Global Start-up Acceleration Programme which is being carried out in Indonesia, Malaysia, India and South Africa.
In all the mentorship will benefit 80 selected start-ups from around the world. In addition, five of the 80 start-ups will be invited to visit Samsung’s global headquarters in Seoul, South Korea.
According to Samsung SA director for the business innovation group and corporate affairs Hlubi Shivanda, the company has partnered with the Small Enterprise Development Agency (Seda) and non-profit Nangila to provide infrastructure and mentorship to fledgling businesses.
Up to 34 employees from Samsung’s global headquarters have volunteered to mentor 19 South African start-ups in a four-day boot camp. “We believe this can be the catalyst that helps the entrepreneurship ecosystem grow,” said Shivanda.
The role of Adanian Labs on the continent offers plenty of hope if one considers its successes with Afya Rekod, a consumer-driven digital health data platform; Phema-Agri, an agriculture crowdfunding platform; Paylend, SME credit-lending solution; Twaa, a digital space for all women; eCobba, a digital platform for savings and investment groups; RewardAdz, allows users to earn money via ads; and Ada Animation, which arranges boot camps for developing top-tier animators.
Last word to Kamara, whose firm is inviting applications from sectors like FinTech, EduTech, AgriTech, HealthTech, Envirotech, InsurTech, EnergyTech, Smart-city, MobilityTech, ImmersiveTech including internet of things (IoT), blockchain and AI start-ups. “We believe in the potential bestowed upon the youth of Africa and are excited to take part in unleashing opportunities to help them harness tangible value.”
Edwin Naidu writes for tech start-up Higher Education Media Services.