3 Fundamentals of a Tech Hub in Africa

Recently, I took a study leave and paused my job of managing a Tech hub, however the entrepreneurship and the Tech community zeal still runs into my nerves, albeit I am thousands of miles away from my once dual workplace and home{kLab}.

I joined kLab as an Entrepreneur with a Business idea in June 2012 and later on got a chance to become kLab General Manager from September 2013 to September 2014. The 2 experiences got me soaked into the "Innovation,Entrepreneurship and Tech Hub business" enough that I tend to be wet of it forever.

Of recent,two articles have caught my attention;

1:Nicolas Friederici -an OII University of Oxford PHD Research Student wrote: A Tech Innovation Hub in the Making: kLab and Its Many Roles and Stakeholders.

2:Tayo Akiyemo, the Director of AfriLabs wrote: All Hands on Deck: Why Hub Sustainability is a Complex Challenge that Requires a Systemic Solution

They point out concerns on issues ranging from Definition of a Tech Hub, Its roles, metrics of measuring a Tech Hub's success and of course they both mention the famous "sustainability".

I completely agree with the challenges and unanswered questions posed by both articles, and like Tayo calls for "All hands on Deck", I have quickly jumped to a pen and a paper to give out my few below inputs;

                                            3 Fundamental Aspects of a Tech Hub

(i) Entrepreneurship  Equation:

To have a vibrant entrepreneurship environment, you need 3 overlapping ingredients. That is, you need Talent, Idea and Capital.

Talent: There is need for world class talent, not sub standard. The world has become a global village and consumers' demand quality products than never before. For example,website development clients in Rwanda need same robust and fancy features as those in Silicon Valley.

What Tech Hubs are doing: Tech Hubs are doing alot to develop talent from organizing and offering short trainings on business and technical hands-on skills to downloading MOOCs (case of kLab) and freely distributing them to their community members who can not afford internet in their homes.

Ideas: Developing countries have a lot of problems and like the popular saying that goes "more problems a society has represents more opportunities for Entrepreneurs". There are opportunities in every sector, Transport, Agriculture, Education, Health, etc.

However, existence of ideas alone does not directly translate into businesses, since Talent and Capital are still scarce.

What Tech Hubs are doing: By creating a single physical place and organizing discussions, idea presentations, hackathons,demo nights,bookclubs and market places, Tech hubs are catalysts of idea generation.

Capital:Once an eco-system has Talented personnel who have invest-able business ideas, then capital comes to make the spark. The spark that we often read on Techcrunch of millions of dollars in series A,B,C rounds or exits. 

(ii) Time:Technology is synonymous to the fastest speed, but development of an Industry is not. Yes, Gigabytes of data can be transmitted throughout the globe at the speed of light, and unfortunately media and observers of Tech Hubs, tend to think that the same speed should apply, in developing the Tech Ecosystem.
It took Silicon Valley 50 years to be what it is today. In Michael E. Goldberg's interesting lectures on Coursera, Beyond Silicon Valley:Building Entrepreneurship in Transition Economies (where I am a visiting Panelist), there are discussions of North East Ohio's 20 to 30 years plans of nurturing entrepreneurship.
While, I agree that it is important that Tech Hubs need to evaluate their activities periodically and iterate their business models often. I disagree with the notion (at this juncture of only 1 to 4 years of existence of most Tech Hubs in Africa) that questions establishment of the tech hubs in the first place or the notion that Tech Hubs are built on Hype or that they are doomed to fail.

(iii) Existing Economy:
Once assigned the job of managing a Tech Hub, a contract stipulates dealing with items like growing a community of entrepreneurs, linking them to market, attracting mentors and organizing events. When into the "Tech Hub box" you realize that its much more than that.

A Tech hub has lots of interconnection intricacies with multiple stakeholders, that must be initiated,nurtured and cemented.
Below, I managed to come up with a diagram that lists some of the stakeholders that most African Tech Hubs are currently engaged with or should engage with. For each, you will notice that it is on quid pro quo basis apart from Donors and Philanthropic ventures.
A Tech Hub has to initiate a link with either a Higher Learning Institution, Government or Public to be able to secure basic resources (like rent,internet,water) for its establishment and move on to build relationships with all the other players in the economy.

For example to receive money from the government, a Tech Hub needs to properly document how its activities will generate Jobs and later on its graduated Startups pay taxes. Likewise a University wants to know, to which extent a Tech Hub can infuse Entrepreneurship spirit into its students, if the university is it to offer its resources freely to a Hub.

However, most African Tech Hubs are currently operating on Donor or Philanthropic funds, which is not based on quid pro quo basis, and the reason the term/question "sustainability" has become famous in each Tech Hub. There was a hot debate in Nairobi and Kigali  a few months ago, where some people argued that "Donor Fund" is the cause for the "Tech Hubs' un sustainability", it is not.

This is basic logic, to kick start anything, you always need "abnormalities". Let me use the Car Engine Ignition as an analogy to describe what a Tech Hub is. For a car to ignite, the car injects fuel, along with air to the engine, compresses both, hence the fuel burns, and the burning mixture expands pushing the piston,rotor and the wheel tyres can begin to move "normally".                                           It does not matter, whether the fuel is flowing from Middle East,USA,Africa or which petrol station, what matters is that, once the car has gained momentum, there will be a guaranteed constant flow of fuel. Likewise, Tech hubs need to utilize any resources available to kick start,but drive to momentum and with continuity in mind.

Tech hubs are the engines of Tech Industry in developing economies: they are currently drawing a small amount of fuel (money) from Donor community (and some from Governments) and attracting air (Talent) from local universities but still lacking compression (Capital) to cause the spark (Series A,B) that will move the car (Tech Industry).
In doing so, Tech Hubs are facing challenges like less fuel trickling into the engine (Donor Money that has long and complex sources and accountability). Air blowing to different directions (Most of the Talented Africans do not go to Tech hubs, they prefer working for corporate companies or going over seas). And of course there is less or no compression at all (Angel, Venture Capital, Private Equity is still unheard of in African Tech Industry)

Conclusion;

Moving forward as we look at the above 3 fundamental aspects of a Tech Hub, we recognize that;

# Most Tech Hubs are still struggling to balance the Entrepreneurship equation. They are trying to raise their members skills' and simultaneously organizing events,hackathons to generate ideas and having hard time to attract capital.

# Persistent and acknowledging that the Entrepreneurship journey will take time (may be a decades) and they are ready to endure the consequences. Big thanks to the Rwandan Government that recognizes this, since quite often in the corridors with Rwandan decision makers I had them mention that "Tech Hubs like kLab" have places in the country's bigger ambitions like "Rwanda's Techno-pole".

# African Hubs are building the complex interconnected relationships with other stakeholders in the economy. They are building a portfolio with;

• Government (that they can create jobs and companies that pay tax), 
• Financial institutions ( that they can save some money on their accounts and have credit worthiness in future, or they can develop businesses)
• Higher Learning Institutions (that they are in it together, to fill the gap that is usually out of scope of the universities {which is dealing with the unstructured hands on mentor-ship of how to develop and grow a business.})
• Overseas companies that offer outsourced work to grouped Tech Hub members.( that African Tech Hubs have talented community that can offer quality services equally competitive as Indians, Chinese or Mongolians do)
• Public (that Tech Hubs are there for the public, through initiatives geared towards public good, like road mapping and offering price friendly IT solutions)
• Other Innovation hubs across the continent (that they share the same challenges and need concerted Pan African efforts like Tayo and Nicolas  mentioned). People like Ben White (VC4Africa) are doing tremendous job tackling the lack of Investment Capital challenge. {By the way, I am co-organizing a 2nd VC4Africa meet-up in Kigali this November 2014}
• Building relationships with Investors (both Local and International). And this is where existence of a "Board of Trustees" or another layer of a Tech Hub management becomes important.                     

         Attracting investors, is the most difficult challenge for Tech Hubs, especially given the small number of Investors on the African continent but also the "class difference". Most African Hubs' community is made of youth, mostly from humble family backgrounds (like mine). Consequently speaking the language of multimillion dollar investors, becomes a great problem.

I would urge basing on my experience at kLab, that existence of an upper layer of Tech Hub management (Board of Trustees as of kLab) is of paramount importance. This was evident to me in several occasions like over this November 2014 Glocal Convention. This convention  has brought Investors from UK, Israel,India,Nairobi,USA,Australia to attend the showcasing of African Innovators' businesses in Kigali,Rwanda. This would never have been organized by kLab community, if it was not the Rwanda ICT Chamber and Rwanda Development Board (Part of kLab Board of Trustees) that pulled strings and tapped into their investor rich contacts list to make it happen.

Finally, I would urge that "Tech Hub debates" should tackle on how to balance the "Entrepreneurship Equation", than try to make conclusions of a 1000 steps journey that has only made 1 to 10 steps. For example, over my 1 year General Manger-ship at kLab, kLab Startups registered a total of Quarter a Million US Dollar investments (mostly private equity and seed fund). Let us keep supporting these Tech Hubs, so that this figure rises to say 5 Million US Dollars investments per year, and many of the posed questions will automatically become obsolete.

Ref: Beyond Silicon Valley:Growing Entrepreneurship in Transitioning Economies https://www.coursera.org/course/entpecon

Dutahe!!!

Jovani Ntabgoba

Former Tenant&General Manager at kLab

BigData Predictive Analytics Research Student