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Role of Incubation Hubs in Fostering Innovation
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Providing an enabling environment to grow start ups Supporting innovations in academic institutions
Sourcing and vetting potential high impact businesses Swahili Box: Nurturing innovations for socio-economic development
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Providing an enabling environment to grow start ups By Albert Kimani
One of the key components of successful enterprises is the ability to remain relevant. This can be achieved by consistently matching the ever dynamic needs of its customers through offering compelling products. In other words, enterprises have to continuously evolve to match the ever changing ecosystems, for their value offering to be compelling as well as have an impact in their target communities and bottom line. In this regard, enterprises have to continuously innovate and integrate measures that support innovation as a principle value for the sake of their survival.Innovation, which is sometimes misconstrued as invention, has as many definitions as are their scholars and business leaders; meaning also differs from one enterprise to another. There are, however, common convergences from all the definitions
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offered including ideas, problems and sustainability. In this sense, innovation revolves around the utilization of ideas to sustainably solve problems within the communities within which we 'live' in. All problems revolve around efficiency and effectiveness of existing coping mechanisms or lack thereof. In most cases budding entrepreneurs identify problems, utilise their knowledge and skills to identify solutions to these problems but fall short on building sustainability around the respective solutions and ideas to the problems. This is where incubation hubs play a significant role in innovation. Incubation hubs support promising entrepreneurs in their idea-startup phase by providing an environment together with support that is meant to slingshot them into the growth phases. “At Spark* International, our support starts with a one-week acceleration and continuous support for 12 months through coaching, individual strategy session, hosting boot camps and small rounds of grants to the respective enterprises. In addition,
we introduce the enterprises to potential investors for funding opportunities,” noted Kimani. Contribution of Incubation Hubs to Innovation. In most cases enterprise founders have little or no business background; they are individual who seek to address pain points in the society using skills from relevant backgrounds. For example: an engineer trying to improve accessibility to water, A software coder developing an app to help access affordable short-term office space for start-ups or a mother trying to use social media to help families locate their lost children. Part of an incubator's function is to significantly contribute to the enterprises' refinement on the three key elements of innovation; problem definition, idea refinement and sustainability throughout the incubation period. Spark* International's contribution to innovation is grouped as follows: Problem Definition – Spark* International's key areas of problem focus are in education, health, jobs and homes; in that, our goal is to support entrepreneurs (change makers) sustainably grow social impact in the these four areas. Entrepreneurs are taken to task, asking them to define how the problems identified affect a significant portion of the community and why it calls for an urgent solution that is economically viable. Idea Refinement – through the help of expert facilitators, accelerator participants are able to refine their ideas/solutions to identified problems. For an idea to be innovative, it needs to focus on effectively addressing the pin points and providing long-term solutions. Being among the community of change makers hosted in the hubs helps sustain this drive amongst entrepreneurs to refine ideas around the societal problems.
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Sustainability – the environment around hubs brings together different players in the start-up support ecosystem which includes investors. A key takeaway from Spark* International's support to change makers is the ability to pitch to and engage investors; this calls for continuous review of the respective sustainability models. A key downside to the incubation hubs contribution to innovation is the duplication of effort; multiple hubs in most cases find themselves supporting the same entrepreneurs thus limiting their aggregate impact towards the overall innovation. “There is need moving forward, to share entrepreneur databases indicating support provided for, from technical to funds and investment so as to ensure equal distribution of support to a wider pool of deserving entrepreneurs,” he emphasized.
Kenya Climate Innovation Center Strathmore Business School, P.O. Box 49162-00100 Nairobi, Kenya. +243703034701 About KCIC The Kenya Climate Innovation Center (KCIC) provides holistic, country-driven support to accelerate the development, deployment and transfer of locally relevant climate and clean energy technologies. KCIC provides incubation, capacity building services and financing to Kenyan entrepreneurs and new ventures that are developing innovative solutions in renewable energy, water and agribusiness to address climate change challenges. Editor Mercy Mumo info@kenyacic.org Contributors Albert Kimani Ernest Chitechi
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Supporting innovations in academic institutions By Mercy Mumo
One of the things that young people appreciate in curriculums in institutions of higher learning is when they have a complete blend of arts and sciences to
foster innovation. This contributes to building competent teams. Established in 2010 at Strathmore University, ilabAfrica set out to bridge the gap
in innovation hubs in academic institutions by using technology and innovation to achieve sustainable development. “This was the first centre of its kind in any academic institution in Kenya. Beyond classroom training, the facility fosters research in ICT for development,” said Bernard Chiira, the Incubation Manager @ibizAfrica. The mandate for ilab has been providing an enabling environment where technology and IT can be used to get solutions. With a clear focus on emerging technologies, i@ibizAfrica works with industry players from government to the private sector. iBizAfrica is the entrepreneurship arm of iLabAfrica which provides an enabling environment for innovation and the creation of new ventures that are addressing the societal needs both regionally and globally. The university has adopted a multi stakeholder approach working with different players panning into a multidisciplinary research and innovation center. Over the last decade, the university has been training people on new technologies in mobile, health, cyber security, digital advertising, data science and in the internet of things which is a new technology looking at how we can leverage on connected devices to solve challenges in various industries. “In all these areas we have built capacity, set up teams and ilabAfrica now employs over 80 people full time,” he noted. Combining applied research and training has opened innovation
opportunities which have translated into viable businesses. For instance, in Bungoma and Busia counties, interventions in public district hospitals have received accolades. “Students came together to figure out how to make operations more efficient while having a quick turn around in diagnosis and treatment. Most hospitals in the country are still using outdated manual systems. Innovations have assisted in automating lab services thus reducing the time from lab to treatment.” On entrepreneurship, @iBizAfrica is focused on commercializing ideas and projects with huge potentials. For example, Medbook, is an innovation that provides solutions for medical practitioners to solve specific challenges over the web. The application is able to facilitate bookings of appointments, health specialists among others. The facility also provides pipeline for entrepreneurs from other academic institutions. “We have a monthly pitch Friday event to access the viability of the ideas presented and identify projects that are ready for incubation,” noted Chiira. The event has attracted over 300 entrepreneurs. @iBizAfrica also runs customized programs that are cohort based to accelerate the startup at different stages. With support from strategic partners, each year it incubates more than 15 teams or individual enterprises to assist them in commercializing their innovations. The success has not been without hurdles. How to consistently attract ideas that can be commercialized has continued on page 4
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continued from page 3 been a challenge. “We have had to continuously revise the selection criteria, take teams as opposed to an individual to ensure quality control of the programs,” averred Chiira. He also emphasized on the need to change the mindset of an entrepreneur by changing the narrative from basic survival to scale to become million dollar companies. For instance, Purpink Gifts was born as a result of a class project that was turned into a business after incubation. The startup is Kenya’s leading customized gifts e-commerce platform. “We want to complete the ecosystem as an institution. Create a structure to raise substantial funding to invest in early stage companies to create value for the university and other stakeholders. Converting research into value. This is what will transform higher education,” he said. “Strathmore university has been a pioneer leader in innovation, we would also like to be the first ones to address what I call the missing economy in Africa. Sustainability for African universities will only come from the ability to commercialize research and translating it in to value for markets and investors in different sectors of the economy.“
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Supporting social enterprises is the way to go By Mercy Mumo
The Kijiji was established in July 2017 with the aim of bringing social enterprises together to learn, exchange ideas and create impact. The survival of a social enterprise is much shorter than a commercial venture. The Kijiji comes in to create an enabling environment for social enterprises to grow and scale. Eric Kariuki who is also the co-founder alludes to the fact that budding social enterprises require a lot of support if they are to survive. “Financial support is not the only solution to their challenges, they also require peer to peer interaction and training to spur growth,” he added. So far The Kijiji has worked with
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50 enterprises in East Africa in various sectors such as health, education, agriculture, environmental and finance. The organization aims to engage enterprises that are focused on impact, profit and environmental sustainability. “We give three key services: flexible membership, Kijiji offers office space with flexible hours that range from 30 hours to full time. We also run various programs and events in incubation and acceleration that targets early start ups and events such as the Nairobi Stew. This is a community crowd sourcing activity where funds are collected during the event and awarded to the individual selected,” emphasized Kariuki.
The third component is the business service support and partnerships which are more targeted to individual enterprises and their needs. The incubation and acceleration programme caters for both ideas and existing businesses in partnership with other entities to address challenges such as human resource, financing among others. In partnership with Microsoft’s Windows4Good programme, The Kijiji supported in the delivery of the second cohort of 20 social enterprises in East Africa. The programme ran for six months and helped the enterprises develop their ideas through mentorship and coaching. For existing businesses, the programmes came in handy to develop their business acumen, providing needed mentorship and coaching and linking the entrepreneurs with industry and business experts to empower them to reach the next level. Some of the successful enterprises that Kijiji has mentored include Mshonaji, which is in the product development stage. This is a Kenyan enterprise which runs an online platform that connects tailors with viable customers. The platform has 20 tailors serving over 60 clients. Another brilliant enterprise is Worknasi in Dar es Salaam which connects landlords with tenants who need office space. The online platform encourages people with office space to connect with startups, businesses and other freelance individuals and access any available space at an affordable rate. “Having been in existence, the company was having difficulties in scaling and marketing. So far the company has over 20 rental spaces in Tanzania,
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Kenya, South Africa and Nigeria,” said Kariuki. The space sharing concept provides a conducive learning environment as the businesses interact. The Kijiji also provides a network based approach aiming at connecting entrepreneurs in various sectors. In the climate change space, Smagri in Rwanda is prototyping smart farms using remote sensing technology and integrating it with the farmers to collect data to address different aspects of the farm such as soil and weather patterns. “They used one farm to pilot where their biggest challenge was lack of infrastructure (hardware) and the integration system (software) for data collection. The Kijiji used its networks to point them to possible service providers, offered coaching and mentorship as well,” he said. Any business is capital intensive regardless of the size therefore its important to work out mechanisms of reducing the capital expenditure. Just like any other incubation hub, the business has not been without challenges. Early stage financing has been a key hindrance to business growth as most investors prefer to work with existing businesses in the growth stage. Kariuki noted that sometimes the viability of the business idea is questioned. “People want to create solutions for invented problems rather than finding out the problem first then coming up with the solutions.” In future, The Kijiji hopes to expand to five more underserved neighborhoods in Nairobi, come up with alternative funding sources and incubate over 1,000 businesses in the next three years.
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Incubating businesses in the health sector By Mercy Mumo
Having worked at the Kenya Medical Research Institute (KEMRI) for more than 15 years, Robert Karanja realized that it is one thing to have the capacity to do research while its another thing to have the capacity to translate that research into products and services. As Africa, we have a very strong life sciences capacity for research and development. “Its not an in issue of lack of knowledge or expertise. It is market solution driven. The problem is not at the science level but at the market level. There is a know-do gap,” noted Robert the Executive Director Villgro Kenya. The reason why we are not able to bridge this gap is majority of us chose tracks that were science oriented or arts oriented as early as high school. “We needed to have structures and systems in place to bridge the void where science is and where the market players are,” he noted. The conversation needs to be taken beyond patenting. “in science we are told to patent invaluable knowledge but the truth of the matter is nobody will rarely come to say that we need to license your patent,” said Robert. There are business opportunities in terms of invention but we do not have a way of getting the invention into the market place. For those in the health sector, there is lack of training opportu-
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nities to empower and unlock the potential for entrepreneurship innovations. This is how Villgro Kenya was born. To support health innovations through social entrepreneurship, de-risk impact investment for global health technologies using incubation and to provide seed capital, technical assistance and hand holding to start ups. Since 2015, we have worked with existing companies and those in incubation. We have worked with 12 enterprises in incubation and 20 others. As compared to other incubation hubs, their programme takes between three to four years. It takes about five years for an innovation in the health sector to pass the regulatory tests and gain approval for market access. “Our definition of incubation is slightly different. We do not provide space, we provide legal assistance, capital networks, mentorship and membership,” added the director. Being sector specific gives the company an added advantage because they have in-depth knowledge to leverage on their networks and expertise to do both short and long term consultancies. Villgro has two categories of entreprenuers. The first is the inventors where they face the challenge of the valley of death. Beyond the proof of concept they have nowhere to go. Being able to provide seed funding
for product development and market success is needed. Think IT is a start up in Kampala, Uganda doing medical diagnostics for malaria without drawing blood. The company is run by young graduates from Makerere University who are currently working on clinical trials with the help from Villgro. “The matibabu device gives results in 30 seconds thus reducing the time taken for malaria tests,” added Robert. From a hackathon in 2016, a group of students from various universities came up with a winning concept of a fetal heart rate monitor. This is a wearable device that can monitor blood pressure during and after pregnancy. The device will go a long way in empowering women to take control of their health. Villgro is assisting with the business and product development especially on
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iterations. The second category is universal health coverage oriented. Less than 10% of Kenya has access to heath insurance.A number of barriers limit access to affordable health care. These include cost, distance and cultural perception. “Establishing a team that compliments each other with their different skills set is not easy. Investment in the health sector is low. The regulatory framework in the health sector requires a lot of goodwill from the end users. There is also need to regulate home grown solutions apart from imported products,” said Robert. A regulatory space that does not kill innovation but facilitates growth is key to the survival and commercialization of the innovations.
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LIVE GREEN Sourcing and vetting potential high impact businesses
Wangui Muna a specialist in private sector development speaks about her experience in sourcing and vetting potential high impact businesses for investment. What has been your experience in financing start ups to prototype and scale? There is a huge financial gap between the number of enterprises seeking investments and investors ready to put their money in these start-ups, with common feedback being that their businesses are at an early stage and too risky for investment. According to 2012 report from Monitor-Deloitte and the Acumen Fund highlights this paradox-“The Pioneer Gap: While thousands of early-stage innovators seeking impact launch companies worldwide, very few are able to build the
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teams, find the customer base, or raise the investment necessary to scale.” When start ups come on board, most have no idea what it takes to scale up and commercialize. A lot of preparation in the form of assessment of business and revenue models, critical investment readiness training and technical support to address identified gaps is required prior to showcasing them to potential investors. When pitching to investors, some of the start ups are either not well prepared for the rigorous process or some are prepared but do not take the feedback positively and end up giving up along the way. Most do not align their businesses with the regulatory framework by getting the proper certification and standardization. Having a
LIVE GREEN ISSUE 04 APR - JUN team gives the investor the impression of commitment and potential as opposed to a one man show. There is also a mentality issue where entrepreneurship is treated as a ‘side hustle’ instead of a core business. Financial management- which is one of the key requirements for investment is taken lightly. The entrepreneur also needs to understand what kind of capital they require when seeking investment. All these issues if not addressed usually place the entrepreneur at a disadvantage when seeking growth capital. What key role in your view do incubation hubs play in supporting startups? Incubators support early-stage start-ups by providing them with a range of services, such as business development support, mentoring, infrastructure, as well as access to investor networks, knowledge centers, policy makers and other ecosystem enablers. Incubators play critical roles in helping startups polish and test their ideas into viable market-driven products and services, build cohesive teams, develop sound financial foundations and attract the right partnerships for successful businesses.
businesses to reach scale. Unclear Regulatory Environment: Lack of an enabling and stable regulatory and policy environment for both investors and sustainable social enterprises. On the flip side, some of the expectations by investors are somewhat unrealistic and have stringent requirements that the enterprises are not able to meet. This discourages enterprises from seeking, game-changing, investment opportunities. Investors need to understand the local business ecosystems. What are the most common business models ideally employed by the start ups you have interacted with? The key to a successful business model is developing one around solving a major problem faced by your market/customers. Whether the model will be direct sales, on-demand, and franchise or pay-as-yougo, solving a critical need is important. Most startups I have engaged with are innovating in the agriculture, clean energy, processing and financial technology sectors. Use of digital technologies on mobile and internet platforms to deliver products and services is becoming normal.
What are some of the challenges that investors face when deciding on which businesses to support? Insufficient investment-ready opportunities: Entrepreneurs’ at times have weak pitches thus the investor does not see the value proposition. This could be as a result of over or under estimations of the capital and market projections as well as service delivery channels. The estimated time for a business to start generating revenue may also be prohibitive. Long due diligence process: Diligence process can be long and tedious, creating frustrations for both investor and investee. Insufficient human capital: Lack of talented, reliable and affordable management needed to plan for and build
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Are there any lessons we can learn from investing in green businesses? According to Green America, green companies adopt principles and practices that protect people and the planet. They challenge themselves to bring the goals of social and economic justice, environmental sustainability, as well as community health and development, into all of their activities — from production and supply chain management to employee relations and customer service. With the effects of climate change on all facets of our lives, green business is good business. We must align our businesses with sustainable environmental utilization. Reaching the UN sustainable development goals also largely depends on a robust green economy.
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News in pictures
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The launch of the 3rd Mentorship Programme in March 2018 Clients at the 5th Africa Sankalp Summit in March 2018
Danida VVIP visit to KCIC in January 2018
Danish Ambassador’s visit to Scode in Nakuru County in March 2018
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Participants at the Agribusiness Investor Summit in February 2018
KCIC CEO Edward Mungai and former VDS Director General Julius Muia during the MOU signing between KCIC and VDS February 2018
Clients and KCIC staff at the Knowledge Cafe on Standards and ESFM in February 2018
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Putting clean tech innovations on a firm business platform By Ernest Chitechi
While we hear of the effect climate change is having around the world, it is refreshing to hear of innovative ways that Kenya Climate Innovation Center (KCIC) is helping to reduce the damage. As a business center for climate innovations, KCIC is targeting Kenyan Innovators, entrepreneurs and SMEs providing solutions that will enable Kenya to achieve a low carbon climate resilient development. KCIC is a cutting-edge facility, offering various services to a growing network of climate innovators. The Center provides incubation, capacity building services, access to information, enabling ecosystem as well as access to finance to ventures that are involved in agribusiness, water and sanitation and renewable energy.
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As part of its continuous innovation, KCIC has developed the early stage financing mechanism. The early stage financing mechanism(ESFM) was established based on need for early stage financing targeted at development and startup-phase clean technology enterprises in Kenya. The ESFM facility provides funding in debt, equity and hybrid instruments to bridge the gap faced by early stage companies when raising funding, primarily by providing equity and equity like capital. Exotic EPZ Limited, a women-led social enterprise committed to promoting sustainable rural development, has received Kshs. 5 million (approximately $50,000) financing from the Kenya Climate Innovation Center, under its early stage financing mechanism.
The company is the first recipient of funding under this facility. Exotic EPZ engages in the processing and export of macadamia nuts. The funding will be used to purchase raw nuts to increase the monthly production capacity by 50%. At the same time, the funds will help the company double the number of farmers it is working with from the current 1,500. The early stage financing facility is designed to empower clean technology enterprises to develop and grow sustainable, revenue-based business models that are aligned to addressing climate mitigation and adaption. This facility was made possible courtesy of a partnership between Autodesk Foundation and Kenya Climate Innovation Center. Autodesk Foundation seeded the facility through which KCIC is now investing in its enterprises to enable them scale their climate innovations. Climate change poses a real threat to Kenya's development prospects and livelihoods and can undermine investments made to meet Kenya's development agenda. The drivers of Kenya's economy are primarily natural resource-based with sectors such agriculture, trade and industry, tourism and services such as water, energy and transport being climate sensitive. Speaking during the signing, Edward Mungai CEO of Kenya Climate Innovation Center noted that this was a
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historic moment being the first time KCIC is signing off commercial funding. “The ESFM facility will assist our entrepreneurs to move from proof of concept to scaling and we hope that this money will open doors and move their market and commercialization to be able to invest in the company,” said the CEO. It is also expected that the opportunities for clean-tech innovations as well as development of new business models that will address the effect of climate change will grow. For Kenya to achieve its development objectives, it will be critical that both the private and public sector supports the development, demonstration and deployment of clean technologies which can support climate mitigation and adaptation. This will in return provide energy, food security, resource efficiency, job creation, and increased competitiveness. He lauded the Autodesk Foundation for supporting the facility to enable KCIC to invest in early stage companies who face the challenge of attracting financing from commercial investors. Exotic EPZ has received support under the Kenya Climate Innovation Center accelerator programme and will continue receiving advisory services from the Center including; sourcing for additional funds to expand production capacity and business process optimization support.
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Swahili Box: Nurturing innovations for socioeconomic development By Mercy Mumo
With majority of the innovation hubs concentrated in Nairobi, having one down in the Coast region was a welcome relief to the youth in the community having found a place where they could be trained and mentored on their socio-economic innovations. Modeled like other hubs, SwahiliBox is a free space for budding enthusiasts in technology where they are able to access training and mentorship support through a peer tp peer kind of model. “It is a project of M-Power that was established in 2013 to bring together individuals in Mombasa with talent in technology for skills transfer to the interested parties,” said Aly Salim, Deputy Executive Director. The facility has a range of experts in coding, web and software developers, hackers, system engineers, gamers among others. SwahiliBox strives to build a community of people who are passionate about technology transfer and focus on building a wide range of skills for those intending to establish businesses and get them past the survival stage.
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Through donor support, they have been able to support budding students in the tech space. The organization provides a platform for teaching interested youth from various universities and colleges to build phone applications. “A community in Mombasa interested in learning Ruby on rails have a place to go sharpen their skills for free every month,” noted Salim. Atlassian tools which is a set of tools one can use to monitor the services that an organization is offering offers trainings twice a year to members. Salim pointed out that with the advent of Ruby, new technology is being taken up by startups, they are hosting workshops for school drops outs and those not able to join tertiary institutions and colleges to learn about hardware and programming. “The aim is to get them basic understanding on the internet of things from Likoni and beyond. SwahiliBox provides the learning materials for free.” All sessions are practical and not theoretical. What you gain by doing sticks more than what you read. The programmes are more volunteer based “We are a non profit and encourage peer to peer learning. Those who go through the program are able to give back to the community in the various programs as trainers,” said the deputy director.
A number of successful start ups have evolved through the training and mentorship support such as Salon Hunts by Mercy Cheruiyot, Nexus Technologiesan ISP provider by Oliver Ngoa. The Andela Learning Community which is a program that was initiated by Andela in Nairobi is hosting the coast cohort at SwahiliBox. Incubating entrepreneurs has its own fair share of challenges. The mentality of the older generation is that in order to succeed, the youth need to attend universities. Teachers in most technical universities are more theoretical than practical. “For us teaching is practical. Getting more interest and attention from university level students who want to learn programming says a lot. Assisting computer science students by exposing them to practical learning has helped turn class projects into functional applications and businesses,” added Salim.
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Offering tech mentorship to interested students has proven that providing some form of direction is sometimes the only thing they need to nurture their skills set. Last year SwahiliBox was represented at the Safaricom's technovation challenge series where studies in Science, Technology and Engineering and Mathematics (STEM) are used to develop technology solutions. “We had students compete at the county and national level and went on to represent Africa at the international level.” Salim adds that the trainings have ben successful. The students have been able to secure employment and start their own businesses and consultancies. SwahiliBox is currently exploring ways to increase their customer base. Salim adds that schools in Malindi have expressed interested in programming and they are working on facilitating a session.
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