So Safaricom will today launch Safaricom Venture Fund for start-ups in Kenya. I am not sure at this moment , how much they are going to put up as the starting amount for the fund but this is big for the Kenyan tech industry. I think this could be the game changer the industry has been waiting for.
There are a number of reasons why I am saying this huge and it is not just because it is Safaricom. The number of funds operating in Kenya are by the foreign firms or foreigners. That is not bad thing but I think there will be a definite shift in thinking when the local money men and women start investing in the local start-ups. Many locals still don’t see the opportunities in investing in the tech start-ups, and that gap has been filled by a number of foreign firms. I once asked a number of tech entrepreneurs or people who thought they were at the time what they would invest in if they have 10 million shillings to invest. Majority of them talked of real estate, land, transport but very few mentioned investing what they were doing. It was and still clear indication on how people think about the technology and its potential in this country.
With Safaricom in, this could change the perception about the industry. Many Kenyan developers dream to work with Safaricom and that is the reason why they run to them with any ideas that come to their minds. If you are a keen watcher of the industry, then you must have heard about many developers accusing Safaricom of stealing their ideas in the past. It is even said that Safaricom stole Mpesa idea despite the fact that Mpesa is owned by Vodafone. The problem has always been Safaricom’s desire to be everywhere, what one would look at as going the horizontal integration route. The good guys at Safaricom always have their eyes open. Unfortunately sometime they see an opportunity, long after some young men and women had seen the same and worked on something for some time. Those fine young men and women in the course of their work, end up discussing their idea with one or two Safaricom employees with hope that Safaricom will buy into their idea. The main reason for doing that is the cost of developing and marketing a product. If you get Safaricom on your side, you would think that they would bring in enough money to never worry about the cost of developing and marketing the product .
But when you look at some aspects of what is known as an idea, then you start to see why Safaricom don’t buy into many of those who present theirs to them. Some of the questions I asked myself which I once mention here (Check the comment section). When people first run to Safaricom, when they think of something or come up with idea, what do they necessarily expect from Safaricom? At this point people need to understand that an idea is not patentable and then there is the issue of how much do you sell an idea for. And if you are Safaricom, how much do you pay for an idea, taking into account that at the ideation stage there are many unknown variables.
Above is the reason why I do understand Safaricom’s tendency to launch a new product whenever they sense an opportunity in a certain sector. But for a company the size of Safaricom when they launch a new a product or a service in most cases they don’t employ people specifically to work on the new product but use the existing employees who probably have other roles at the same time. For that reason I always believe that a start-up which decides to stand tall and concentrate in building a better product would definitely have a better chance for success. A simple case for vertical integration. Then you would ask, what then should Safaricom do instead of the so called Horizontal integration maneno. The best route is to look around and see if there are people who are already working on the kind of product they want , then buy them out instead of trying to reinvent the wheel. The advantage of this is that on top of acquiring the product you also acquire the skilled individuals behind the product. Best still, their passion for what they are doing. A good example is when Radio Africa, bought Trinc Media. And bad example is When Radio Africa were not able to buy Ghafla then they came up with Mpasho.
But Safaricom is changing. Just last week, they acquired Mledger app. Still trying to find out how much they paid for it but it seems they have learned they lessons over the years. And with the launch of Safaricom Venture Fund today, then you realize that they are now completely a different animal. Now the Start-ups with ideas can go to them without fearing that their ideas will be hijacked
Back to the reasons why I think that the Safaricom Venture Fund is a game changer. When Savannah Fund was launched sometime back, we said the same thing, but much did not change for the local start-ups. The reason being that Savannah Fund look at itself as Africa Venture Fund instead of Kenya centric Fund. With such big outlook, it is hard to get in and get the Funding. It also did not change the dominant narrative in Kenya, that unless you have a white partner, the chances of getting funding is next to nil. And those who are able to get it don’t get as much as those with white partners or ventures run by whites. My view on this is simple. I do understand why someone in Silicon Valley will not just walk in and fund any Tom Dick and Harry he/she finds on the streets of Nairobi. Bring it back home and think of any Kenyan who will go to South Sudan and invest in any young South Sudanese, regardless how good they think they are doing. Very few or none at all. But many Kenyans would be willing to invest in a business run by another Kenyan in South Sudan. The reason is simple, people trust what they know or who they feel they know.