feed the addiction: being a VC, “making friends/influencing people” and Kenyan Entrepeneurship

 + Do you have what it takes to be a VC? The VCAT (Venture Capitalist aptitude test).

 + Flow: The Game.
Check it out and get addicted.

 + Need a control interface for a high complexity project? Try The Lemur.

 + Consultants as a development tool. 1 and 2.

 + A Kenyan Towns Offer of Aid Pays Dividends for Its youth (behind the NY Times paywall, try bugmenot.com for a username/password).

 + An ongoing theme on other blogs but one that needs to be addressed all the same. China flexes its muscle.

 + Paralyzed by Aid? De Spiegel on Aid in Africa

 + Airport frustrations.

This is my take on how to make friends and influence people at airports wherever. Without having to carry an extension cord.

Splitter on laptop power cord
Splitter on laptop power cord

Thats right people, I have an splitter at the end of my laptop power cable, it makes me all kinds of friends.

 + On Kenyan entrepreneurship

I already wrote a little about Mama Mikes’. I tried to get involved in some debate going on at KenyanPundit by leaving a comment on what ails Kenyan entrepreneurship but all my attempts to get the comment up thwarted by a blog engine that decided to swallow chunks of my writing each time I posted. As a work-around, I decided to post some thoughts here and cross link to that debate at KenyanPundit.

I am of the opinion that Kenyan entrepreneurship is on the cusp of something big.

One of the biggest problems in the past was that of political patronage. Up to maybe 5 years ago, one did not really “build” a successfull business in Kenya. The accepted path was to “link up” with political patron with some pull and get your business connected to the “real deal”. This was always some sort of government contract to provide services or products to public sector projects. As a result, we all lived through and heard all types of horror stories coming out of the way in which this type of business was conducted. Some of the more magnificent stories from this period include the one about the contractor responsible for supplying clorine for treating water for the entire City of Nairobi who chose to supply chalk instead.

Anyway, I digress.

With governance improving, we are getting back to the point where people with viable ideas can create and grow great small and medium businesses in the long term. I think that Mama Mike’s is an example ofa great idea whose time is coming. Once KTs can get past the initial mental obstacles associated with doing business with a Kenyan company over the web especially with credit cards, this is a project that will grow in leaps and bounds. Maybe I can even do some business with this this Christmas season.

It is also important to mention that I disagree with the idea that there is a dearth of investment opportunities in Kenya? What with the mobile phones, the pending implosion of the housing/land market, net and the sub-par services offered by many stockbrokers who are the effective gateway to the NSE, I want to argue that there are a host of new business opportunities coming up from cell based businesses (money-transfer/banking applications) to internet based businesses (legal transcription, customer service/application development).

Even the stock exchange is a viable option if you have more than Kshs 500,000 to get you in at the better brokerages like Krestrel.

For starters, anyone can see that there is a glut of capital in Kenya. Look at the booming construction industry coupled with decent growth and an economic revival thanks to ever increasing numbers of tourists coupled with improved prices for agricultural produce. (I could link to documentation on all of this but these are just comments)

I think that a huge part of the problem though is the fact that Kenyan big money is still pretty myopic in terms of what it will invest it. They will certain invest in KCB/KQ/StanChart/KenGen IPO for tens of millions or pump another 5m Kshs into a gas station (this seems to be the business of choice for Kenyans looking to strike it rich) but they will not put up <5m Kshs to get a small company off the ground. I would love to see the Kenyan bank that would put <5m Kshs into a 3-5 person group (with no political patronage) with a big idea. They will give you 5m Kshs for a gas station though or 100m Kshs to Uchumi.

I would love to see an investor/bank or two set up an startup incubator: basically office/lab/work space + infrastruture and a small amount of funding and a small paycheck for groups like these in return for a reasonable fraction of the business if it takes off. It makes it easier for entrepreneurs to try their hand at business and is profitable all around. Having an incubator minimizes risks since having just one or two successes will more than adeqautely cover the cost of carrying a bunch of other failed projects.

Any other thoughts/ideas out there: I would love to see some debate/talk about this especially if we could get a potential investor to chime in.

Discuss - 9 Comments

  1. Kenyan Pundit says:

    Great post…love the splitter :-) Will pick up on your debate back at KP…

  2. acolyte says:

    The Mama Mike’s crew hollad at me so I gave a link to the video. I think you do have a point, due to some swindlers out here many Kenyans are very very reluctant to let a fellow kenyan within sniffing distance of their credit cards!
    The splitter is a great way to make friends!

  3. acolyte says:

    Oh btw if anyone wants archived NY Times articles give me a shout. I am a Times select member.

  4. E-Nyce says:

    Ntwiga, your splitter idea is wicked! Thing is, don’t most power cables have a three-prong plug? You’ll make more friends if your splitter could accomodate the 3-prong…

    About glut of capital in Kenya – where did it come from? Where *is* it coming from? I’ve not been able to read anywhere an explanation for this phenomenon. Anyone can point me to a thorough reading/discussion on the issue?

    Dearth of capital in Kenya:

    The evidence says otherwise: I spent exactly 30 minutes trying to find evidence of large capital investment in Kenya and found the links listed below (I went with the obvious stuff but I still missed out some big ones like Portland/East African cement, KenGen, KPLC, JICA, Kenya Pipeline due to my half hour limit. I also was not able to document private investment (which is by definition typically un-documentable in this fashion)

    – over-subscrition of ALL – and I mean ALL – IPOs over the last 5 years. Typically, oversubscriptions are to 500% of the value of the rights issue
    – remitances (currently estimated at $1B) have to go somewhere since Kenyans are typically not consumers
    – external investment in Kenya
    property -> $330m
    telecomms -> $380m for ADSL and another $150m for a bacbone link etc etc and this is just one company.

    – internal investment in Kenya
    KQ – atleast $50m for new planes

    EABL – $30m for expansion(page 14)

    Safaricom – $210m

    – Steve

  5. […] The one thing that was very visible was the enthusiasm by most KTs to invest back home. Maybe that comment by Mutumia on the now famous post is indeed true; ‘KT-ing’ and ‘nation building’ need not be mutually exclusive. With the debate that is going on about the shortage of investment opportunities over at this post and this other one, I am of the opinion that investment professionals have their work cut out. There’s a glut of capital [KT remittances, increased bank liquidity and first time investors] and obviously many opportunities. These two factors are only asking for a rendezvous and everyone is happy. […]

  6. nwabu says:

    Great to see segeni and Mama Mikes doing well.

    About the NSE and Nairobi property prices, I think on one level Kenya has quite a lot of international exposure compared to most African countries. Nairobi happens to be one of the better cities in that region and is a major hub for businessmen and tourists. Secondly, there is a lot of remittance money that is being channelled into hard, easily monitorable assets. Stock you can get in and out of. Property never goes down particularly in a place with almost perfect weather like Nairobi and a place that is a tourist magnet.

    For SME’s capital is tough to come by everywhere in the world and the Kenyan economy is no different from many early-stage economies. But I think making these opportunities available to investors requires innovations that are not present on the ground from what I can see.

    Lets not forget credit cards, junk bonds, venture capital are US innovations that people there created to value start-up and high-risk operations so we in Africa (I am Nigerian) have to come up with similar innovations that works for the lender and for the borrower at the same time.

    In addition, we need to do more networking. Seriously! Being an entrepreneur requires major networking and again for those of you who have been in the US you should know the value of investment clubs, entrepreneurial clubs, business events, conferences for meeting potential partners, exchanging ideas and even getting potential investors who will lay down their money because they believe in your idea.

    Do we have these kind of clubs in Kenya? Nigeria? Africa? Do we have these kind of conferences? If we don’t maybe a starting point is setting up these in Nairobi or wherever else so you can bring in entrepreneurs, financiers and people that want to setup their own businesses.

    It might be the jumpstart that you need to get that capital to get your business moving or the people you need.

  7. Mbeca says:

    I would like to join networking circles here in states in an aim to get to know business opportunities available can you please get me to some on the networks in PA

    Not sure I can do this as I neither live in the PA area or have any knowledge on how to get into organizations of this nature. Any one with suggestions for Mr. Money (I assume that Mbeca is a nom-de-guerre) here?

    – Steve

  8. Alexander says:

    I am a finance student of Strathmore University in Kenya, i enjoy your discussions and would like to share my inputs.
    I think the only way of increasing kenya’s economic growth to rival that of India other than using the youthis through developing SME financing.Most SMEs in Kenya are at the moment left vulnerable as banks and microfinance instituitions are climbing over each other to attract SMEs to obtain loans from them, which is leaving SMEs at ransom since they are not adviced on how to pay back the loans and huge interests. Utmost these SMEs borrow from one institution to pay a previous loan from another instituition, making this a vicious circle and reducing the growth potential of these SMEs.
    It is in these regards that i have registered an investment company, Networth Investment Group of Africa. It has been a trying period for me given my financial situation( broke arse student life) since i had to fork out all the registration costs (Kshs.65,000- and i still have no licence and office), i managed this through getting some 4 classmates of mine who became my business partners and shared in the costs.
    In the business we are setting out to buy out viable SMEs that are being run down by mismanagement, restructuring them into profitavility and growth then selling them to willing buyers and venture capitalists.
    We are also planning on applying for a licence to the Capital Markets Authority to operate a securities exhange secondary market for an Over-The- Counter market for SMEs where we create a portal for SMEs to obtain interest free and capital that they don’t have to pay back which they can put in their business and expand to enjoy economies of scale.
    Given my lack of experience in the financial industry, i started a Students Finance Assiciation in Strathmore University where i can get a lot of training and exposure in this industry.
    I am currently looking for angel investors who can invest in the business and add their experience and technical expertise.
    I am also requesting for guidelines and information on how to expand my knowledge in this industry.

    Bund Alexander
    -The darkest man in Africa-


    help Kenyans build kenya

  9. Fluke says:

    Muchas gracias por su explicaci?n, la escritura era muy super
    En el ?nterin, he revisado su gercekler sitio muy bueno, le deseo ?xito. http://sxeantihile.wordpress.com/

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