E.A Incubators Should Push Young Entrepreneurs to Talk to “Real People” – GrowthAfrica CEO

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Johnni, GrowthAfrica CEO, Briefing the Participants

Last week, GrowthAfrica held its first GrowthAfrica’s Acceleration Programme 2017 workshop in form of a boot camp for its Ugandan cohort at the Innovation Village in Ntinda. The boot camp was the first of seven workshops that the 11 businesses in the cohort will be subjected to.

It is a very intensive program, just like one would expect an accelerator program to be. The trainers pump so much in those five days they get to interact with the businesses.

These three days a workshop will go on until December 2017 with occasional follow-ups on the participating businesses by GrowthAfrica staff, who are called Growth Catalysts and Financial Modellers who work with the businesses to essentially get them ready for investment.

When I paid a visit to one of their training sessions, I found Dr. Edward Isingoma, Managing Director at Pearl Capital Partners taking them through a session on investment readiness.

Johnni and Dr. Edward Isingoma, Managing Director at Pearl Capital Partners

In between, I was able to get a quick chat with Johnni Kjelsgaard, the Founder, and CEO of GrowthAfrica. Johnni speaks so proudly about this cohort as well as his commitment to see that they get equipped with whatever is necessary to enable them funded.

This is the second time GrowthAfrica is running the programme in Uganda. Prior to shifting to the innovation village, the programme workshops were been held at the Bugolobi based Venture Labs.

For this cohort, there are 11 businesses. These include IntelWorld, GRS Commodities, Global ICT, Smart Watch Solutions, Patasente, Gorilla, Lipa Mobile, Bee House, Bold in Africa, Ugabus and Eco International. They span Agribusiness, IT, renewable energy and other sectors.

Asked the first thing they do with their cohorts, Johnni says they “investigate if their [business owner’s] assumption about their business is correct and that primarily has to do with their customers”.

Edward receiving a gift from the GrowthAfrica team

The team at GrowthAfrica tries to establish if the customers see the products and services of these businesses the way the business owners think they do. This is aimed at removing any chances of one of the business founders living in a bubble.

Often, according to Johnni;

What is common with not only entrepreneurs generally but also the cohort that we have here, is that because you’re so busy developing your products and trying to sell, you never really feel you have time to take two steps back and ask if what you assume about your customers is real.

Yet, that’s just one of the many things the team at GrowthAfrica investigates. The other thing is what they do about figuring out what my customers think about their products. They find out how they take that input and put it into a process that informs them about refining their products and services.

Focus

Johnni emphasized that their focus is not too much on startups. They usually take on post- revenue businesses- ventures that have been existence for a couple of years, already have a product or service that is in the market and existing customers.

Businesses mostly admitted into GrowthAfrica’s Acceleration Programme, are those that are still trying to figure out how to scale, start or keep growing as well as those looking to accelerate their growth. But, amongst of all key things considered, these businesses should be creating enough value for the customers to justify charging whatever they are charging for their products and services.

Similarities

Although all the startups accepted in the cohort are not in the same industries, Johnni says that “most of the businesses accepted have a few things they share in common.”

For the current cohort of 11, “the thing they have in common is the stage they’re at”, says Johnni. Which, as highlighted in the focus section, is that they are just about to figure out how to grow exponentially as businesses. Johnni believes all businesses accepted have the capacity to significantly grow and reach full scale.

Cohort Participants taking a “Selfie” with Johnni

“Another thing that they have in common is their willingness to ask for help”, Johnni adds. This is one of the things GrowthAfrica screens for. He says “there is a lot of entrepreneurs who often say they are not open to input.” The kind that believes they have everything in check and all they need is funding.

The kind that believes they have everything in check and all they need is funding. Johnni says that’s not a group they’re interested in. On the contrary, they look for those that “have the humility to say they actually need some guidance”.

Scale

Given that GrowthAfrica’s focus isn’t startups, I engaged Johnni in clarifying the nature the of business and what level of scale they focus on. Not surprisingly, they prefer pre-scale businesses.

They also look for businesses that have the ambition of growing internationally. Though, as Johnni emphasized, they are “not necessarily talking about ‘unicorns’.”

But, it has to be growth outside of Uganda, East Africa and perhaps it can be global. Most importantly, they are after businesses with the potential of becoming medium sized companies that can, in turn, employ hundreds, if not thousands, of people.

Success stories

Along the way, GrowthAfrica has been at the center of some of the successful companies in East Africa which gone through their accelerator program and eventually raised funding. Some, are looking to expand across the continent. These

Though the website indicates a figure of US $46 Million, Johnni says GrowthAfrica has now helped business raise funding that has surpassed that figure. He estimates the current figure in the region of US $53-57 Million.

Participants in a session

One of the businesses he is most proud of is M-Kopa solar. It is one of the companies that they have assisted. M-Kopa spent the first few years of their existence at GrowthAfrica. They were in effect incubated at the GrowthAfrica facility.

Unfortunately, for Johnni and GrowthAfrica, that was before they started taking a small percentage of each business that used their facility. M-Kopa indeed is a success story given that their last raise was over

M-Kopa indeed is a success story given that their last raise was over US $20 Million at a valuation of over US $200 Million. Plus, they were named alongside Jumia among the 50 Smartest Companies of 2017.

Also read: M-Kopa, Jumia Among MIT 50 Smartest Companies of 2017

That, according to Johnni, so far is their biggest success. However, he also highlights other businesses like Soko that raised over US $2.5 Million in their last round. This he follows up with EcoFuels, an agro-processing company that also raised around

This he follows up with EcoFuels, an agro-processing company that also raised around US $1.5 Million for their last round.

Altogether, he puts the total estimate of those that have raised above US $1 Million at around 5 companies. Though they have also had over 18 companies raise somewhere between 300,000 – 800,000 USD.

Partnership with incubators

Given that GrowthAfrica focuses on pre-scale businesses, I  was interested in finding out if they have any form of partnership with hubs or incubators across East Africa to create some sort of conveyor belt that can continuously supply them with businesses. They don’t.

This he attributes to the fact that most of the entrepreneurs in these incubators are still young. Johnni clarifies that “not that we haven’t partnered with the incubators, but we have not seen much come through from the incubators at least in Kenya where we have been the longest.”

Though they have had a couple of businesses come through from ChandariaBusiness Incubation Centre as well as a couple apply from Nailab. Though these never made it through.

Also read: Fenix International’s Silicon Hills Kampala to Celebrate Technology in Uganda

He says that incubators seem to mainly attract students who are very young entrepreneurs. Yet, GrowthAfrica’s ideal entrepreneurs should be in their 30s. This he says is not aimed at age discrimination but that’s the age that usually has what they’re looking for.

He says that what seems to work well for them are entrepreneurs that have had some work or industrial experience as well as those that understand the sector or industry that they’re in. yet most of the entrepreneurs in the incubators lack these.

Most of our entrepreneurs are early to mid-thirties. We have even had entrepreneurs who are in their late 50s. So the age span for our entrepreneurs is from late 20s upwards – Johnni.
Young Entrepreneurs

Incubators should burst the bubbles of these entrepreneurs who are seated in their incubation spaces and force them to go out and talk to real people“, says Johnni, GrowthAfrica CEO. This was when i asked him about what incubators should do to ensure they can put out entrepreneurs that meet their criteria.

They, according to Johnni, need to “tell them how they engage with customers, how they engage with potential users as well as how to engage with other partners and stakeholders.

Johnni says that at GrowthAfrica, they have constantly asked themselves “how to do we crack the nut that is startups”.

Also read: Andela Uganda Opens Application for Third Cohort

And in their experience, from running a couple of cohorts with entrepreneurs who are pre-revenue, they’ve seen that these entrepreneurs don’t listen. This, he repeats, is partly because they think they know everything.

And they think they know everything because they have not been in the market”, he adds, and continues, “they have not been out there and receive some ‘beatings’ from customers, suppliers and other entrepreneurs.”

He believes that if incubators in East Africa can burst the bubble in which these young entrepreneurs are, “all of a sudden you’ll have entrepreneurs who are more mature”.

This is because they’ll be forced to see things from other people’s perspective which will teach them a valuable lesson in terms of who their customers are and how valuable their product is.

Previous cohorts

I was very anxious to get feedback on the previous Ugandan cohort which included RoundBob, Clinic Master, Amagara and many others. But, Johnni revealed to me that their program actually runs for around 42 months – not just six. The first six months are just a preamble to the real support.

Also read: This Ugandan Youth is Slowly Building A Film Company With Friends

So, he says, you can’t expect that much from these companies until that time is done. Though Clinic Master has raised some undisclosed funding but mostly debt.

Johnni also adds that they have realized that things take time in Africa. This is especially in economies that are not as mature as Kenya. Like Ethiopia, Uganda, and Zambia – where they cover. There’s a little bit of Kenyan bias in Johnni’s opinion.

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