Digital Entrepreneurship

in Kenya 2014

GSMA Mobile for Development

GSMA Intelligence
Digital Entrepreneurship in Kenya 2014

The GSMA represents the interests of mobile operators worldwide. Spanning more than 220 countries, the GSMA unites nearly 800 of
the world’s mobile operators with 250 companies in the broader mobile ecosystem, including handset and device makers, software
companies, equipment providers and Internet companies, as well as organisations in industry sectors such as financial services,
healthcare, media, transport and utilities. The GSMA also produces industry-leading events such as Mobile World Congress and Mobile
Asia Expo. For more information, please visit the GSMA corporate website at www.gsma.com. Follow the GSMA on Twitter: @GSMA.

Mobile for GSMA Intelligence

Development

GSMA Mobile for Development brings together our mobile GSMA Intelligence is the definitive source of global mobile
operator members, the wider mobile industry and the operator data, analysis and forecasts; and a publisher of
development community to drive commercial mobile services authoritative industry reports and research. Our data covers every
for underserved people in emerging markets. We identify operator group, network and MVNO in every country worldwide
opportunities for social, economic and environmental impact and – from Afghanistan to Zimbabwe. It is the most accurate and
stimulate the development of scalable, life-enhancing mobile complete set of industry metrics available, comprising tens of
services. millions of individual data points, updated daily.

Mobile is the predominant infrastructure in emerging markets. We GSMA Intelligence is relied on by leading operators, vendors,
believe it is the transformative technology that enables us to put regulators, financial institutions and third-party industry players,
relevant, impactful services into the hands of underserved people. to support strategic decision-making and long-term investment
Since the creation of GSMA Mobile for Development we have planning. The data is used as an industry reference point and is
partnered with 50 mobile operators, rolling out 104 initiatives, frequently cited by the media and by the industry itself. Our team
impacting tens of millions of people across 49 countries. of analysts and experts produce regular thought-leading research
reports across a range of industry topics.
For more information, please visit the GSMA Mobile for
Development website at www.gsma.com/mobilefordevelopment For more information, please visit GSMA intelligence at
or email [email protected]. Follow GSMA Mobile for Development www.gsmaintelligence.com or email [email protected].
on Twitter: @GSMAm4d.
GSMA Intelligence also supports the digital empowerment of
people in emerging markets through its Mobile for Development
resource. It is a central platform of data, analysis and insight used
to inform investment and design decisions for mobile services.
Our work is freely accessible through support from Mastercard
Foundation and Omidyar Network at www.gsmaintelligence.com/M4D.

In support of this research, *iHub_Research conducted over 200 interviews and several focus groups with Kenyan startups. *iHub_
Research focuses on technology and its uses in East Africa. We facilitate local research capacity building and conduct local qualitative
and quantitative research in East Africa, by East Africans. We bring information on technology and its uses to the technology community,
enabling entrepreneurs and developers to make better decisions on what to build and how to build it. For more information, please
contact [email protected].

The UK Government supported this research in order to better understand the challenges faced by entrepreneurs in Kenya and
the support currently provided to early-stage companies by local intermediaries and institutions. The Department for International
Development (DFID) leads the UK’s work to end extreme poverty.

The research was also supported by the Omidyar Network, a philanthropic investment firm creating opportunity for people to improve
their lives by investing in market-based efforts that catalyse economic and social change.
 Digital Entrepreneurship in Kenya 2014

PREFACE
This report focuses new attention on Kenya’s emerging digital entrepreneurship ecosystem,
with a unique perspective on entrepreneurs developing mobile enabled services. In this
report, we highlight the challenges startups are currently facing and the opportunities for
collaboration among stakeholders, in particular opportunities for engagement with the
mobile industry. Our findings culminate several months of research and analysis involving
over 300 interviews with startups and other stakeholders as well as thoughtful contributions
from colleagues within our global network.

The GSMA writes extensively about the social and economic impact connectivity has on
people’s lives. Our recent Mobile Economy Sub-Saharan African report highlighted that
the mobile ecosystem currently contributes 6.3 per cent to regional GDP and will generate
6.6 million jobs by 2020.1 At this year’s World Economic Forum in Davos, world leaders
gathered to discuss the “profound political, economic, social and, above all, technological
forces [that] are transforming our lives, communities and institutions.”2

Mobile technology is enabling the creation and growth of the digital economy—both in
the developed and developing world. In the digital economy, mobile technology provides
a global platform over which people and organisations can connect, verify identity, and
transact. This foundation is reshaping how digital content and services are created
and consumed.

01. Mobile 02. Mobile

Connectivity Identity

03. Mobile 04. Digital Content

Money and Services

1. http://www.gsmamobileeconomyafrica.com/
2. http://www3.weforum.org/docs/AM14/WEF_AM14_ExecutiveSummary.pdf

i
 Digital Entrepreneurship in Kenya 2014

Mobile connectivity has unlocked an opportunity to rapidly scale mobile enabled services
by connecting billions of people. At the end of 2013 there were 3.4 billion unique mobile
subscribers worldwide. By 2020, the developing world will add another 880 million.
Moreover, mobile broadband connections currently at 2.4 billion globally will nearly double
to 4.1 billion by 2020.3 Rising connectivity across the globe is fuelling the growth of Internet
platforms such as Google, Yahoo, and Facebook. Small and medium size enterprises
have also benefited with some emerging as competition to existing Internet platforms,
for example Twitter and Instagram. For entrepreneurs and innovating businesses in the
developing world, the ubiquity of mobile technology provides a tremendous opportunity
to fundamentally change the business landscape and the lives of the underserved. Where
mobile infrastructure is already in place, scaling mobile enabled services, even to underserved
populations in rural areas, is not only physically plausible but financially feasible.

Mobile identity is foundational to the digital economy by building trust among people
or businesses that would like to exchange information (including payments) via mobile
networks. Because a mobile user can be identified by their SIM and password or other
personal information, mobile networks foster trust between parties that may not have met
physically. This in turn unlocks the potential for digital commerce at local and global levels.
The more people are connected to the network with an identity, the greater the opportunity
for mobile commerce and other mobile services that require identity verification, such as
health and government services.

Mobile money is the currency of the digital economy. In the developing world mobile money
enables previously unbanked populations to perform person-to-person money transfers,
bill payments, bulk payments (such as salary payments of government disbursements),
or other financial transactions using a mobile handset. Digital entrepreneurs are also
benefiting, as mobile payments platforms provide a mechanism for startups to collect cash
from customers interacting with their service or application. Futhermore, data collected by
mobile operators could be used to analyse customer behaviour and assess credit worthiness,
thereby creating opportunities for customised services and the extension of credit to more
customers.

Digital content and services address business challenges, enable transparency and
efficiency for government, and offer convenience, entertainment, and empowerment to
consumers. In urban environments, smart cities use innovation and digital technologies to
address urban challenges, such as transport and utilities, and improve services for citizens.
A thriving entrepreneurship ecosystem provides the creative talent, financial resources,
and shared infrastructure (such as office space and Internet connectivity) to enable
entrepreneurs to build locally relevant content and services.

3. GSMA Intelligence

ii
 Digital Entrepreneurship in Kenya 2014

We are grateful for the prior research conducted by numerous organisations on the
investment and entrepreneurship climate in Kenya, the role and performance of startup
accelerators, and mobile and Internet technology in Africa. Many agree that mobile
technology will transform Africa and contribute to economic growth if the right foundation
is built by government, the international development community, and the private sector.
We hope this report paints a clear picture of the situation for digital entrepreneurs in Kenya,
so that private sector, government, and development organisations can direct further
support and attention where it is most needed.

Marissa Drouillard (GSMA Intelligence) led the research, analysis and production of this
report, and managed the research team in Nairobi and London. David Taverner (Senior
Director, GSMA Mobile for Development), Chris Williamson (Director, GSMA Intelligence),
and Martin Harris (Director of Technology, GSMA Mobile for Development) supported and
contributed to this work.

We would like to thank all the stakeholders who were interviewed for this research, without
whom this report would have been impossible. As this list is quite long, the names of these
organisations appear in the appendix. We would also like to thank the contributions of
numerous individuals who have kindly shared their expertise and views with us during
reviews of this report.

Any questions about this research report should be directed to [email protected]

Marissa Drouillard
David Taverner
Chris Williamson
Martin Harris

iii
Digital Entrepreneurship in Kenya 2014
 Digital Entrepreneurship in Kenya 2014

CONTENTS
executive summary 02

1. Kenya’s digital transformation 10

2. The emergence of a digital entrepreneurship ecosystem 20

3. The need for deeper engagement between mobile operators and startups 30

Show me the money!

Startups need integration to operator payment platforms 34

Channelling growth in digital serviceS

Access to mobile channels is an issue for entrepreneurs and a potential opportunity for operators 38

Reinventing the wheeL

Environments, platforms and tools that accelerate development are an opportunity for mobile operators 40

4. The competing narrative between lack of capital and lack of dealflow 44

Constrained capital
Few investors are working at very early stages and most of the capital is spread across later stages 45

More angels needed

A major source of early stage capital and mentorship is missing in Kenya 48

Staying alive
Few startups have received significant venture capital funding and most are
bootstrapping as well as using non-traditional sources 50

Growing pains
At growth stage the issue appears to be a lack of investible teams 54

Supporting startups
More hands-on mentorship and business scaling guidance are needed 60

5. Summary and Recommendations 68

Specific Recommendations 72

6. List of Interviewed Organisations 74

7. Abbreviations and Terminology 78

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 Digital Entrepreneurship in Kenya 2014

Executive Summary
The mobile evolution occurring in the developing
world is creating unparalleled opportunities for digital
entrepreneurship. Over the past few years, a number
of hubs, incubators, and accelerators have sprung up
all over Africa—from Cape Town to Cairo and Lagos
to Nairobi. While still nascent, the rapidly rising digital
entrepreneurship scene in Africa has real promise to
grow successful businesses stimulating job creation and
generating new sources of revenue for the mobile industry
and innovative services for business and consumers.

Nairobi, in the heart of Kenya, is at the This research was undertaken to understand
forefront of this transformation and has the challenges to developing digital services
already produced some notable success across Kenya. It included over 300 in-depth
stories. Wananchi Online, a leading Kenyan interviews with entrepreneurs, mobile and
Internet service provider has become information and communication technology
East Africa’s leading cable, broadband (ICT) industry corporates, investors, tech
and IP (Internet-based) phone company, incubators and accelerators, and other
and is currently valued at over $100 support organisations. The GSMA’s partner
million; additionally, Craft Silicon, a in this effort, *iHub_Research, helped us
Kenyan software firm that provides core reach over 230 local startups across Nairobi,
banking, microfinance, mobile, switch Kisumu and Mombasa.
solutions software and electronic payments
services for over 200 institutional clients
in 40 countries has a $50 million market There is an opportunity to deepen
value.4 These success stories, however, ecosystem engagement.
are somewhat unique. While the city has
strong potential to become a major digital There is an opportunity for the ICT and
entrepreneurship hub, a myriad of financial, mobile industry to engage, collaborate,
commercial and technical challenges prevent and partner with entrepreneurs to build a
the vast majority of digital entrepreneurs thriving digital entrepreneurship ecosystem
from scaling and realising the full potential in Kenya for mutual benefit.
of their business ventures.

4. http://vc4africa.biz/blog/2013/07/23/10-african-startup-founders-who-built-million-dollar-internet-companies/

2
 Digital Entrepreneurship in Kenya 2014

Mobile operators play a central role in There is a competing narrative

the ecosystem and at present only a between a lack of capital and
few startups have managed to secure
a lack of dealflow.5
such partnerships (11 per cent as per our
entrepreneur survey). Nearly all mobile
‘Lack of capital at the early stage’ is a
operators are starting to engage with
commonly cited problem by entrepreneurs
entrepreneurs, through mobile application
in East Africa—we decided to analyse in-
(app) stores, toolkits and other support
depth whether there really is a gap and at
mechanisms. However, more effort needs
which stages of startup development. To do
to be made to work collaboratively and
this we spoke with the majority of investors
constructively to transform the digital
actively financing digital startups in East
services sector. Processes and tools will need
Africa, and used these results along with
to be put in place to support interaction with
our entrepreneur survey results to estimate
startups, and this will take a significant effort.
relative supplies of capital. Somewhat
On their side, startups need to demonstrate
expectedly, we found few investors working
deeper commitment to their ventures and
at very early stages and most of the capital
a willingness to improve professional skills.
spread across later stages.
In addition, there is an added challenge
whereby the entrepreneur community
currently does not trust operators and has Especially for many later stage
concerns about sharing ideas freely (33 per startups, challenges with teams,
cent of startups stated that a main challenge
skills, and experience appear to be
in forming commercial partnerships was lack
of trust and concerns about sharing
an underlying problem.
ideas freely). In particular, investors find most business
plans are poorly developed, and many teams
In addition to benefits for entrepreneurs, lack any track record or experience relevant
we believe a thriving digital ecosystem for their business model.
creates tremendous opportunity for mobile
operators and Kenya in general. Through
collaboration, operators benefit from
promising new combinations of mobile
technology and digital services, harnessing
the skills and experience of individuals and
institutions outside the four walls of
the organisation.

Operator infrastructure and capabilities

can also be transformative in scaling digital
services that could impact all of Kenya—from
supply chains to small businesses to school-
age children. Closer engagement between
the mobile industry and entrepreneurs can
catalyse this revolution.

5. Dealflow refers to the stream of investible business opportunities necessary to keep venture capital investors functioning at peak capacity.

3
 Digital Entrepreneurship in Kenya 2014

Funding shortfalls at all stages Competitions and grants are helpful

affect team composition and focus. in spotlighting entrepreneurs and
The lack of venture capital at early
an important source of capital for
stages and lack of confidence in teams social impact projects.
at later stages results in most startups Some competitions, mainly those with
‘bootstrapping’ and running side businesses prize money sub-$2,000, are attracting
in parallel. Side money, however, is not ‘compepreneurs’7 who enter with ‘cool’
enough to sustain the venture to the next mobile applications as opposed to scalable
milestone or funding round. Few teams business ideas. However, the total amount
demonstrate revenues of any significance,6 of prize money awarded in this category
and at least 70 per cent of startups were not over the last several years has been less
earning enough to maintain business and than $50,000. While soft money in this
living expenses for a small team. amount is unlikely to ‘crowd out’ venture
capital funding, the frequency of and hype
around competitions creates a distracting
Technology-focused business environment for entrepreneurs and a
angels and angel networks are just significant amount of noise. Investors
emerging in the region; with the then spend a substantial amount of time
determining which entrepreneurs are serious
right support, angels could create
and which are simply working to build
a critically needed supply of both their portfolios.
early stage capital and hands-on
mentorship.
Even though mentorship opportunities were
available through networks, accelerators,
and peer-groups, these avenues were not
sufficient to overcome gaps in practical
business and management knowledge.

As wealth and knowledge

accumulate in Kenya, the potential
for a significant number of active
business angels will increase, and
many different types of business
angels could support businesses in
the country—from local to global,
and from technical to professional.
Efforts are underway to raise awareness
about business angel investing in Kenya,
but more activity is needed.

6. Comparing investor expectations of revenues relative to deal size for mobile-oriented startups across markets may be an interesting piece of future research; differences between the developed and developing
world seem to be quite substantial from anecdotal evidence.
7. ‘Compepreneur’ refers to an entrepreneur chasing after competitions with half-baked ‘cool apps’ as opposed to scalable business ideas.

4
Digital Entrepreneurship in Kenya 2014

5
 Digital Entrepreneurship in Kenya 2014

Catalysing the growth of digital

entrepreneurship in Kenya:
recommendations for stakeholders
Kenyan mobile operators and
information and communication
technology (ICT) industry corporates
• Collaborate and partner with the ecosystem and with
Kenyan startups
• Clear and transparent processes for working with startups
• Common interfaces and tools for startups
• Easier access to mobile assets, especially mobile
payment platforms
• Invest into or acquire startups
• Buy services or form partnership agreements with startups
• Build and deepen ties to accelerators and hubs

Accelerators and hubs

• More hands-on mentorship
• Explore partnerships with mobile and ICT industry beyond
financial resources

Investors and financial institutions

• Put capital into seed stage funds
• Provide hands-on, business building support
• Build and develop the business angel network in Kenya

6
 Digital Entrepreneurship in Kenya 2014

Development organisations
• Support early stage funds and accelerators
• Programmes that build local venture capital capacity
• Revise winner selection criteria in competitions
• Broaden support beyond ‘social’ entrepreneurs or impact
investment funds
• Support creation and dissemination of market information
• Support networking opportunities that promote partnership
and collaboration

Research institutions
• Make policy recommendations for government
• Recommend entrepreneurship updates to Kenyan
educational curriculum

Government
• Support early stage funds and accelerators
• Develop a procurement framework to work with
local entrepreneurs
• Establish an ‘Entrepreneurship Visa’ programme
• Identify digital entrepreneurship hubs throughout Kenya
• Modify current loan guarantee programmes

7
 KENYA’S DIGITAL
TRANSFORMATION
Bandwidth Unique Mobile Subscriber Penetration

8Tb/sec
Bandwidth Through Undersea Cables

31%
Handset Costs Technology

Basic phone handsets

$15 (AND THESE

ARE INCREASING)

Smartphone Handsets

<$100 20% 80%

3G 2G
Subscriptions Subscriptions
60%
Access

OF
KENYANS
LIVING ON LESS THAN

$2.50/DAY
Have access to mobile phones

Internet Subscriptions

99% OF INTERNET
SUBSCRIBERS,
AROUND 16 MILLION PEOPLE

Access the Internet through mobile devices

 Digital Entrepreneurship in Kenya 2014

1. Kenya’s digital
transformation
Infrastructure improvements created an enabling
environment for developing digital services cost
effectively and with high degree of sophistication

Kenya’s technical infrastructure national government usually provides

developed very rapidly over the last finance. An interesting exception is the
SEACOM cable where a 26 per cent share
10 years—both in capacity
is held by the Aga Khan Fund for Economic
and capability. Development.11

Huge increases in data capacity into and

Additionally, growth of in-country
out of Kenya underpinned this progress.
infrastructure and capacity also contributed
Kenya had satellite links since 1970, but in
to progress. Fibre backbones expanded
2006 private telecom companies, notably
rapidly through government-backed
Safaricom, opened a Satellite Earth Station
initiatives such as the National Optic Fibre
in Nairobi.8 This laid the foundation for initial
Backbone Infrastructure (NOFBI) project,12
build-out of 3G networks. The next step-
which linked Kenya’s major urban areas
change in capacity came with the landing of
and is now expanding to rural areas of the
four submarine cables in Mombasa starting
country. Moreover, telecommunications
in 2009.9 Capacity increased by several
and utility companies are also laying their
orders of magnitude to over 8 Terabits
own fibre optic cable networks especially
per second.10 Undersea cables, similar to
in urban areas, as well as other backhaul
satellites, require significant investment.
technologies.13
A conglomerate of organisations and

8. http://www.upi.com/Science_News/2006/07/05/Gateways-should-cut-Kenya-long-distance/UPI-31361152116873/
9. http://www.teams.co.ke, http://lion.orange.com, http://www.eassy.org, http://seacom.mu
10. Kenya Communications Commission. (2013). Quarterly Sector Statistics Report, Second Quarter of the Financial Year 2012/13 (Oct-Dec 2012).
Available from: http://www.cck.go.ke/resc/downloads/Sector_statistics_for_Quarter_2_-_2012-2013.pdf
11. http://seacom.mu/our-company/company-structure/
12. Kenya Ministry of Information and Technology. (2013). The National Broadband Strategy for Kenya (DRAFT).
Available from: http://www.cck.go.ke/links/consultations/current_consultations/The_National_Broadband_Strategy_.pdf
13. Backhaul technologies such as non-line-of-sight (NLOS) microwave links and very small aperture tunnel (VSAT) for out-lying network stations

10
 Digital Entrepreneurship in Kenya 2014

TECHNICAL INFRASTRUCTURE

NORTH
RIFT VALLEY EASTERN

WESTERN
EASTERN

CENTRAL
NYANZA
NAIROBI

COAST

Active
Proposed Fibre-optic (NOFB)
In build

EASSY
LIONZ
Submarine cables
TEAMs
SEACOM

Figure 1

11
 Digital Entrepreneurship in Kenya 2014

Rapid growth in capacity has had a Infrastructure expansion has also

number of implications for mobile enabled a myriad of other players in
networks and digital services. the ecosystem to grow.

While currently most networks and Mobile subscription penetration levels

connections use 2.5G (80 per cent of for businesses and consumers are now
subscriptions),14 operators have been high enough to sustain business models
expanding coverage of 3G (20 per cent of for digital services. At present, mobile is
subscriptions). Increases in capacity have the primary vehicle for accessing digital
resulted in significant decreases in cost services and the Internet (99 per cent of
of bandwidth for data and voice services. Internet subscriptions, around 16 million
Consumer tariffs have dropped by over people, access the Internet through
80 per cent since 2010.15 Moreover, these mobile devices).17 Furthermore, technology
infrastructure improvements have laid the support providers are now available which
foundation for higher capacity mobile means that digital startups can be setup
networks by extending 3G networks and rapidly and cost effectively. For example a
opening the possibility for 4G networks startup developing on a low cost platform
(the Kenya ICT Authority has said that provided by a Platform as a Service (PaaS)
the government is fully committed to fast provider, such as Amazon, can create a Short
tracking roll out of national 4G networks Message Service (SMS) product reaching
as part of their ICT sector master plan).16 large segments of mobile subscribers. The
With higher capacity networks and broader startup could connect to the mobile network
coverage, mobile operators are better through a Premium Rate Service Provider
positioned to support data intensive digital (PRSP) or directly with a mobile operator
services (subject to device capabilities). partner. The connectivity to support such
architecture is now available within Kenya
and internationally, whereas previously this
would have required extraordinarily large
investments in infrastructure.

14. GSMA Intelligence

15. Stork, C. (2011). Termination Rate Debate in Africa. Research ICT Africa.
Available from: http://www.researchictafrica.net/presentations/CPRafrica_2011_-_Presentations/Stork_-_Termination_rate_debate_in_Africa.pdf
16. GSMA Intelligence
17. Kenya Communications Commission. (2013). Quarterly Sector Statistics Report, Second Quarter of the Financial Year 2012/13 (Oct-Dec 2012).
Available from: http://www.cck.go.ke/resc/downloads/Sector_statistics_for_Quarter_2_-_2012-2013.pdf

12
 Digital Entrepreneurship in Kenya 2014

99%
of Internet
subscribers,
around

16million
people, access
the Internet
through mobile
devices

13
 Digital Entrepreneurship in Kenya 2014

TECHNICAL LANDSCAPE FOR

DIGITAL SERVICES DEVELOPMENT

Users

Businesses

Mobile operators SERVICE ICT INDUSTRY

PROVIDERS CORPORATES

CLICKATELL GOOGLE
16.9%

AIRTEL AFRICA’S FACEBOOK

TALKING
Safaricom 10.5%
64.5%

YU ONMOBILE IBM

8.1%

ORANGE COMVIVA OTHERS

BROADBAND FIBRE OPTIC SUBMARINE Satellite

ACCESS Often part of other CABLES service providers
Fibre, DSL, Mobile, players such as Ranging from dedicated to
WiMAX Typically consortiums
mobile operators shared channel provision

Clouds

Source: GSMA

Figure 2

14
 Digital Entrepreneurship in Kenya 2014

Legend
Users:
Mobile and Internet subscribers

Businesses:
Business-to-business using mobile Internet services

Mobile operators:
Safaricom (64.5 per cent), Airtel (16.9 per cent), ZYu (10.5 per cent), Orange (8.1 per cent)18

Service providers:
-- Premium Rate Service Providers (PRSPs) – provide premium resources and channels
(e.g. Short Message Service, short codes, premium rate phone numbers)
-- Mobile Service Aggregators – provide aggregated services such as Short Message Service
(SMS) allowing companies to deliver SMS across multiple mobile operators through a
single point of contact
-- Value Added Services (VAS) Providers – work with mobile operators to provide Value
Added Services across their networks

Information and communication technology

(ICT) industry corporates:
Large vested companies that provide infrastructure and services to (and in partnership
with) the mobile operators (e.g. Ericsson, IBM, Google, and Nokia)

Hubs:
Provide workspace, connectivity, tech community support, quality assurance and
testing facilities (limited)

Infrastructure providers:
-- Broadband and Network connectivity providers
-- Fiber optic backhaul service providers (often part of other players such as mobile operators)
-- Submarine cable providers (typically consortiums)
-- Satellite service providers – ranging from dedicated to shared channel provision

Clouds (in/out-of-country service providers):

-- Cloud services
-- Platform as a service (PaaS) – service hosting (e.g. open-source solution stacks,
Amazon Web Services, .Net)
-- Backend as a service (BaaS) – integration to cloud services and social messaging
networks for mobile and Internet service providers
-- Software as a service (SaaS) – data repositories, office services (e.g. Google Applications)

18. GSMA Intelligence

15
 Digital Entrepreneurship in Kenya 2014

Low-cost and second-hand platform Series 40/ASHA, which functions

handsets along with affordable much like a low-end smartphone. The latest
version, Asha 501, is currently retailing for
pre-paid airtime tariffs have led
around $50. In addition to smartphone-like
to explosive growth in mobile features, these devices are typically more
subscriptions, even among the poor. robust and have a longer battery life than
many smartphones.
In 2005 Motorola announced an initiative to
drive down basic phone costs to below $20
(retail) in that year and to $15 by 2008.19
These factors have contributed
Today we see basic phones regularly
retailing around $15, a recent example being
to a significant number of
the Nokia 105. Like many other regions, connected Kenyans.
sales of smartphones have been growing
in Kenya. While initial sales growth was The GSMA estimates 31 per cent of people
largely attributable to wealthier classes, living in Kenya have at least one mobile
retail trends now support wider adoption. subscription (see Figure 3, as of 2012).
Prices for some smartphones have dropped Results from other surveys suggest even
significantly, notably those operating on higher penetration rates, especially when
Android. Many sub-$100 handsets are now phone sharing is included. A recent study
on display in Kenyan stores, for example the by *iHub_Research, Research Solutions
Huawei Ideos retailing at $70. Feature phone Africa, and infoDev found that 60 per cent of
platforms are also becoming more functional. Kenyans living on less than $2.50 a day have
Nokia have been pushing their feature phone access to mobile phones.
20

UNIQUE MOBILE SUBSCRIBER PENETRATION IN KENYA

2007 2008 2009 2010 2011 2012

18% 22% 24% 28% 29% 31%

Source: GSMA Intelligence
Note: Represents unique users that subscribe to mobile services, as opposed to the
number of registered Subscriber Identification Module (SIM) cards on mobile networks.

Figure 3

19. http://news.bbc.co.uk/1/hi/business/4285638.stm
20. The World Bank. (2012). Mobile Usage at the Base of the Pyramid in Kenya. Available from: http://www.infodev.org/articles/mobile-usage-base-pyramid-kenya.

16
 Digital Entrepreneurship in Kenya 2014

These infrastructure improvements

have several game-changing
implications for startups in Kenya

Set-up costs: developers can now access communication and

mobile channels appropriate for early stage development either
direct from providers or through hosted spaces

Facility access: cloud based hosting services (PaaS and BaaS)

are finally becoming a real possibility for early stage startups.
Also increased capacity makes it easier for developers to access
development resources (e.g. smartphone solution developer
toolkits) and general computing platforms (e.g. open source tools
and platforms)

Market growth: Uptake of digital services has grown as device

costs have decreased and capabilities increased. As well, more
Kenyans are getting online every day through innovative projects
such as Matatu Wi-Fi connections (Vuma Online)—this is growing
the potential user base for digital services 21

Education and support: Developers now have easy access to

online development training courses and support tools, including
online forums and chat sites. This is increasing the skills of
developers and exposing them to innovative service ideas from
other regions around the world

21. http://www.safaricom.co.ke/blog/2013/08/08/vuma-online/

17
 THE EMERGENCE
OF A DIGITAL
ENTREPRENEURSHIP
ECOSYSTEM

Entrepreneurs

• Mobile operators
Industry • Information and communication
technology corporates

• Venture capital investors

Capital and private equity

• Business angels
• Financial institutions

Policy • Government
• Research organisations

• Incubators and accelerators

Support • Professional services organisations

• Universities and training organisations
• Development organisations

Connect • Hubs, networks and community spaces

• Events and media
Relevant Mobile Operator Assets & Capabilities

CHANNEL ACCESS DISTRIBUTION

Channels that allow services to operate Agent networks, marketing displays,

without direct data or Internet access, such as supply chains, software push technology,
Short Message Service (SMS), Unstructured mobile application stores
Supplementary Services Data (USSD),
Voice / Interactive Voice Response (IVR)

OPERATIONS CAPABILITIES TRUST

Customer support, marketing, Reputation, brand

accounting, financing, skills and
know-how, training and mentoring

HARDWARE, SOFTWARE, PHYSICAL NETWORK

Hosting hardware and software,
international bandwidth, testing
facilities, application
programming interfaces, billing
and accounting software
 Digital Entrepreneurship in Kenya 2014

2. The emergence
of a digital
entrepreneurship
ecosystem
The mobile evolution as well as recent events
in Kenya inspired the emergence of a digital
entrepreneurship ecosystem

As mobile technology has become the platform of choice for launching digital services in
Kenya, a diverse set of stakeholders now have a role in creating, supporting and delivering
services. ‘Ecosystem’ is used to describe the many players involved and the fact that
they interact closely. Various stakeholders are supporting the development of the digital
entrepreneurship ecosystem in Kenya.

20
 Digital Entrepreneurship in Kenya 2014

DIGITAL ENTREPRENEURSHIP ECOSYSTEM

Entrepreneurs

• Mobile operators
Industry • Information and communication
technology corporates

• Venture capital investors

Capital and private equity

• Business angels
• Financial institutions

Policy • Government
• Research organisations

• Incubators and accelerators

Support •
•
Professional services organisations
Universities and training organisations
• Development organisations

Connect • Hubs, networks and community spaces

• Events and media

Figure 4

21
 Digital Entrepreneurship in Kenya 2014

ORGANISATIONS WITHIN THE KENYA DIGITAL

ENTREPRENEURSHIP ECOSYSTEM

Mobile Operators Commercial Venture Capital Impact Venture Capital

Airtel 500 Startups Accion

Orange 88mph Acumen Fund
Safaricom Africa Media Venture Fund Bamboo Finance
Yu Amadeus Capital Partners D.O.B. Equity
Business Partners International GroFin
Incubators / Accelerators eVA Fund Growth Hub Africa
Fanisi Invested Development
@iLabAfrica / @iBizAfrica Grassroots business fund Jacana Partners
500 Startups Innovation 4 Africa Khosla Impact
88 mph Kitendo Capital Kukua Fund
Afrilabs Mbada Ventures Leapfrog
GrowthHub Africa Savannah Fund
IFC SME Solution Centre SPARK Ventures Professional Services
Kenya Markets Trust TBL Mirror
m:lab East Africa Tech Equity Chembe Ventures
Open Capital Advisors TLcom Open Capital Advisors
Savannah Fund Technoserve
Sinapis Group Hubs, Networks, &
Spotone Global Solutions Community Spaces Events & Media
Unreasonable Institute
Upstart Africa *iHub_ Africa Assets
Village Capital Africa IQ Africa Gathering
Business Lounge Africa Interactive
Private Equity Gearbox Demo Africa
VC4Africa How we made it in Africa
Catalyst Human IPO
East Africa Capital Partners Research & Training Mobile Monday Kenya
EC Private Equity Pivot East
*iHub_Research Tech 4 Africa
Commercial Lending eMobilis Venture Beat
infoDev Venture Burn
Bank of Africa Nokia Research Centre
Chase Bank Research Solutions Africa Development Organisations
Eco bank Safaricom Academy
Equity Bank World Bank DfID Kenya
Fina Bank FSD Kenya
NIC Government
ICT Corporates
Communications Commission of
Kenya (regulator) Cisco Systems
Kenya ICT Authority Board Intel
Konza City Nokia
Ministry of Information & Microsoft
Communications Google

Figure 5

22
Digital Entrepreneurship in Kenya 2014

23
 Digital Entrepreneurship in Kenya 2014

Motivations to form a community when entrepreneurs from other areas of

of digital entrepreneurs have been Kenya such as Mombasa and Kisumu begin
to build traction, they move to Nairobi to be
and continue to be strong in Kenya.
closer to the hub of activity in and around
Bishop Magua and Ngong Road. Moreover,
During the aftermath of Kenya’s disputed
widespread adoption of M-PESA has also
2007 presidential election, Ushahidi realised
motivated digital entrepreneurs to come
the political influence that crowdsourcing
forward. While M-PESA itself is not a startup,
could have for social activism and public
Kenyans are inspired that the cutting edge
accountability. The founding of *iHub_
mobile payments service has been so
as a space for the emerging technology
successful, and point to its popularity when
community followed from Ushahidi’s
discussing the potential for their business
popularity. As noted in our focus groups,
ventures to scale.

CITY
CENTER

NAIROBI

NGONG ROAD
Bishop
Magua

UHURU HIGHWAY
Strathmore
University

1 88mph
2 GrowthHub
3 m:lab East Africa
4 Nailab
5 *iHub_
6 @iLabAfrica

24
 Digital Entrepreneurship in Kenya 2014

The close proximity of startups and the growing techie community. Venture
support organisations in Nairobi capital investors too have set up shop
close by, some working from virtual offices
and the geographical distance to
located at hubs and accelerators (see Table 1
corporates is striking. below which summarises several prominent
accelerator programmes located in Nairobi).
The Bishop Magua building in Nairobi has Posters and stickers from Safaricom and
been the cornerstone of Kenya’s digital other Kenya mobile operators, as well
entrepreneurship ecosystem, and is host to as global technology company sponsors,
*iHub_, Nailab, m:lab East Africa, Savannah are visible on the walls and windows of
Fund, GSMA, as well as several startups. In a accelerators and hubs, however corporate
short period of time, gift shops and beauty offices are noticeably on the other side
salons have moved out and graduates of of town in Westlands or Central Business
accelerator programmes have taken over. District. The geographical distance between
Other clusters are developing down the road, the Nairobi tech startup scene and mobile
near 88mph’s accelerator and Strathmore operators is probably pure coincidence, but
University which hosts the Climate it illustrates a gap that needs to be bridged
Innovation Centre as well as @iLabAfrica. in terms of level of engagement across
Coffee shops and trendy restaurants have the ecosystem.
also sprung up along Ngong Road to service

COMPARISON OF SEVERAL ACCELERATOR

PROGRAMMES IN KENYA

Organisation Programme Length Investment Equity Stake Class Size

88mph
Nairobi, Kenya 3 months Y Y 8-15
Cape Town, South Africa

GrowthHub I2I
3 months Y Y 12-15
Nairobi, Kenya

@iLabAfrica / @iBizAfrica
6 – 12 months Y Y N/A
Nairobi, Kenya

m:lab East Africa Y

4 – 24 months N 20-25
Nairobi, Kenya Through Pivot East

Nailab
3 months N Y 20
Nairobi, Kenya

Savannah Fund Accelerator

3 months Y Y 3-5
Nairobi, Kenya

Table 1

25
 Digital Entrepreneurship in Kenya 2014

Mobile operators have a central role infrastructure. Several operators have

to play in the ecosystem. discussed developing network application
programming interfaces that will provide
An increasing number of operators are access to relevant services. Others are
adopting strategies to harness the energy launching competitions to crowd source
and creativity of startups. Their unique applications (apps) for newly launched
assets can be leveraged in a wide range of app stores, complete with accelerator
applications and services. These include programmes to support winning teams
capabilities like voice, messaging, payments through development and testing. Largely
and billing, identity/user authentication, untapped, operator agent networks could
location awareness, customer trust and potentially catalyse a mobile services
loyalty, as well as physical assets like face- evolution because of their reach deep into
to-face distribution networks and network rural communities.

POTENTIAL MOBILE OPERATOR ASSETS AND

CAPABILITIES OF INTEREST TO ENTREPRENEURS

AREA ASSETS AND CAPABILITIES

Channel Access Channels that allow services to operate

without direct data or Internet access, such as
Short Message Service (SMS), Unstructured
Supplementary Services Data (USSD), Voice /
Interactive Voice Response (IVR)

Distribution Agent networks, marketing displays, supply

chains, software push technology, mobile
application stores

Hardware, Software and Physical Network Hosting hardware and software, international
bandwidth, testing facilities, application
programming interfaces, billing and accounting
software

Operations Capabilities Customer support, marketing, accounting,

financing, skills and know-how, training
and mentoring

Trust Reputation, brand

Table 2

26
 Digital Entrepreneurship in Kenya 2014

Collaboration has underpinned Examples of mobile operator

early success stories. collaboration and partnership
strategies in the developed and
Bridge International Academies is a chain developing world:
of nursery and primary schools delivering
Network Application Programming Interfaces (APIs):
low-cost education to 45,000+ Kenyan
Network APIs allow applications to use mobile
pupils through a mobile enabled “Academy
network capabilities, such as messaging,
in a box” model that uses mobile operator authentication, and payments. For example, a
payment platforms and mobile enabled payment Network API could be used to add
management tools. Another example, charges to a user’s mobile phone bill based on
in-app purchases. The GSMA OneAPI initiative
Kopo Kopo, which has created a world- is working with major operators, such as AT&T,
class platform to enable small and medium Deutsche Telekom, Orange, and Vodafone, to create
businesses to accept mobile payments and standardised APIs and the OneAPI Exchange enabling
platform for operators, so that developers can
build relationships with their customers, has
integrate a single API once and run the application
an extensive set of partnerships with mobile in many operator’s networks without any change.
operators, banks and other businesses in Bharti Airtel recently announced plans to open up its
Kenya. Hubs and accelerators have also location and micropayment API’s in 3-5 months.22

benefited from collaboration. The m:lab Operator-led accelerators:

East Africa in Nairobi, a centre for mobile
Wayra is an ICT startup accelerator developed and
entrepreneurship developed by World owned by Telefonica. Launched in 2011, Wayra has
Bank’s infoDev group, provides incubation, expanded to 14 accelerators across Europe and Latin
developer training, application testing, and America. Early stage companies accepted into the
6 month revolving programme are provided with
ecosystem building, with support from
mentoring, technical resources, seed funding and
World Bank, Qualcomm, Samsung, Nokia, workspace in exchange for a minority equity stake.
Microsoft, Intel and others. Accelerators are being launched by a range of other
industry players, for example Orange Fab, DOCOMO
Innovations (a Japanese operator) and Samsung Open
Innovation Centre.
Further support and collaboration
Startup competitions:
will be needed to translate
Crowd-sourced startup competitions like Safaricom’s
progress into tangible results. App Wiz Challenge and the Orange African Social
Venture Prize incentivise local developers and
Further support and collaboration will be startups to develop innovative mobile services.
needed to translate progress into tangible
Innovation scouting:
results. Some startups have achieved early
Swisscom Ventures has a team based in the Silicon
success; however the number realising
Valley to scout for new technologies and introduce
scale is still relatively small. A myriad of innovative businesses (like cloud services)
commercial, financial, and technology into Swisscom.
challenges remain as we will highlight
Corporate venture capital:
further in this report. While the digital
Operators including Vodafone, SK Telecom, Telefonica
entrepreneurship ecosystem in Kenya has
and DOCOMO, as well as industry players like
welcomed the progress and commitments Samsung, Qualcomm and Intel engage in active
of mobile operators, deeper collaboration corporate venture capital activity to bring promising
will open many opportunities to drive external innovations in-house.

adoption of digital services.

22. http://www.medianama.com/2013/12/223-airtel-will-open-up-location-vodafone-no-show/

27
 THE NEED FOR DEEPER
ENGAGEMENT BETWEEN
MOBILE OPERATORS
AND STARTUPS
Collaboration Partnerships

Better engagement would ease technical

11%
challenges and build a more robust industry
and a strong ecosystem through collaboration

Only 11% of startups have partnerships

with mobile operators

Operator Resources

Biggest technical challenge faced by half of

50%
startups is the high cost of operator resources
Popular Channels, Operating Systems and Payment Methods

Most popular mobile channels, operating systems and payment methods used by entrepreneurs

46% 52%
SMS MOBILE WEB

46% 24%
ANDROID M-PESA
 Digital Entrepreneurship in Kenya 2014

3. The need for

deeper engagement
between mobile
operators and
startups
There is a tremendous opportunity for mobile operators to engage with
others in the digital entrepreneurship ecosystem.

Whereas in more developed countries digital entrepreneurs have looked to Internet

companies and even adjacent industries for collaborative partnerships, in Kenya startups
want to partner with mobile operators to facilitate monetisation, discoverability and channel
access for their ventures. Unfortunately at present, only a few startups have managed
to secure such partnerships (see Figure 6—only 11 per cent of startups surveyed have
partnerships with mobile operators).

PERCENTAGE OF KENYAN STARTUPS WITH PARTNERSHIPS

11% 8% 6% 4% 4% 3% 3%
MOBILE OTHER OTHER BANKS NGOS GOVERNMENT/ INDUSTRY
OPERATORS SMALLER LARGE GOVERNMENT ASSOCIATIONS
BUSINESSES BUSINESSES INSTITUTIONS

Source: GSMA Intelligence Kenya ICT & Mobile Entrepreneur Survey

Figure 6

30
 Digital Entrepreneurship in Kenya 2014

Collaboration and partnership an overarching strategy at the operating

models are gaining traction country or group level is lacking for most.
Partnerships with startups are formed ad-
in Kenya, but have additional
hoc and are often dependent on personal
complexity that operators are connections. While this has led to several
struggling to adapt to. startups successfully gaining traction, it
has been a time and resource consuming
Mobile operators in Kenya have indicated process for mobile operators and non-
they would like to create value through transparent for startups. Indeed, the biggest
sharing access to services or through challenge noted by startups in developing
combining operator resources with those relationships with mobile operators was a
from entrepreneurs, customers, and others in lack of trust and concerns about sharing
the ecosystem. However, business processes ideas freely (33 per cent of startups
to handle creative activity with startups are stated that the main challenge in forming
not well-established at present. While mobile commercial partnerships was lack of trust
operators have been experimenting with and concerns about sharing ideas freely).
different approaches to engage startups,

What is the value of partnerships?

One startup that we interviewed formed an extensive set of partnerships with mobile
operators, banks and other businesses in Kenya. Their most significant partnership is
with Safaricom: the startup is responsible for identifying retail businesses relevant to
M-PESA’s consumer-to-business payments platform and managing the relationship
with merchants. Safaricom is responsible for maintaining the M-PESA payment service
and providing Tier-2 customer support.

The partnership with Safaricom has added value in the following ways:

• Being official partners of Safaricom brings instant credibility when talking to potential customers
• Close contact with Safaricom helps them better integrate their product with M-PESA
• Safaricom’s marketing efforts increase customer awareness in their target market

31
 Digital Entrepreneurship in Kenya 2014

32
 Digital Entrepreneurship in Kenya 2014

BENEFITS AND POTENTIAL ISSUES TO ENGAGING WITH

STARTUPS FOR MOBILE OPERATORS

BENEFITS POTENTIAL ISSUES

• Ability to tap expertise and creativity • Costs and issues with certification of
external to the organisation code, brand, usability, services,
• Lucrative revenue streams that capitalise support channels
COMPANY • Potential for increased developer or
on both previous investments and on
IMPACT ON: PRODUCTIVITY, external investments customer support needs, which
PRODUCT / SERVICE • Spread risk of service failure and reduce requires structures and processes
PERFORMANCE, COST
STRUCTURE, FINANCING
exposure to short and variable nature of to manage
fashionable app cycles
• Maintain awareness of cutting edge
trends and ideas

• Diversification of services available • Potential loss of exclusivity and first

to customers mover advantage revenues
CUSTOMERS • Diversification of offerings that drive • Potential dilution of relationship
CHANGES IN ABILITY / data usage with customer
WILLINGNESS TO BUY • Loss of complete control over brand
and quality, possibly mitigated through
certification processes

• Limit influence of disruptive technologies • Complexity of intellectual property

COMPETITION • Services innovation as a differentiator and monitoring licenses
CHANGES IN COMPETITIVE
POSITION VS. COMPETITORS
OR SUBSTITUTES

• Reduced investment to develop • Complex monetisation process to

individual services set-up and manage with startups as
VALUE CHAIN • Business models and technologies opposed to all in-house
that leverage external innovation while • Upfront investment required to
CHANGES IN INPUT COSTS maintaining control deliver open application programming
OR STRUCTURE
• Rapid time to market and reduced interfaces to development
resource constraints for new and environments
improved services

DISTRIBUTION • Increase centrality of mobile • Capacity of network and systems to

CHANGES IN PERFORMANCE across sectors handle upstream and downstream
OF DISTRIBUTION CHANNELS traffic

Source: GSMA Analysis

Table 3

33
 Digital Entrepreneurship in Kenya 2014

Show me the money

Startups need integration to operator
payment platforms

Mobile payments platforms have been foundational for

digital entrepreneurship.

Very few countries in the developing world come close to Kenya’s mobile payments
penetration levels where an estimated 74 per cent of adults (23 million people) are
registered mobile money users.23 Widespread adoption has created an unparalleled
opportunity for digital entrepreneurs because mobile money services, such as Safaricom’s
paybill and ‘Lipa Na M-PESA’,24 are making it easier for businesses to accept payments.
As such, many startups build businesses that use mobile money platforms, including several
that extend M-PESA services to merchants and financial institutions such as Kopo Kopo and
Zege Technologies. Moreover, as shown in Figure 7, 24 per cent of startups are using the
M-PESA platform to process payments.

PAYMENT METHODS ACCEPTED BY KENYAN STARTUPS

24%
TRADITIONAL
14% 16% 16%
MOBILE

5% 5% 6% 7% 7%

DEBIT YU CASH MOBILE CREDIT AIRTEL CHEQUES CASH ON BANK M-PESA

CARD MONEY CARD MONEY DELIVERY WIRE
WALLET TRANSFER

Source: GSMA Intelligence Kenya ICT & Mobile Entrepreneur Survey

Figure 7

23. http://www.gsma.com/mobilefordevelopment/gsma-mmu-infographic-kenyan-journey-to-digital-financial-inclusion
24. ‘Lipa Na M-PESA’ is Safaricom’s service that allows merchants to accept M-PESA payments from customers (see http://www.safaricom.co.ke/personal/m-pesa/m-pesa-services-tariffs/lipa-na-m-pesa)

34
Digital Entrepreneurship in Kenya 2014

35
 Digital Entrepreneurship in Kenya 2014

Because prevailing forms of later, they simply adopted card payments as

payment involve mobile operator the mechanism. In Kenya most consumers
and most entrepreneurs do not have
platforms, startups need operator
a credit card and therefore alternative
partnerships to execute their monetisation processes must be used.
business models. Leading alternatives are mostly controlled
by mobile operators (see Table 4). Because
Extracting value from services is critical to standard processes and in some cases
the survival of startups. International bank appropriate technologies to enable access to
account and credit cards enabled the cash payment mechanisms do not exist, operators
flow during the eCommerce boom of the handle requests from startups one at a
early 2000s in the developed world. When time, bottlenecking the ability of startups to
mobile app stores launched several years monetise their service.

36
 Digital Entrepreneurship in Kenya 2014

MONETISATION METHODS IN THE DEVELOPING WORLD

METHOD DESCRIPTION CURRENT CHALLENGES

Mobile advertising not well developed in East Africa
Startup collects payment
Advertisement from client directly
value vs. traditional advertising still needs to be
demonstrated and campaign platforms developed

Web financial transactions are standardised around

DIRECT card payments or international bank account numbers–
Startup handles payment traditional bank accounts and credit cards are
In-app / developer handled
from consumer directly uncommon in the developing world. The registration
and payments processes tend to be cumbersome
for customers

Mobile application stores charge developer fees ($99

annually for Apple and $49/$99 for Windows, $25 one
time for Google) in addition to taking a cut of revenues
(typically 30 per cent). There are also minimum and
Store handles payment from
maximum prices for apps. Mobile app stores collect
customer and pays out after
Mobile application stores developer fees from credit cards and wire payments to
a short period of time and/or
bank accounts—many Kenyan entrepreneurs especially
when threshold is met
youth do not have credit cards or bank accounts. Mobile
app stores that require US credit cards will also involve a
multi-step process with significant transaction handling
to move funds from the US to Kenya

Charges are added to Needs to be set up directly with the operator, which
Direct operator / carrier billing consumer’s monthly mobile is difficult for startups. There are also regulatory
invoice or deducted from restrictions on the types of services that can be sold
airtime balance through direct carrier billing

Operator deducts standard

amount from consumer’s
Difficult to secure dedicated short code with a mobile
airtime balance account via
operator, likely to go through a Premium Rate Service
Premium Short an associated cost per SMS
Provider (PRSP, see below). Availability tends to be
Message Service (SMS) to a prescribed number,
limited for low-volume startups
but retains a portion of the
payment as commission

Operator deducts purchase Standardised application programming interfaces

amount from consumer’s allowing access are limited, unstable or non-existent,
Mobile money payments
mobile money account, although there are plans to improve them. Issues with
plus commission trust and fraud need to be resolved

Some gateways deduct fees per transaction instead

INTERMEDIARIES Intermediary acts as payment
of as a percentage of transaction values; high-volume
gateway, processing variety
Payment aggregators low-margin revenue models may struggle. Also
of payment types
technology is still relatively new and run by startups

PRSP’s margin after operator cut has been historically

PRSP handles payment from low, resulting in very low revenues for startups further
Premium Rate Service
Providers (PRSP) customer and pays out after down the value chain. Also, PRSPs rarely have a
a period of time transparent billing process, making selection of a
PRSP a challenging step

Source: GSMA Analysis

Table 4

37
 Digital Entrepreneurship in Kenya 2014

Channelling growth
in digital services
Access to mobile channels is an issue for
entrepreneurs and a potential opportunity
for operators

Startups are underutilising operator channels that could unlock

opportunities to expand their businesses, such as Interactive Voice
Response (IVR) and Unstructured Supplementary Services Data (USSD).

Because startups do not have consistent or cost-effective access to channels that are
controlled by mobile operators, many develop on ‘the path of least resistance’, which is
typically Android or mobile web, even though most users do not have smartphones (see
Figure 8). If mobile operators open up relevant network services, entrepreneurs will be able
to develop a wide variety of services that use these assets, potentially generating additional
revenue. Of all the channels, basic voice is the most underused means for delivering services.
Although set-up costs for voice-based solutions are generally much higher than Short
Message Service (SMS), addressable markets for voice serves are significantly higher. This is
because many users in developing world countries lack the language and technical literacy
skills necessary to operate SMS-based services. As projects scale, profit margins for IVR and
voice services will grow whereas SMS and USSD will remain flat.25

25. See Value of Voice – an unsung opportunity, available at: https://mobiledevelopmentintelligence.com/insight/Value_of_Voice_-_an_unsung_opportunity

38
 Digital Entrepreneurship in Kenya 2014

POPULAR MOBILE CHANNELS AND OPERATING SYSTEMS

FOR KENYAN STARTUPS
Symbian 8%
APPLICATIONS & WEB Blackberry 9%
VOICE Apple iOs 10%
MESSAGING Windows OS 10%
Java (J2ME) 23%
Android 46%
Mobile Web 52%
OutBound Dialled Calls 0%
Interactive Voice Response 3%
Call centre 4%
MMS 3%
USSD 14%
SMS 46%
Source: GSMA Intelligence Kenya ICT & Mobile Entrepreneur Survey

Figure 8

Access to Short Message Service volume customers. Even with discounts,

(SMS) is readily available and however, costs are fixed per unit. As noted
by developers that we interviewed, the high
understood, but not always cost
cost of resources, such as SMS services from
effective to scale. mobile operators, is the greatest technical
challenge Kenyan startups are facing (see
Most mobile operators charge for SMS
Figure 9). Startups generating insufficient
network services on a per unit basis—so
volumes to reach lower price bands feel
delivery costs increase with traffic volumes.
these growing pains acutely.
Some operators discount costs for large

TECHNICAL CHALLENGES FACED BY KENYAN STARTUPS

50%
39%
26% 23% 19%

2% 1% 1%
High costs Programming Hosting Internet Tools Time / effort Delinquent Poor quality
of operator languages access for testing accounts assurance
resources
Source: GSMA Intelligence Kenya ICT & Mobile Entrepreneur Survey

Figure 9

39
 Digital Entrepreneurship in Kenya 2014

Reinventing
the wheel
Environments, platforms and tools that
accelerate development are an opportunity
for mobile operators

Hosted environments for testing and early stage operations are an

opportunity for mobile operator and ecosystem collaboration.

Even with the recent advances in infrastructure, hosting options that replicate live conditions
remain expensive or impractical. At present, startups have several options:

1. Host services on their findings indicated that only 18 per cent of

own equipment: startups in Kenya have average revenues
above $2,900 per month and most are
Building a reliable and scalable platform ‘bootstrapping’, this option is out of reach for
requires a significant capital outlay, as the most startups.
requisite equipment, infrastructure and
redundancy are expensive. In addition, there Co-locate within a mobile operator’s data
are on-going costs for operations staff and centre facilities: This option is similar to the
24x7 support. above, but could potentially be offered at an
affordable cost or as part of a wider package
of support. This option does require startups
2. Housing – service provider and mobile operators to form partnership
provides rack, power, air agreements; interviews with startups have
conditioning and Internet noted that negotiating partnerships has
been challenging.
connectivity:
Co-locate services in a managed data centre:
While facilities are available in Kenya, they
3. Managed server hosting:
are designed to enterprise standards and
costs. One example, Kenya Data Networks On top of housing, the service provider
(KDN), provides a state-of-the-art facility but leases the server and provides operating
costs approximately $2,000-$3,000 a month system level administration support.
for a rack (excluding servers). As our survey

40
 Digital Entrepreneurship in Kenya 2014

4. Locate services with a cloud- Furthermore, tools and methods to

based Platform as a Service conduct thorough quality assurance
(PaaS) provider: are rarely available or cost-effective.
PaaS providers host services on virtual Unlike Web development, where developers
servers that run on cloud architectures. only need to test software on a few popular
Because resources are virtual, this option Web browsers, mobile developers face
is typically cost-effective for startups tremendous variation in Web browsers,
as resources can be easily scaled as operating systems, application environments
requirements change. Unfortunately and mobile devices. In addition, mobile
at present, PaaS are all located out of technology will vary with each operator
country and require a reliable connection or may be used inconsistently throughout
and bandwidth. Moreover, PaaS providers network resources (e.g. application
typically collect payments using programming interfaces, short codes, USSD
international payment standards, such ports). This adds to both the effort and cost
as Visa or MasterCard, which Kenyan of testing software on a plethora of devices.
entrepreneurs rarely have. Also, depending
on the industry, storage of user data out of
the country may be regulated (e.g. medical Technical programming skills need
or health records). to be broadened.
The number of highly-skilled technical
developers is growing in Kenya, fed by
Advanced software tools and
Nairobi’s universities (University of Nairobi,
platforms need to be more available Jomo Kenyatta University of Agriculture
to accelerate technical development. and Technology, and Strathmore University).
Developer tools and platforms are widely University and online learning is also
available, often free of charge. A variety supplemented by expatriate developers
of support alternatives are also accessible working in Kenya alongside local developers.
through the Internet, including online That said, developers’ skills in Kenya are
courses and developer support forums. Most clustered around Web programming and
developers are aware of and make use of technical systems administration, such as
such tools and online support; however they networking, security, and general technical
are less familiar with specialised frameworks support. Most have never received training
for building advanced services in a particular in technologies suitable for deploying
industry, such as OpenMRS (an open source mobile services to basic and feature phone
electronic medical record system) and users, such as IVR (62 per cent), USSD (45
FrontlineSMS (a bulk Short Message Service per cent) or SMS (38 per cent). From our
management tool). Making platforms easily discussions with other stakeholders, formal
available and publicised could help startups training on digital services technologies is
develop increasingly sophisticated services not available and most developers are either
without having to waste time ‘reinventing self-taught or learn while developing for the
the wheel’. first time. At present, only one organisation
in Kenya, eMobilis,26 stands out as presently
offering or planning to develop such services
at scale in the near future.

26. eMobilis Mobile Technology Institute was founded in 2008 and focuses on training individuals on Mobile Software Development as well as Network Infrastructure Management
(http://www.emobilis.org/emob/index.php/courses)

41
 THE COMPETING NARRATIVE
BETWEEN LACK OF CAPITAL
AND LACK OF DEALFLOW

Bootstrapping VC and Angel Funding

10%
Less than 10% of
entrepreneurs
receive funding from
60% of entrepreneurs are self-funded VCs or Angels

Total Funding Received

40% < $1,200

93% < $120,000
40% of mobile startups receive less than
SMS
funding, and 93% have received less than
$1,200 of
$120,000
(46%)
60%+
Equity Financing

More than 60% of entrepreneurs are interested in equity financing, but have not approached an investor

Confidence Support
60% of entrepreneurs need additional
50% support in sales and marketing

Less than 50% of

entrepreneurs feel they
have the skills needed to
run the company
60%

Early Stage Venture Capital Constraints

70%
Only 7% of venture capital is targeting idea The majority of
and prototype stage opportunities in Kenya startups we
surveyed (70%)
earn $2,900 or less
which means they
cannot work full

7 time on their
ventures nor hire
proper marketing or

$2,900 user design

% resources
 Digital Entrepreneurship in Kenya 2014

4. The competing narrative

between lack of capital
and lack of dealflow
Entrepreneurs and investors in Kenya have
conflicting viewpoints

From entrepreneurs’ perspective, accessing challenging. Many startups lack proper team
finance is difficult. “Investors view Africa structure, track records, and skills necessary
as a high risk market resulting in fierce to run a business. To clarify the situation, in
competition for very few funds,” commented depth interviews were conducted with over
one entrepreneur who recently raised seed 230 founding teams and most of the venture
capital. Entrepreneurs felt that reluctant risk- capital companies actively investing in
taking translates into investors demanding information and communication technology
disproportionate equity stakes during in East Africa. Our conclusions were also
negotiations. These points were echoed shaped by several recent entrepreneurship
during further interviews with startups (see ecosystem studies, interviews with other
Figure 10). From the investor perspective, stakeholders, and our own observations.27
finding investible opportunities is

ACCESS TO FINANCE CHALLENGES FACED BY KENYAN STARTUPS

31%
21% 21%
13% 11% 8% 4% 2%
Investors My pitching No challenges Investors My business Finance comes There is Feedback that
have stringent skills are have a poor is not well with high strong our business
requirements poor understanding established interest rates competition model is
of startups for funds unsustainable

Source: GSMA Intelligence Kenya ICT & Mobile Entrepreneur Survey

Figure 10

27. Reports reviewed include: Bannick, M. and Goldman, P. (2012) Priming the Pump: The Case for a Sector Based Approach to Impact Investing, Omidyar Network | The Bridgespan Group. (2009). The Strong
Field Framework: A Guide and Toolkit for Funders and Nonprofits Committed to Large-Scale Impact | Bulloch, G., Lacy, P., & Jurgens, C. (2011). Convergence economy: Rethinking international development in a
converging world. Accenture | Capital markets Authority (2011). Challenges and opportunities in the East African ICT sector | 2013 Julisha ICT Study; Kenya ICT Master Plan 2017 Kenya Vision 2030
Koh, H., Karamchandani, A., & Katz, R. (2012). From blueprint to sale: The case for philanthropy in impact investing. | Monitor Group Monitor Group. (2013). Accelerating Entrepreneurship in Africa:
Understanding Africa’s Challenges to Creating Opportunity-driven Entrepreneurship | Open Capital Advisors. (2013). Toward an Ecosystem for Early-Stage Incubation of Social Enterprises in East Africa
Sondhi, A., Biswas, S., Gupta, G., & Bharwani, P. (2011). Mobile value added services: A vehicle to usher in inclusive growth and bridge the digital divide. Deloitte.

44
 Digital Entrepreneurship in Kenya 2014

Constrained capital
Few investors are working at very early stages and
most of the capital is spread across later stages

Early stage investing requires taking risk. Based on our analysis (see Figures 11
Several early stage investors run their own and 12), there does appear to be a gap in
accelerator programmes to complement the funding, especially at prototype stage. The
financial assistance they provide to startups. relative amount of capital compared with
This increases the likelihood that some of supply is lower at prototype and seed stage
their investments will lead to successful compared with other stages. As well, the
exits. Not every investment is expected to spread of capital tends to be focused on
survive through the accelerator programme— seed and growth stage startups, with very
startups failing to gain traction are typically little available at idea and prototype stage.28
culled or sent back to the drawing board.

ANALYSIS OF THE FUNDING GAP FOR KENYAN DIGITAL STARTUPS

Spread of VC across stages

41%
Supply of VC / demand for VC by digital startups in Kenya

40%
34% 32%

18%
25%
18%
11%

1% 6%
IDEA PROTOTYPE SEED GROWTH EXPANSIONARY
Source: GSMA Intelligence Kenya ICT & Mobile Entrepreneur Survey

Figure 11

28. Analysis includes 17 funds that responded to our survey as well as 1 fund estimated from data on the company website and Growth Fin’s (2008) Capacity Constraints Facing Risk Fund Managers.

45
 Digital Entrepreneurship in Kenya 2014

Kenya Digital Idea and Prototype:

Startup Stages: There are very few investors funding idea and prototype
stages; our research uncovered three active investors
• Idea: Founders have more in Kenya. The investment range is broad, from several
than one idea but no thousand to $25,000, with average deal size of $13,000
tangible prototype for idea and $18,000 for prototype. Funding needs as
stated by startups at idea stage was just above this range
• Prototype: Founders have ($27,000), but prototype stage startups were seeking
crystallised their ideas significantly higher investments ($70,000).

• Seed: Founders have

formed a company based
Seed:
on their ideas and have a Approximately three-quarters of investors who responded
clear business model and a invest at the seed stage. Typical investment range
core team is $165,000 to $490,000 with average deal size of
$226,000. Funding need at this stage was below the
• Growth (Series A): lower end of the range ($135,000).
Company has a polished
product or service, a well
proven market, a clear
Growth:
commercialisation strategy Approximately one-half of funds that invest at seed
and a considerable stage also invest at growth stage. Typical investment
customer base. Revenues range is $460,000 to $1.8 million with average deal size
are strong and growing. of $900,000. Funding need as stated by startups is well
Company has several below the lower end of this range ($310,000). Many firms
employees and focussed reportedly seeking growth capital are unlikely to meet
teams. Focus is on scaling investor expectations. For example, annual revenues
up operations for this stage from our interview respondents averaged
approximately $200,000, whereas investors interviewed
• Expansionary (Series B): stated they require annual revenues ranging from
Profitable company $1 million to $10 million.
looking to expand
operations regionally or
Expansionary:
internationally
Venture capital investors cohabit with private equity at
this stage. We spoke with three venture capital funds that
invest in East Africa, with a funding range of $2 million to
$5 million, and average deal size of $3 million. As we only
interviewed one startup at this stage, we do not report
the funding need. Unless a strong pipeline is developed at
the earlier stages, there will not be enough deals to satisfy
the appetite for multi-million dollar investments into
digital African companies.

46
 Digital Entrepreneurship in Kenya 2014

VENTURE CAPITAL ORGANISATIONS

FINANCING DIGITAL STARTUPS

$10,000 $25,000 $250,000 $2.5M+

PROTOTYPE SEED GROWTH & EXPANSIONARY
Catalyst

Eacp

Ecp

Leapfrog

Grassroots

Acumen Fund

Accion Venture Lab

Fanisi

Kukua Fund TBL Mirror Fund

Innovation 4 Africa Tlcom Capital

Mbada Ventures (estimated)

500 Startups ResponsAbility

Kitendo Capital

Khosla Impact

African Media Ventures Fund

Jacana

Bamboo Finance

Savannah Fund

DOB Equity For Africa

Invested Development

Growth Africa eVA Fund

GroFin

88 mph

Business Partners International

$10k $15k $20k $25k $50k $100k $150k $200k $250k $500k $1M $1.5M $2M $2.5M+

Source: GSMA Analysis. Figure is illustrative and was developed using stated investment ranges and publicly available information.
Intention is to show relative ranges of investment and visible early stage funding gaps

Figure 12

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 Digital Entrepreneurship in Kenya 2014

More angels needed

A major source of early stage capital and
mentorship is missing in Kenya

A lack of business angel networks in Kenya makes the funding gap

at the early stage more severe.

Whereas in the Silicon Valley business angels funded 37 per cent of ventures, less than 2 per
cent of Kenyan startups had received funding from angels. Combined with venture capital,
the amount of startups funded with risk capital is approximately 64 per cent, compared
with 8.6 per cent for Kenya (see Figures 13 and 14). Interestingly, the proportion of startups
bootstrapping in Kenya is about the same as the proportion of startups receiving risk capital
in the Silicon Valley.

INITIAL SOURCES OF FUNDING – INITIAL SOURCES OF

KENYAN STARTUPS FUNDING - COMPARED

Other SILICON
4.1% SOURCE KENYA
VALLEY
Venture capital
6.7% Venture capital (VC) 27% 6.7%
Angel (includes private equity)
1.9% Business angels 37% 1.9%
Competition
2.2% VC + Angels 64% 8.6%
Grant Self-funded 13% 60.3%
3.2%
Bank / SAACO Family & friends 22% 20.3%
1.3%
Bank / SAACO 1% 1.3%
Family & Friends
20.3% Grant 0% 3.2%
Self-funded
Competition prize 0% 2.2%
(personal savings)
60.3%

Source: GSMA Intelligence Kenya ICT & Mobile Entrepreneur Survey (Figure 13, 14); Telefonica Digital (Figure 14) 29

Figure 13 & 14

29. Telefónica Digital and the Startup Genome. (2012). The startup ecosystem report 2012. Telefónica Digital [Online]. Available from http://blog.digital.telefonica.com/?press-release=startup-ecosystem-report-2012

48
 Digital Entrepreneurship in Kenya 2014

“The angel scene depends on companies being successful

enough to make big exits” – Managing Partner, Venture Capital Fund

The lack of local business angel There are many different types of
investors arises because there have business angels that could support
been very few exits to date. businesses in Kenya.
Business angels typically arise from While local business angels understand the
individuals who build and exit successful Kenyan context, returning diaspora and non-
businesses and want to reinvest the Kenyan investors with technology startup
proceeds, usually in a sector where they experience or commercial, marketing and
have experience. Because very few Kenyan financial expertise gained from working in a
digital entrepreneurs have exited startup corporate environment will also add value.
businesses, we have yet to see a strong local A business angel investor is likely to be
business angel community emerge. Some senior in experience and highly specialised.
early stage funds are plugging the gap that As such, activities supporting the
business angels would fill in other markets, development of business angel networks
in addition to investing in their target range. should recognise that a single business angel
Many believe that a few big success stories mentor may not be able to address all the
will attract interest from potential angels— skills needs of a startup in Kenya. Business
once some investors have made profits, angels collaborating and co-investing
others will pile in. Formalised business angel together may address this issue.
networks will probably emerge organically
when the timing is right.
Efforts are underway to raise
awareness about business angel
There is potential for a significant investing in East Africa, but more
number of active business activity is needed.
angels in Kenya.
Education for potential business angel
Nairobi currently has 5,000 $US millionaires, investors and investees could definitely
the fifth highest number of any African catalyse the process and prevent ‘horror
city.30 Angels typically make smaller-sized stories’, of which there have been a few. One
investments and at very early stages. business angel we spoke with was burned by
Funding in the range of $10,000 to $30,000, a previous investment in a software company,
which is the range most desperately needed and is now refraining from making any future
at present in Kenya, would be right in a investments in information technology.
business angel investor’s sweet spot. High On the flip side, we heard rumours of a few
net worth Kenyans are savvy investors business angels with a reputation for taking
already, with many speculating in real aggressive amounts of equity. Business
estate and traditional industries. Informal angel workshops to provide training,
investment groups are emerging, typically networking, and deal sourcing opportunities
with senior people from large technology would help support the development of
conferences and recent Strathmore business business angel networks in Kenya.
school graduates.

30. http://www.businessdailyafrica.com/Nairobi-ranked-among-top-havens-for-the-super-rich/-/539546/1960192/-/1151e8y/-/index.html

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 Digital Entrepreneurship in Kenya 2014

Staying alive
Few startups have received significant venture
capital funding and most are bootstrapping as well
as using non-traditional sources

While demand for venture capital As mentioned above, entrepreneurs may

funding is high, most startups are not be proactively seeking venture capital
funding due to perceptions of terms (see
staying alive by bootstrapping.
Figure 10—stringent requirements by
82 per cent of startups interviewed reported funders, 31 per cent). They may also not feel
that they were currently looking for external confident about their negotiating position
finance. Most (61 per cent) were interested in with investors (see Figure 10—the second
venture capital but have not yet approached highest reason for issues accessing finance
an investor; only 3 per cent had approached was lack of skills necessary to pitch ideas
a venture capital investor unsuccessfully (see and draft business plans, 21 per cent).
Figure 15).

KENYAN STARTUP INTEREST AND SUCCESS IN

APPROACHING VARIOUS FUNDING SOURCES
VENTURE 15% IN PROGRESS
16% 61% 23% 3% UNSUCCESSFUL
CAPITAL 5% SUCCESSFUL

ANGEL 15% IN PROGRESS

6% 73% 21% 3% UNSUCCESSFUL
INVESTOR 5% SUCCESSFUL

DONER 10% 77% 14%

FUNDS

BANK 59% 29% 12%

PRIVATE 24% 65% 10%

EQUITY

PUBLIC 21% 70% 9%

FUNDS

NOT INTERESTED INTERESTED APPROACHED

Source: GSMA Intelligence Kenya ICT & Mobile Entrepreneur Survey

Figure 15

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 Digital Entrepreneurship in Kenya 2014

The demographics of teams have an and non-Kenyans) received funding from

effect on their funding channels. business angels than teams that were all
Kenyans (see Figure 16). This could also
Analysis of the type of funding received by indicate easier access to business angels
team composition revealed that international from international connections. All Kenyan
team composition tended to be favoured by teams tended to rely more on banks, own
donors and investors, particularly business savings, and ‘family and friends’ compared
angels. A significantly higher percentage to international teams.
of teams with mixed-nationality (Kenyans

KENYAN STARTUP TEAM COMPOSITION BY

FUNDING CHANNEL
3% 2% BANK LOANS

46% 29% 13% OWN SAVINGS

1% 1% SACCO LOANS

20% 17% 13% FAMILY AND FRIENDS

12% 6% 11% OTHER

3% 2% 3% PRIVATE EQUITY INVESTMENT

4% 6% 5% VENTURE CAPITAL INVESTMENT

5% 10% 6% COMPETITION PRIZE MONEY

4% 8% 6% GRANT / DONER FUNDS

3% 21% 3% BUSINESS ANGEL INVESTMENT

All Kenyans Mixed nationality (Kenyans & non-Kenyans) All non-Kenyans

Source: GSMA Intelligence Kenya ICT & Mobile Entrepreneur Survey

Figure 16

Competition prize money and donor competitions offering cash prizes greater
grants are also supporting early than $5,000. Out of 5 smaller competitions
where cash prizes ranged from $100 to
stage entrepreneurs.
$2,000, the total amount awarded over the
We analysed a total of 12 competitions period was less than $50,000. This amount
occurring in East Africa over the last several is insignificant compared to the amount
years, and 3 grant competitions which of venture capital available at the early
resulted in 25 grant awards. In sum, we stage. Even if small competitions attract
felt that grants and prizes were doing little ‘compepreneurs’ it is unlikely that prizes are
if any harm. There have been instances of crowding out substantial seed investments
‘compepreneurs’—entrepreneurs chasing or serious investors. Moreover, for larger
after competitions with half-baked ‘cool competitions, two-thirds of competition
apps’ as opposed to scalable business ideas— winners are still operating businesses.
but they tended to get weeded out of larger

51
 Digital Entrepreneurship in Kenya 2014

Even if not financially distorting, To ensure the potential of

the frequency of and hype around competitions is maximised, we
competitions is creating an recommend revising winner
environment that is distracting for selection criteria, adding non-
entrepreneurs and creating a lot of monetary awards, and disbursing
noise for investors. money on a milestones basis.

According to one investor, several Revising the winner selection criteria

entrepreneurs who recently approached to include commercial viability (e.g.
his fund for investment touted prizes won monetisation plan and market size) would
from competitions as signs of success, drive entrepreneurs to focus on successful
rather than marketplace evidence. He finds businesses instead of developing a cool
this troubling, especially as investors are app. Providing non-monetary awards in
increasingly paying attention to Kenya. The addition to or in lieu of cash prizes, such as
more competition winners there are, the mentorship or in-kind hosting, may be more
higher the background noise interfering with helpful to entrepreneurs than smallish sums
investors’ scanning activities. of cash and may discourage ‘compepreneurs’
from participating in such competitions.
Finally, disbursing awards based on agreed
To some extent, given the severe milestones creates a sense of commitment
lack of early stage funding, prizes to progress.
and grants have been helpful forms
of capital.
The end result is that few startups
Competitions raise the profile for the
receive the necessary funding to
winners, and in fact, 55 per cent of startups develop and scale their ventures.
who won prize money and 42 per cent of
startups who received grants went on to Only 7 per cent of startups have received
receive additional other funding. Grants are total funding (excluding personal savings) in
also essential for social impact projects to excess of $120,000 (see Figure 17). Nearly
fund activities that many not be possible one-half have received less than $1,200.
through pure commercial fundraising, The gap in early stage funding needs to be
such as extending service to an initially addressed otherwise the pipeline for more
unprofitable segment or area. Finally established ventures will continue to be
competitions rally the community and get constrained.
young people excited about starting their
own business.

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 Digital Entrepreneurship in Kenya 2014

KENYAN STARTUPS TOTAL CAPITAL RECEIVED

40% 93%
RECEIVED RECEIVED
LESS LESS
THAN THAN

$3,000,000

$1,200 $120,000 $2,500,000

$2,000,000

$1,500,000

$1,000,000

$500,000

$0

NO FUNDING MOST FUNDED

Source: GSMA Intelligence Kenya ICT & Mobile Entrepreneur Survey

Figure 17

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 Digital Entrepreneurship in Kenya 2014

Growing pains
At growth stage the issue appears to
be a lack of investible teams

Our survey results demonstrate estimate that only about one-quarter of

that many startups have revenues; startups (with more than 300 users) are
probably gaining traction as a business
however few have revenues of
to consumer service. Moreover, while it is
any significance. encouraging to see revenues, the reality
is that only 18 per cent earning more than
Surprisingly, at least one-half of startups $2,900 have enough revenues to grow
in Kenya reported having revenues (which the business organically (recall from the
we measured as taking in at least $600 previous section that 60 per cent of startups
per month).31 This number on its own does are bootstrapping).
not tell the entire story, however, as many
Kenyan entrepreneurs work on side projects Capital constraints result in poorly structured
in addition to their ventures. teams and lack of focus. To sustain three
founding team members, a bootstrapping
Roughly three-quarters of startups surveyed startup with little savings must be earning
described their model as business–to– at least $3,300 a month. As the majority of
business (B2B), and nearly half stated they startups we interviewed (70 per cent) earn
were business–to–consumer (we noted $2,900 or less, teams will struggle to work
that some startups provide both services full-time on their ventures and pay necessary
to other businesses and work on their own expenses, such as for resources to help with
software simultaneously). Given the number marketing plans or user-design.
of registered users noted in Figure 19, we

31. This finding was surprising considering 48 per cent of startups in Silicon Valley have no revenues (Telefónica Digital and the Startup Genome, 2012).

54
 Digital Entrepreneurship in Kenya 2014

Chief Technical

MINIMUM
START UP
REVENUE
Officer
Chief Executive
Officer
Head of Business
Development
70%
EARN
STARTUPS
REQUIRED

$3,300 $2,900
MONTHLY REVENUE NUMBER OF REGISTERED USERS

Less than $600 38% 1 - 10 38%

$600 - $2,900 32% 11 - 50 21%
$2,900 - $11,800 12% 51 - 100 8%
$11,800 - $58,800 4% 101 - 300 9%
More than $58,800 2% 301 - 500 4%
Other 12% 500+ 20%

Source: GSMA Intelligence Kenya ICT & Mobile Entrepreneur Survey (Figures 18, 19)

Figure 18 & 19

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 Digital Entrepreneurship in Kenya 2014

What distinguishes deals you screen and those you invest in?
“Team” – Fund Manager, Venture Capital Fund

Most of the growth stage fund The reality is that most founding
managers we spoke with stated teams are relatively young and have
the ‘team’ was the reason they little formal work experience.
ultimately decided to invest.
In some areas, Kenyan entrepreneurs are
Many investors cited a general frustration similar to peers in other innovation hubs.
with the quality of teams pitching for growth For example, there was no real difference in
capital. Investors felt entrepreneurs had gender or in the percentage of non-technical
weak business acumen and poor business founding teams (see Figure 20). But in terms
models. Often investors are approached of experience, Kenyans are well behind other
by a solo developer, or two techies with no ecosystems and investors are more sensitive
operations, finance, or marketing resources to track record. Whereas the average age of
or skills. Few startups actually meet all the entrepreneurs in the Silicon Valley is 34, in
criteria, and many investors have now turned Kenya 86 per cent are younger than this (see
to finding ‘rough diamonds’–ideas or teams Figure 20). Significantly more entrepreneurs
that show some signs of promise. Ultimately, in Kenya have masters or PhDs compared to
as one investor put it, one has to be “willing other ecosystems (7 to 1 in Kenya compared
to deal with all the disorder and just with 2.5 to 1 in Silicon Valley and 2.3 to 1 in
plough through”. Tel Aviv), however the Kenyan formal
education system is not considered to be a
substitute for formal work experience by
an investor.

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 Digital Entrepreneurship in Kenya 2014

PROFILE OF KENYAN ENTREPRENEUR COMPARED

TO OTHER ECOSYSTEMS

KENYA SILICON TEL AVIV SANTIAGO BANGALORE SAO PAOLO SINGAPORE MOSCOW
VALLEY

< 35 86%
AGE

34 36 28 37 30 33 28
35+ 14%
GENDER (F/M)

10% 10% 9% 20% 6% 4% 5% 7%

90% 90% 91% 80% 94% 96% 95% 93%

HIGHER EDUCATION
(RATIO OF POST-GRADUATE WORK TO
NO UNDERGRADUATE DEGREE)

7:1 2.5 : 1 2.3 : 1 1.3 : 1 4.5 : 1 10 : 1 6:1 2.3 : 1

% OF NON-
TECHNICAL
FOUNDING
TEAMS

19% 16% 11% 8% 15% 24% 26% 13%

Source: GSMA Intelligence Kenya ICT & Mobile Entrepreneur Survey and Telefonica Digital (2012) Startup Ecosystem Report

Figure 20

57
 Digital Entrepreneurship in Kenya 2014

The result is poor business maintaining accounting books, leading

modelling, a lack of strategy and to cash flow issues and challenges when
raising finance. Teams that reported having
failure to execute.
at least three years of experience in sales
and marketing, business development, and
On the whole, Kenyan entrepreneurs have
business plan writing were self-trained or
less real-world commercial experience
learned these skills through experience.32
compared with peers in the Silicon
These same skills were not perceived as
Valley. Most have technical educational
strengths by investors. Without strategic
backgrounds, but business, management
direction, startups fixate on their code,
and finance skills are critically lacking (see
instead of focusing on faster execution and
Figure 21). Surprisingly a quarter
testing/iterating in the market.
(25 per cent) of respondents reported never

EDUCATIONAL BACKGROUND OF
KENYAN STARTUP FOUNDERS

IT 46%
Other 24%
Business Management 11%
Engineering 8%
Accounting & Finance 5%
Science 3%
Fine Arts and Visual Design 3%

Source: GSMA Intelligence Kenya ICT & Mobile Entrepreneur Survey

Figure 21

32. 50% or more with 3 years of experience: Entrepreneurship skills, Strategy; 40% or more with 3 years of experience: Sales and marketing, Managerial skills, Business development, Budget management,
Business plan writing, Financial projections.

58
Digital Entrepreneurship in Kenya 2014

59
 Digital Entrepreneurship in Kenya 2014

Supporting startups
More hands-on mentorship and business scaling
guidance are needed

Entrepreneurs recognise they Awareness of intellectual property

need mentorship. rights is lacking.

Fewer than 50 per cent of founding teams at The desire for legal support was surprisingly
any stage felt they had all the skills necessary low (7 per cent), potentially because it
to run the company (see Figure 22). was straightforward to set up a company
65 per cent of founders stated they have a and because few have sought legal advice
business or technical mentor; however nearly to protect intellectual property (only
all startups expressed the need for more 15 per cent had protected their ideas
mentorship in addition to what they through intellectual property rights). Lack
already receive. of awareness appears to be the reason
why startups had not sought to protect
their ideas as many reported insufficient
The biggest area where knowledge on approach protecting the idea
as the reason why they had not done so. This
entrepreneurs were seeking
is potentially an area where government,
additional support was sales and academia, hubs and accelerators can be
marketing (60 per cent), followed influential. Kenya needs a regulatory system
by technical mentoring that builds entrepreneur confidence and
(27 per cent). intermediaries that demystify and push
entrepreneurs to protect themselves. While
Many did not have a clear marketing strategy not all digital companies will have intellectual
and only 38 per cent of those interviewed property that is patentable, those that do
had at least one team member with formal should be incentivised to do so (potentially
skills in sales and marketing. 50 per cent of through support programmes implemented
startups rely on self-trained/experienced through hubs and accelerators). This will
team members and the remaining 12 per cent reduce investor uncertainty and provide
have no team members with any relevant recourse for entrepreneurs whose ideas truly
sales/marketing experience or skills. Most have been stolen.
startups are using ‘word of mouth’ as the
primary marketing channel, probably due to
inability to afford other avenues (47 per cent
of those interviewed stated high prices was
a major marketing challenge).

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 Digital Entrepreneurship in Kenya 2014

Quotes from startups on mentorship needs:

“…someone to give us advice frequently in both business and
technical issues.”

“…a digitally oriented person who understands my kind of

business and understands the challenges mentioned.”

“…a technical mentor who is well-versed with animations and

running an animations-oriented business.”

“…a Kenyan mentor to help us understand the Kenyan market,

especially legal issues affecting our business.”

“…how to build a team and scale-up the business, how to

manage human resources while scaling a company….”

PERCENTAGE OF KENYAN STARTUP FOUNDING TEAMS

WHO FEEL THEY HAVE THE SKILLS NECESSARY
TO RUN THE COMPANY

50% OVERALL
42% 40%
38%
13%
IDEA PROTOTYPE SEED GROWTH

Source: GSMA Intelligence Kenya ICT & Mobile Entrepreneur Survey

Figure 22

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 Digital Entrepreneurship in Kenya 2014

“I know I do not have the business skills sufficient to run the

business. There is no time to take courses. I would rather be
Chief Technical Officer (CTO).”
Founder and Chief Executive Officer, Kenyan Startup

“My business angel investor is my biggest mentor.

He guides me in business development, framing business
problems, strategy, etc.”
Founder, Kenyan Startup

Even at growth stage, entrepreneurs Mentorship programmes are

need mentorship. insufficient in Kenya.

Things get more difficult for startups at Compared to other regions, most Kenyan
growth stage. Decisions become more organisations are providing minimal or
critical and companies may struggle with average mentorship support, meaning
building scalable business processes. Many mentors are available on a needs basis
entrepreneurs at this stage stated they and no active mentoring or performance
needed mentorship in business strategy, reviews are conducted. Where one-to-one
expansion and development. All-Kenyan mentorship programmes do exist, mentors
teams in particular wanted mentorship are often neither local nor subject matter
on leadership, professionalism and experts. Being local is not a prerequisite to
management, from people with experience being a good mentor—and in fact several
running big companies. virtual mentor programmes, such as
VC4Africa,31 have been established in the
There are lots of exciting ideas developed last few years. However, mentors that lack
by digital entrepreneurs in Kenya, but what appreciation for the Kenyan business context
many are struggling with is the ability to or have no practical experience working in
scale their ventures to a wider audience. Africa may find it difficult to relate to the
It was noted during focus groups and needs of Kenyan startups.
interviews that the majority do not know
how to approach growing the business and
lack the networks and connections to do so.

33. Venture Capital for Africa (VC4Africa) provides a virtual community for entrepreneurs and investors building companies in Africa. https://vc4africa.biz/

62
 Digital Entrepreneurship in Kenya 2014

One startup we interviewed commented Others have not been as satisfied. We

on mentorship they received from an interviewed a startup that was one of the
accelerator programme. They had mentors first companies to receive investment
from Kenya and the US who guided them in through a venture capital investor/
their journey. The experience was positive: accelerator in Nairobi. At the time, the
most of the mentors are now official board accelerator was still refining its own
members and regular meetings occur model and attracting further funds. As the
monthly. The founders praised their mentors startup recounts, there was a mismatch in
for assisting them to define a clear vision for expectations, and joining the accelerator had
the company and manage day-to-day hurdles. both advantages and disadvantages.

Some positive aspects were:

• Access to funds & infrastructure: With the necessary funding and infrastructure
support from the accelerator, the startup could better focus on building the business
and didn’t have to worry about generating short-term revenues to pay its employees at
the end of each month
• Peer support: Being part of the accelerator also provided the founders with access to
different skillsets from various other startups working at the same place

However, the level of coaching and mentorship

provided felt insufficient:

• The startup was expecting strong guidance on how to achieve growth: The
accelerator defined key metrics to track the business and met the founding team every
Monday to assess the progress based on those KPIs. However the startup felt ‘lost’
thinking how to build the business
• The startup was expecting local mentors: The accelerator brought in an ‘entrepreneur
in residence’ to mentor startups in their accelerator. Most entrepreneurs in residence
were non-Kenyan, hence some of their inputs felt less relevant to the local market

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 Digital Entrepreneurship in Kenya 2014

Angels, accelerators and incubators exist is definitely contributing to the strong

deliver critical early stage support need for more mentorship. The accelerators
and incubators in Nairobi are making
in more mature ecosystems.
efforts to provide mentoring and make
connections, and further support may allow
Angels provide the hands-on mentorship
them to intensify efforts or scale what they
that entrepreneurs are seeking, in addition
are already doing to more startups. Indeed,
to cost-effective early stage financing and
some of the more successful incubators and
network introductions. While at the end of
accelerators in more mature ecosystems
the day, Kenyan startups need to just get
deliver comprehensive mentorship and
on with business building, the fact that few
connections to venture capital investors.
angels and other role models or examples

MENTORING NEEDS AS STATED BY KENYAN STARTUPS

APPROACH COMPANY
ADVISE BUSINESS PROCESSES DESIGN

DEVELOPMENT
COACH
GROWTH
EXPERIENCE IN THE INDUSTRY

IMPROVE LEARN MANAGEMENT

SCALING
MARKETING
TECHNICAL
SUPPORT TAX
MONEY QUESTION

SOLUTION SUCCESS STORIES

VENTURES
TECHNOLOGIES

Figure 23

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From the perspective of an expansionary

stage startup: what are the financial,
commercial, and technical challenges
currently faced?
Having founded a company in 2004, way before the
entrepreneurial boom, the team did not receive the
support that current entrepreneurs have access to.
Some of the key commercial and technical challenges
faced included:
• Lack of knowledge about their product: the company launched mobile money products
before M-PESA was launched in 2007. During that period the team spent a lot of time
educating companies about mobile payments

• Lack of mentorship: 9 years after the company’s launch, lack of mentorship is still believed
to be one of the biggest challenges facing entrepreneurs. So, imagine the case in 2004.
The founder and his team did not receive much mentorship and learnt a lot by doing

• Lack of funding: the company was founded when there was no real venture funding in
Africa – the company was started on $3,000 and a credit card. Until the company received
external funding, it was very challenging to run the company. The founding team spent a
lot of time managing the little resources the company had and motivating their team to
work even in months when they did not receive salaries

Additionally, the founder believes that nowadays startups

are facing several challenges including:
• Investors still do not fully believe in Africa: even for the company, it is still difficult to find
investors who truly believe in the potential in Africa. The founder had a very hard time
convincing investors of his vision to become a billion dollar company

• Entrepreneurs are not receiving enough mentorship: Young entrepreneurs, especially those
with purely technical backgrounds, need a lot of mentorship to run and grow their business.
They need someone to help them focus and refine their strategy

• Working for startups is not encouraged: Startups are having difficulties hiring the right
people with the right skill set. The founder believes the problem is not a lack of high quality
employees, but rather that they are not encouraged to work in startups. As he stated: “It is
not cool to work for startups.” People would most of the time prefer to work for
established organisations with stable salaries. The education system has to encourage
entrepreneurship a lot more

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5. Summary and
recommendations
Catalysing the growth of digital
entrepreneurship in Kenya

In summary, the potential for Operators are highly unlikely to meet the
Kenya, especially Nairobi, to demand for breadth and depth in mobile
services solutions on their own, especially
become a leading hub for digital
where technology is changing rapidly.
entrepreneurship is extraordinary. In addition, barriers to entry are low for
mash-ups and copycats, challenging the
Mobile operators must deepen their present model of ‘owning everything’. There
engagement with the ecosystem to is a far greater opportunity in promoting
enable a new wave of innovation. This ecosystem development by sharing
can be accomplished by sharing and resources. As noted by one investor we
commercialising resources such as tools, interviewed who previously worked at a
application programming interfaces, mobile operator, “Operators have wanted
technologies, distribution channels, and to control access to resources by picking
environments. In addition, business models and choosing ‘winners’, but markets and
that allow mobile operators to share the customers are better at determining who
risk and ‘grow the pie’ together with the winners are.” To this end, a number of
entrepreneurs will be as important as collaboration and partnership strategies
developing the technology to support these could be used by mobile operators to benefit
activities. Moreover, organisational strategy, from externally developed mobile services
structure and processes will need to be and use of mobile operator assets.
revisited and transparent, and repeatable
and scalable processes will need to be put
in place.

A wide range of mobile services could

be created on top of mobile network
infrastructure and technology or even an
operator’s own internal capabilities, such as
billing or location information.

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Expanding monetisation methods Responses from a survey of venture

will enable an explosion of paid-for capital funds actively investing
mobile services. in East African digital startups
confirmed there are few investors
Many startups find it challenging to make focused on very early stages.
their business models work due to issues
with monetisation. A combination of factors The lack of business angels and business
including challenges obtaining short codes angel networks in Kenya makes the effects
and premium SMS agreements, low margins at early stages more pronounced.
in revenue share agreements, and limited
access to unstable or variable payment
interfaces contribute to the problem.
An increase in the amount of risk
Seamless integration with mobile wallets
and traditional payment methods, as well as
capital available is needed to kick-
more equitable revenue shares would reduce start the number of ventures that
time to market and increase the number of grow and scale.
services. Startups would find it easier to
scale across networks and geographies, and In more developed innovation hubs, such as
more effort could be focused on customer the Silicon Valley, New York, or Israel, early
acquisition instead of making sure interfaces stage ventures are typically funded through
are up and running. personal savings or credit cards, ‘friends,
family, and fools,’ and business angel
investors. In Kenya, funding from friends and
Some operators are now making family is available for entrepreneurs who
an effort to work with the come from affluent backgrounds, but several
revealed that sizable funding was difficult to
developer community by launching
obtain unless family members understood
competitions to populate mobile the business model. Generational gaps of
application (or app) stores or by confidence and understanding of technology
launching toolkits specifically for are probably not unique to Kenya; however,
African digital entrepreneurs. issues approaching venture capital investors
and a lack of angel investors, not to mention
Others are holding workshops to understand the absence of a social safety net, create a
if assets and capabilities may be of value challenging environment for Kenyan startups
to entrepreneurs and to discuss possible with insufficient personal financial resources.
commercial models for using these
resources. While mobile operators still may
not understand exactly what developers in
Kenya need (and vice-versa), it is clear they
are open to discussions about collaboration
and want to do more to support
entrepreneurs.

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A significant number of startups The support environment for mobile

are self-funded. innovation needs to be improved.

Some get by on their own resolve by Soon after the *iHub_ community was
working part-time or entering competitions; founded in March 2010, Bishop Magua
others have become ‘lifestyle’ entrepreneurs, Centre on Ngong Road became a Mecca
providing services to other startups and for digital entrepreneurs across East Africa.
nursing their own venture ideas as time allows. While hands-on support for entrepreneurs
is available through hubs and accelerators,
The constraints on funding result in a lack there is insufficient support to meet demand.
of focus and slow progress, as a majority Entrepreneurs appear to be very aware of
of startups are distracted by their side the fact that they must increase their skills
businesses and many struggle to find and balance out their teams but struggle
resources to hire another team member or to do so. One-to-one mentorship across
pay for office space. a broad variety of topics is desperately
needed, especially in marketing, technology
access and skills, growth strategy, and
business management.

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Specific
recommendations
Kenyan mobile operators Accelerators and hubs
and information and
communication technology • Deepen or increase frequency of hands-
(ICT) industry corporates on mentorship for entrepreneurs, focused
on setting up a commercial operation,
protecting intellectual property, approaching
• Support strategies that will enable investors, and scaling a digital business
collaboration and partnership building with
the ecosystem and with Kenyan startups • Explore partnerships with the mobile and
ICT industry that deliver mutual benefits,
• Structure clear and transparent processes beyond financial resources
to enable the organisation to work with
startups
• Collaborate, as mobile operators and
with the ecosystem, to provide common
Investors and financial
interfaces and tools for startups institutions
• Make it easier for startups to access
mobile assets that can generate additional • Development finance institutions should
commercial value as well as scale, put capital into seed stage funds that
especially mobile payment platforms focus on digital startups to generate future
commercial investment opportunities
• Invest into or acquire startups that are
creating mutually beneficial opportunities • Investors should provide hands-on,
business building support to investees in
• Buy services or form partnership
addition to providing finance
agreements with startups
• Experienced investors should take
• Build and deepen ties to accelerators and
ownership to build and develop the
hubs – form partnerships for investing and/
business angel network in Kenya, especially
or sponsor their infrastructure (e.g. Internet
by sharing knowledge and best-practices
connectivity)

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Development organisations Government

• Support early stage funds and • Support early stage funds and accelerators
accelerators with financial resources to with financial resource, or by co-financing
offset operational costs of running fund/ their investments
accelerator programmes, or by co-financing
• Develop a procurement framework for
their investments
government ICT projects that includes
• Establish programmes that build capacity opportunity for local entrepreneurs to work
and provide training to investors and in collaboration with large ICT corporates
business angels
• Establish an ‘Entrepreneurship Visa’
• As almost all entrepreneurs are inherently programme to enable local entrepreneurs
addressing social problems or underserved to recruit founding team members
needs, donors do not need to uniquely internationally, transferring skills and
support ‘social’ entrepreneurs or impact building global teams
34
investment funds
• Identify ‘Pasha Centres’ (Kenya Ministry of
• When sponsoring innovation competitions, Information and Communication’s ICT hub
ensure winner selection criteria includes programme) that can also serve as digital
sustainability, add non-monetary awards, entrepreneurship hubs; add supplementary
and disburse money on a milestones basis support for pre-incubation and accelerator
programmes to promote and advance
• Support the creation and dissemination of
digital entrepreneurship
market information into public domain
• Modify criteria for current loan guarantee
• Support networking opportunities that
programmes to accommodate qualified
promote partnership and collaboration
mobile and ICT-oriented businesses
within the ecosystem

Research institutions

• Make policy recommendations for

government in support of mobile and ICT
innovation and entrepreneurship
• Analyse current Kenyan curriculum
and recommend areas to incorporate
entrepreneurship, in particular mobile and
ICT enabled services

34. Allowing entrepreneurs to identify the pertinent issues may be a more effective use of resource: meeting a need that was underserved in the market was the highest ranking reason as to why entrepreneurs that
we surveyed started their businesses, and most of these needs were identified based on personal experience.

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6. List of interviewed
organisations
Mobile operators Other ICT corporates
• Airtel • Apollo Life
• Orange • IBM
• Safaricom • Nokia
• Qualcomm
Investors • Wananchi Group
• Angel investors (anonymous)
• Accion
Accelerators & Incubators (*investor)
• Africa Media Venture Fund • @iLabAfrica / @iBizAfrica
• Amadeus Capital Partners • 500 Startups
• Business Partners International • 88 mph *
• D.O.B. Equity • African Entrepreneur Collective (Rwanda)
• East Africa Capital Partners • Afrilabs
• GroFin • GrowthHub Africa *
• IFC Solution Centre • kLab (Rwanda)
• Innovation 4 Africa • m:lab East Africa
• Invested Development • Open Capital Advisors
• Jacana Partners • Savannah Fund *
• Khosla Impact • Spotone Global Solutions
• Leapfrog • Unreasonable Institute
• SPARK Ventures • Upstart Africa
• TBL Mirror • Village Capital
• TLcom
• Tech Equity Events & media
• Becky Wanjiku
Development, Research, & • Harry Hare
Academic Organisations • Demo Africa (attended)
• FSD Kenya • Pivot East (attended)
• London Business School • Tech 4 Africa (attended)
• Nokia Research Centre
• Safaricom Academy Hubs networks (virtual / physical)
• Thoughtworks (Uganda)
• CCHub ( Nigeria )
• UNICEF (Uganda)
• *iHub_
• USAID
• VC4Africa
• World Bank infoDev
• Africa IQ

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Startups • Doban Africa

• Dosuno
• 24 Interactive
• Dotsavvy
• 3B Concept
• DUMA
• Absolute Media Pictures
• Dynamic Data Systems
• Adonis Systems
• Echo Mobile
• Afrah
• Ecobiz Limited
• Africa’ Talking
• Emerge Enterprises Limited
• Afrinnovator
• Eneza Education
• Agrisoft Solutions
• Enpa Tech Solutions
• All Day Tuesday
• Epitome Enterprise
• Angaza Design
• Etag
• Annay Agencies Softwares
• Evolusion Graphics
• Anto Tech
• Extreme Technologies
• App Bees
• Fatboy Animations
• Autonomous systems research
• Find A Home
• Aynek Info Systems
• Fintech
• Azuri Host
• Forte
• BIDE
• Genius Dynamics
• BidorBuy.co.ke
• Geowiz
• Binary Science
• Ghafla!
• Blamwa Media
• Gigwapi
• Blue Gate Technologies
• Gimki
• BookNow
• gMaarifa
• Bud Code Software
• Guru Technologies
• Buymore
• Hakikahost and Konza
• Camera Educational Foundation
• Helland
• CardPlanet Solutions
• Hirizi
• Chamapro
• Hostelia
• Chura
• ICT Diplomat
• Cnytech
• Imbosoft Enterprises
• Coast Tech solutions
• Infosol Systems
• Conextions East Africa
• Innova Africa
• Crablink Interative
• Intersoft Technolgies Consulting
• Creative Designs
• iPay
• Cushite
• iProcure
• CV Kenya
• Isoc Solutions
• Cytris Technologies
• iStreams Africa
• Danbelte Social Media Managers
• ITAtlanta Solutions
• Danto International Software Technologies
• iTech Kenya news
• Darasani
• Jafftek
• DateMe Kenya
• Jamo designs
• Design house
• Jesi
• Dhana House
• Jesi Web Solutions
• Digital Horizons
• Jibonde fresh
• Dinero – Chama Pesa
•JimLab
• Diverse General Contractors

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 Digital Entrepreneurship in Kenya 2014

• Jooist • MyCourier
• Juakali • MyWebdesk
• JudStars IT Solution • Mzoori
• Jumia • NeNe Games
• Kanguma • Nettech Solutions
• Kayaa • NexGen
• Kedrel • Nexus Technology Consultancy
• Kenya GIS • NikoHapa
• Kiko Software • No business name (x7)
• Kikosi • Oderam
• Kili.io • Odipo Dev
• Kinyaginda Business Venture • Olive Tree
• Kopo Kopo • Olivine Technology
• Kosmerc Solutions • ONIE Design House
• Kweli Mobile • Optination
• Kytabu • Overdrive Consultancy
• Lamu Technologies • Pelmoq Academia Systems
• Laser Tech • Philsoft Corp
• Leti Games • Pillar Technologies
• Lipisha • Planet Trackers
• Lite Computers • Pluspeople Kenya
• Ma3Route • Pluspoint Ltd
• Mak computer services • Ponchus Enterprises
• Mank and Tank • Powernet Solutions
• Manyatta Rent • Pragmatic Urbanism
• Maruki Consulting • Prince Wilface Media
• Masewald • Purpink
• Masewald Technologies • Reeds International
• Maxim Consulting • Remote Cycle
• Maydell Business systems • RevWebolution Business Solutions
• Mdundo • Rockko Consulting
• Megapixels Productions • Rupu
• Mettle Media • Ryanada
• Mfarm • SafariDesk
• M-Farm • Sakwa
• mHealth Solution Centre • Salmartech
• MMI technologies • Semasoft
• Mnazi Studios • Shack Media
• Mobi Changa • Shujaa
• Mobi Kazi • Skoobox
• MobiDev • Skytech
• Mobitech • SNETTSCOM
• Movas • Soko
• M-safiri • Solidaire Telecom
• Muva • Somsom Software Solution
• MXD Developers • Space Kenya Networks
• My Online Pharmacy • Space Media Group Enterprise

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• Sprint Interactive
• Sprout
• StockMatic
• Sunrise Tracking
• Tali Craft
• Tatu Media
• Tech Riffs
• TechAnsi
• TechBiz
• TeeVee
• The Flip Experts
• Theory of everything
• Thirst Interactive
• Tiko
• Tusqee Systems
• Ukall
• Unimind Media
• Universal Computer Services
• University of Games
• Vault Mobi
• VR Net Solutions
• Waabeh
• Waltron
• Web focus Solutions
• Web Solutions Kenya
• Webkraft Kenya
• Websimba – EatOut
• Websys Software Solutions
• Weltel
• Weza Tele
• Workspace Kenya
• Worldbiz Enterprise Soultions
• Yum
• Zege Technologies
• Ziada Digital
• Zoe Alexander
• Zonematrics
• Zoom-IT Technologies

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7. Abbreviations and
terminology
2G Second Generation Mobile Networks (Voice, SMS and limited data)
3G Third Generation Mobile Networks (Voice, SMS, and data)
4G / LTE Fourth Generation Mobile Networks/Long Term Evolution (Data)
Channels Mobile services pathways such as short message service (SMS),
multimedia messaging service (MMS), and Internet
ICT Information and Communication Technology
IVR Interactive Voice Response
PaaS Platform as a Service
PRSP Premium Rate Service Provider
SMS Short Message Service
USSD Unstructured Supplementary Services Data
VAS Value Added Services

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For more information or to submit feedback please email [email protected].