Inside fresh push by Kenyan tech startups to rival Silicon Valley

Kenyan innovators have long vied to establish themselves as worthy rivals to Silicon Valley - a global centre of technological innovation located in the South San Francisco Bay Area of California.

The area was named after the primary material found in computer microprocessors.

Kenya’s fast-growing technology sector - Silicon Savannah - has been drawing the most foreign investor interest, supported by an improved business environment.

Kenya liberalised its ICT sector in 2000, leading to a technological revolution, which has stimulated home-grown innovation, transforming many lives.

However, the collapse of these startups, some of which recently raised billions of shillings in investor financing, has exposed the underlying myth of “disruption” that drives much of the Nairobi “Silicon Savannah” narrative, and the problematic attitude of investors from the West who perpetuate this hype.

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The scarcity of early-stage capital and lack of management expertise has seen many Kenyan startups die an early death.

A missing link between the startups and corporates and academia has also denied local entrepreneurs a helping hand, including advice, introductions and seed money.

However, initiatives to strengthen collaboration between academic institutes, industry and startups, and pursuing public-private partnerships to fund startups’ higher-risk research and development-intensive projects could unlock the true potential of local entrepreneurs.

Can Kenya get its groove back? Innovators, stakeholders and the government reckon it can.

This saw President William Ruto, for instance, recently step up his push to lure Silicon Valley for increased business for American tech giants in Kenya.

President Ruto made the pitch in September this year during a visit to the United States (US) at the famed Silicon Valley. He asked the American investors to tap Kenya’s pool of well-resourced app developers.

The Head of State noted Kenya’s fast-growing technology sector dubbed “Silicon Savannah,” has attracted many entrepreneurs from places like the US and the United Kingdom, supported by a pool of well-resourced software app developers in the country.

“Kenya’s sizeable youth population is ever-hungry for new ideas, fresh innovations and the latest technology, and this makes our country a magnet for innovation, creativity and entrepreneurship,” said President Ruto.

“We are, unequivocally, Africa’s start-up hub.”

Ruto’s bullish prospects come at a time when Kenya has seen several startups close shop, scale down or report operational difficulties of some kind, casting doubt on their future.

However, private sector players echo the President’s sentiments and believe Kenya still has the potential to take on the world’s innovators and position itself as the next growth frontier for scalable startups.

This view is held by both Nairobi-based business incubator, iHub Kenya and Mastercard Foundation, a private Canada-based charity, which have entered into a deal to help startups grow and expand their offering in digital learning solutions.

Managing partner Nissi Madu told The Standard recently in an interview that iHub Kenya signed up 12 educational technology (EdTech) startups in six months, which underwent an acceleration programme to enable them to amplify support around products, talents, distribution and funding.

The fellowship, which was first announced in February this year, went through a rigorous selection process, leading to the selection of the firms that met the robust criteria outlined by the Mastercard Foundation and iHub.

The startups received $100,000 each (Sh15.3 million) in funding to help drive growth and scale up their businesses.

Speaking during the Demo Day event for the first cohorts of the Mastercard Foundation EdTech Fellowship Programme, Ms Madu said the successful firms were required to have an i-tech solution, which addresses learning challenges or learning gaps from early learning to working skills in the formal, and informal or corporate world.

“They also needed to be at a certain level of revenue attraction and show that they are willing and excited to receive the support needed to amplify and do more than they were already doing and that the solutions can reach many more learners across Kenya,” she said.

Ms Madu said the startups were selected from across the country, and none of them was their portfolio companies.

These startups were then inducted into a six-month accelerator programme that started in May.

The programme involved advisory support across learning science, investment, product development, financial management, and communication strategy.

Nairobi-based iHub Kenya is a globally recognised innovation centre that has been the main catalyst for regional technology acceleration and a role model for tech hubs in emerging markets since 2010.

Through the programme, the startups will be able to provide a range of different solutions that seek to address a range of different challenges.

One of the solutions that were picked is FunKe Science, which seeks to improve outcomes in science, technology, engineering and mathematics (STEM) subjects by offering interactive and engaging learning that helps them have a deep understanding of science concepts.

It offers online and offline content that makes science fun and relatable for African children.

The Demo Day event was an opportunity for the startups to highlight their growth in the last six months, while in the programme as well as share their plans with potential investors and customers.

The participating start-ups in the 2023 cohort of the Mastercard Foundation EdTech Fellowship include Arifu, an interactive learning platform for small businesses and job seekers in Africa; MsingiPack, a self-paced learning content offering; Kidato Inc, an interactive online learning platform for families; and EasyElimu, an online platform providing K-12 learning content and exams prep for students.

Ntemata, a learning management system for teachers to deliver more efficient assessments for students, Angaza Elimu, an adaptive and interactive platform that leverages technology to improve access to quality education on demand and Silabu, a platform which connects students with tutors also benefitted.

Others are Smart Brains Kenya, an Edtech solution focused on empowering schools to independently provide coding and robotics lessons in schools and Longhorn-owned Loho Learning, which provides an e-learning platform for personalised and interactive content.

The programme further benefitted Snapplify, an innovative e-learning solution for e-learning content and materials; and Goomzu by Elewa, an education innovation solution focused on supporting teachers, schools and large training audiences to deliver cost-effective and scalable continuous professional development.

As part of the benefits of the fellowship, the start-ups will continue to receive additional advisory support from iHub for the next 12 months.

Suraj Shah, the lead at the Regional Centre for Innovative Teaching and Learning in ICT at Mastercard Foundation, said the fellowship is part of a broader goal of the Mastercard Foundation to support the growth of an impactful African EdTech ecosystem.

He said this will catalyse innovation and advance promising practices in the use of technology in learning and teaching to benefit African learners, education, and EdTech innovators across the continent.

“At MasterCard Foundation we believe that everyone has a chance to learn and prosper,” said Mr Shah.

He added that learning outcomes for learners who used the platforms had improved in some instances by as much as a third.

“In this fellowship alone here in Kenya in six months we have seen the 12 Edtech companies come together to reach 32,000 new learners,” he said.

During the forum, Nairobi County Director of E-learning, Digital Economy and Startups Elizabeth Gitonga said the county will facilitate innovation in the country by opening up incubation hubs across the country.

Overall, the process has been intentional to ensure that the cohort offers a range of solutions covering digital content, learning management platforms, STEM (science, technology, engineering, arts and mathematics) education support, workforce and skill development, tutoring and testing, curriculum-based online learning content, and providing support for teachers in lesson delivery and assessment.

Dr Ruto told US investors on his recent trip that Kenya has emerged as a major player in the fintech (financial technology) space since telecoms operator Safaricom pioneered its M-Pesa mobile money service in 2007 for people without access to the formal banking network.

“More than 300,000 young youths graduate from Kenya’s over 65 universities annually, implying that we have a considerably well-educated population, which gives us the capacity to develop internationally certified engineers, scientists and researchers,” he said.

“These people form the backbone of our Silicon Savannah’s technology, innovation, research and development ecosystem to which I am privileged to have the honour of inviting you.”

The President was accompanied by US Ambassador to Kenya Meg Whitman.

Ms Whitman, an American billionaire who cut her teeth in California’s Silicon Valley, amassing a Sh575 billion fortune, told US investors there is a huge opportunity for them in Kenya.

The envoy has been keen on the plan to see the US possibly overturn the dominance of Chinese firms in Kenya by linking American tech giants like Facebook, Apple and Alphabet’s Google to local deals.

“Kenya is well-positioned to be an African leader in information technology, telecommunications, and mobile banking and is open to partnering with the United States,” she said previously.

Ms Whitman, who previously served as CEO of top US tech giants eBay and Hewlett-Packard (HP), has underlined fresh plans by the Biden administration to topple Chinese dominance in the country’s vibrant ICT sector.

“Techplomacy,” which could build up on an earlier position by the US is, however, expected to be an uphill task at a time when Chinese firms have entrenched themselves in Kenya.

Kenya has emerged as a major player in the fintech space since telecoms operator Safaricom pioneered its M-Pesa mobile money service in 2007 for people without access to a formal banking network.

Microsoft, for instance, recently opened a Sh3 billion office and labs for its premier engineering hub, the African Development Centre (ADC), after three years of operation in Kenya.