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3 things foreign tech startups setting up in Africa should consider

1. Culture, Culture, Culture (also read Context, Context, Context):

It is impossible to do anything without considering the prevailing culture of the region – and all these areas: Nairobi, Lagos, Accra, Cape Town… – all of them have vastly different cultures that shape the place. This is especially a key factor for startups that are interested in providing their services to the local population. I once had the opportunity to listen to a talk by Nathan Eagle, the founder of txteagle. Nathan gave a story about how they created an SMS based solution for hospitals to notify the blood bank when they were running low on reserves, which was a significant problem in the area he was working in the coastal region of Kenya. Strangely they found that the uptake of the service was not very positive. The reason – apparently the cost of a single SMS (at the time) was a significant cost for local nurses. Changing their application such that the nurse got their money back for each SMS sent dramatically changed the results.

The cultural aspect is key in many aspects, from the design of your application to how you market it

2. Lack of local financial intermediaries

Forget the numerous VCs in the Valley hunting for the next big thing from local garages – if anything Africa’s tech startups most likely won’t start from garages, majority of the population probably doesn’t have a garage in the first place – they’ll probably start from tech and innovation hubs such as Nairobi’s iHub or Cameroon’s ActivSpaces, or Senegal’s Bantalabs! The point here is, it would be wise to consider how you will finance your startup, in most cases bootstrapping your own startup would be the way to go.

The finance problem has been with us for a while and is slowly changing but we’re yet to get to the point where probable local financiers are knocking on doors looking for startups to invest in. Right now, at least for the most part, it’s the startups that are chasing down financing, even when they have a really viable product!

3. Innovation ecosystems are still not well developed (Startup Culture)

Innovation is not yet the norm. The education systems are not explicitly supportive of innovation. So far, for the most part, even for the more forward looking universities, innovation is treated more like an add on than a core part of education, particularly in tech programs.

Added by View user profileD C on May 19, 2011