August 16, 2017
Few weeks ago, I had a very interesting conversation with Sesinam Dagadu, a well respected young Ghanaian tech entrepreneur and creator of the Snoocode navigation app, about the start-up ecosystem in Ghana. I asked of his views on why many promising start-ups spring up in Ghana, but go extinct in about 3-5 years of operation.
Why do many promising start-ups spring up in Ghana, but go extinct in about 3-5 years of operation?
He said, “you know what? Many young Ghanaian innovators innovate to survive. In other words, they are motivated to innovate to be able to provide food and shelter for themselves and their families. They don’t innovate only because they have the passion for what they are doing or to help solve societal problems”.
Rasheeda Yehuza, founder of Nasara Tech, also argues that “there’s nothing wrong with building a business to survive if you do not have a safety net. In fact, it’s commendable that instead of looking for a job, an entrepreneur is willing to fight for what they believe in while struggling to eat. I don’t know the statistics, but I’m sure on average more startups fail yearly in the established markets than the whole of Africa combined… In developed markets they have the flexibility to test the waters, make connections and find a job in a a reputable company if their startup fails, because, when that person’s startup failed, there’s so much to learn from them’. Over here we don’t have that luxury. If your startup fails, you will struggle to feed yourself, and we don’t have an established community to pick you back up. “
Perhaps this is the reason why Ghana receives less funding for the start-up ecosystem than its sister country Nigeria. In 2016, according to a report released by Partech Ventures, Ghana received about $8.67million as total investment raised by start-ups as compared to a whooping $109.37 million raised by the Nigerian ecosystem.
Has the media and conferences been helpful?
Many believe that most innovations or startups in Ghana don’t thrive because they are mostly motivated by the “wrong reasons”. Another factor for failure of these startups is what I call the “unnecessary media hype”. Many young folks build start-ups to get the “media and conference panelist” recognition. Many of these young folks don’t have the patience to build a working model which will yield extreme long term benefits, but prefer to do a quick fix for short term recognition and then phase out after the media hype shifts to another start-up.
In a Facebook interaction with Kobby Blay, a nurse and founder of GhanahealthNest.com, he indicated that the media is to blame for poor work done. He said, “May be we should share the blame of the ‘unnecessary media hype’ to the media persons, who fail to do proper probing”. Many seasoned entrepreneurs believe that, young entrepreneurs build products to showcase at conferences without any sustainable plan.
Godwin Martey, CEO of Websoft Solutions, shared his view on the issue, he said “I started building Websoft in 2007, and I ensured I never showed up on any platform or any media till I had built a system in 2013. That was 6 good years of grinding. Most of these folks showing up in every conference and collecting awards have no foundations, no working model, no proper cash-flow, no serious assets, nothing. They just go about empty enjoying a transient hype that will eventually put them in trouble. Until 2013, I never called myself CEO, I was always Marketing Officer for Websoft Solutions for 6 years, then I changed it to Head of Operations and then when the business grew further I became the CEO. Many people want to start with the glory before they write the story. It’s Sad.”
Francis Birikorang, co-founder of AgroCenta, also stated that “the hype will take you there, due diligence will bring you back empty handed”. Other people are of the view that the media plays a critical role in helping start-ups in Ghana succeed. “They could have the motive of survival and that is not wrong. They could get media hype and that is ok. If they had the safety net, capital and efficient incubator hubs with business support and advisory services, most of them will turn out very ok. They do the media and attend conferences for visibility, hoping it will land them the right networks and capital.” says Ms. Louise Clara Donkor, former SRC President at the University of Ghana.
“Africa is a very green territory and mostly innovators don’t go looking for media but media comes to them since they happen to fall in a unique spot. if local media finds you in your early stage, due to ignorance in the field, they may hype you in a way that annoy those who know.. but who do you blame? Ignorance! But then, all these are good and have to happen for the ecosystem to grow. Start a game company now and CNN will find you.. why? because it’s new in the territory (but not in the world). After 10 years, it wouldn’t be new anymore since a lot more would have been done by us the early birds and due to the encouragement instilled, more game developers would have been made” says Eyram Tawiah, co-founder of Leti Arts.
The Safety Net
One other key factor that Sesinam indicated was that, most young Ghanaians don’t have a “safety net” as they intend to build start-ups. He said “the people who built Facebook, Google, Microsoft, etc had the privilege to be able to even quit attending Ivy league schools. You can’t take such a huge risk as a young Ghanaian. In fact, if a young Ghanaian dreams to quit Harvard and follow his passion, he will wake up from his sleep and apologise to himself for having such a dream. I respect young Ghanaians who are building businesses in Ghana because I am not sure I would have had access to the opportunities and courage to start up my tech business in Ghana if I lived all my life in Ghana “. Even though the environment plays a role in how successful a start-up could be, some entrepreneurs like Kwabena Danso, CEO of Boomers International, believes that there are other equally important factors. He said ” when you have a business you are passionate about, you do not think about it failing in the first place. You are always looking at what will make you thrive and succeed. The fear of failure will not be part of the thinking. It is only when you have jumped onto the wagon with the intention of getting what you can get is when you also become afraid of failing. I understand the environment plays part in a lot of businesses failing but most businesses are failing as a result of unwise decisions from the entrepreneurs”
No Market for the Start-ups?
Is the non-existence of a ready market to buy the products of these start-ups the primary reason for their failure? The President and founder of mPedigree, a mobile application technology that is able to identify fake products by texting a 10-digits to a short code, Bright Simons, argues that, ” I am now on the side of those who believe “markets are everything”. The primary reason for failure is the simple absence of a market for the product. Without a market it doesn’t matter if the team is made up of Ford, Jobs and Dell, it will fail. If a market exists, even a mediocre entrepreneur will crack a reasonably workable model of making money. I have advised enough big companies now to conclude finally that “creating new markets” often simply mean “hijacking old markets”.
However, there is another school of thought that believes that start-ups can create a market if there is none. Ekuonana Omane argues that “not only existing markets but the ability to create one. Most people don’t know they need a service or product until you effectively brand and market that service or product.
What do you also think?