Why We Need a Y Combinator for East Africa

In a few months’ time, two new submarine fiber optic cables will go live in East Africa, TEAMS and SEACOM. These are expected to lower the cost of accessing the internet by about 90% for consumers in Kenya.

This is a big deal for two reasons:

1) Kenya is home to half a million high school and college graduates who face 60% unemployment upon finishing school. A lot of them (at least 15,000 by my estimate) study technology. Over 100 people took matatus and/or walked to Samasource’s Facebook Developer Garage at the University of Nairobi last year. There’s a huge pool of talent in that country that can found or work for start-ups, especially since the opportunity cost is so low.

2) Most organizations focusing on entrepreneurship in Africa (Enablis, the Business in Development Network,…) are not focused on high tech, because costs have been too high. That is, until now. Tech makes perfect sense in a place with a lot of human capital and not a lot of physical infrastructure for manufacturing or other economic activities. Telecom giants Safaricom and Celtel (two of the biggest companies in African history) offer good proof: Safaricom’s M-PESA mobile money transfer has processed a whopping $1.7B in transactions since late 2007, in a country where average annual income per capita is less than $600.

Most investment capital in Africa is managed by private equity funds — angel investing is extremely rare. With just a million dollars (if that), we could do in East Africa what Paul Graham has done in the US. The 145 companies funded by Cambridge and Mountain View-based Y Combinator have made it possible for college kids with smarts and vision to dream big; why can’t we do the same in Africa?

6 Comments

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6 responses to “Why We Need a Y Combinator for East Africa

  1. WeLove

    Venture cap need to take a foo on the continent. There are alot of talent across the continent but unfortunetely the circumstances don’t enable them to shine.

  2. AL

    I strongly agree! There are good examples that it will /can work e.g Limbe Labs (Cameroon) and Appfrica (Uganda)

  3. this is an interesting post and your point ic clear. Kenya is a regional powerhouse with lots of talented individuals. I have a question though what form of startups would be best.
    mobile based ones would have a advatage in a country with a high percentage of people with mobile devices

  4. We Klik

    Absolutely fantastic news. I blog on the theme of startup and early stage funding, at the moment I have limited it to just the UK and the US but am hoping one day to extend it. It would be great to somewhere in Africa become a specialist area for some aspect of online development. If you want to pick up on some of my blog articles on Y-Combinator style funding sources, feel free to visit my blog at http://weklik.wordpress.com
    Aristos

  5. good idea. want to do a guest blog on the socap site about it?

  6. Leila

    Great post! TechStars is listening…we would love to help you on this – how could we best be of assistance?

    Would love to hear your thoughts!

    Regards
    Tom Keller
    TechStars

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