Techstars Announces First-Ever African Program - Analysis

(Josh Liu) #1

(Salim Virani) #2

There are a lot of interesting things being tried here, applying the traditional Techstars model in Africa. However, accelerators in Africa go back at least 5 years, to The Web Foundation’s work, and possibly before that.

Techstars has propagated the traditional seed-funding accelerator model: 3 months, round-robin mentoring, demo day. There are plenty of accelerators that customise their accelerator model to suite their needs, and many that don’t. So Techstars in Africa presents an interesting case, one where the traditional model is applied in a very different context. Yet, it’s also a situation where Techstars can bring with it investors, mentors and brand, something that copycats can’t. Whether or not Techstars succeeds in Africa will be an indicator of what to do or not to do in places that consider mimicking Silicon Valley so readily.

I caught up a bit with Jess Williamson, who was setting up the programme, when I saw her in Accra last year. We go way back, five years or so ago, to when she was managing Springboard and I was teaching and mentoring there. (She and Jon Bradford transitioned into running Techstars London.)

Having also helped Techstars with their mentor network when the expanded to London, I saw they were able to draw on the brand to attract:

  1. mentors from the corporate world
  2. later stage startups

Picking the winners up front

“Typically Techstars companies go on to raise between $1-million to $3-million in venture funding on completion of the program from primarily UK and US-based investors”, he told me.

I know the guys from Asoriba in Ghana - one of the new Techstars teams. (They feature in our online course called The Sources.) Though MEST, they already have access to a lot of US VC connections. They were among the strongest hustlers and executors in their MEST class last year, so I expect they’re able to use the Techstars network as a multiplier.

In London, the onward funding was already done by selecting startups who were already close to closing their next round. Accelerators need to sell their success, and choosing startups who already have checks in the mail guarantees success. In Africa, Asoriba is just one data point but consistent with that approach in that they already have strong funding prospects.

Given the startup investment climate in Africa, and the relative insecurity in US startup investors when looking at Africa, I’m interested to see if this pick-the-funded approach will work. (Or, if it’s indeed what they’re doing here.)

Building a local mentor network

The Techstars mentorship model is also an interesting fit for Africa. The Techstars programmes that overperform, like London, do so in part because they can select later-stage. So when it comes to mentors, they don’t draw on typical startup mentors, but more corporate who can help with connections and later-stage growth. As most startups know in Africa, finding mentors who understand pre-business-model and high-growth startups is difficult. And the corollary, that most of the high-growth tech businesses in Africa don’t follow Western startup conventions, means that this could be a tough fit.

Helping train these mentors is important, but it’s not just about “this is what startups do.” African culture, with characteristics like power distance and the oga effect, creates a very different mentoring dynamic. Going back to the Web Foundation accelerators five years ago, there’s been a consistent failure of traditional startup mentoring to take hold in Africa. The culture is very different, and sticking a bunch of mentors in a room with a bunch of startups doesn’t just work itself out. It’s not appropriate to follow-up so actively. I don’t know any programme that’s figured this out well.

The announced mentors are all from Barclays, so that’s not a positive sign. On top of that, Barclays is divesting its African interests, so I hope those mentors see this as an opportunity, rather than a distraction.

South Africa ain’t easy


When I met Jess, I warned her of some of the big issues we’ve had, running international programmes in Africa like The Africa Prize. South Africa seems like a nice entry-point to the African markets, just like London feels like a safe entry-point to Europe. Except South Africa has fairly hostile visa policies to most African countries. Running parts of the Africa Prize in South Africa proved difficult because of that. I wouldn’t be surprised if a significant number of the selected teams have trouble getting a visa on time for the programme to start, or even at all.

Market expansion

Also, traction in South Africa doesn’t typically transition into other African countries, at least not in a comparable way as from the UK into Europe. Nigeria is a good entry market for B2C and culture. Kenya’s a good early-adopter market for technology. SA has strong universities and R&D, and commercial networks that are more connected to Europe, but little expansion reach beyond a few neighbours.

Proof-of-concept: does the traditional accelerator model make sense in Africa?

There’s a lot of promise here. Techstars is a heavy-weight, and could carry in onward funding, rather than relying on existing upstream VC. And the brand could attract new blood, strengthening the startup community in Africa. Out of everyone I’ve met in Techstars, Jess is the JFDI master. If you know her, then you know – she’s a force. She’ll be able to hustle and make things work.

The real results will show for themselves, but we need to look at more than onward funding. Will the portfolio companies expand? And where? What legacy will the programme leave in Cape Town, and what path will it pave for others?

Barclays had initial success with TechLab Africa, another programme, not based on the traditional accelerator model. This gives us promise, but more importantly, it gives us a positive control. We know that successful startup support is possible in the same environment with the same resources.

One of the key differences is TechLab doesn’t make funding a condition of support, which limits accelerators to startups seeking investment now. TechLabs has a wider pool to draw from, and can invest its support more strategically. Plus, the startups it supports define success on their own terms, not the terms set by investors.

I’m interested in if the accelerator model that Techstars runs is a good fit in Africa, or if can it be adapted. If Techstars succeeds, it can help drive accelerators forward, but if it fails, then that’s a sign that the underlying accelerator business model needs to evolve.