If Yaba plans to become the Silicon Valley of Nigeria, tech-hubs will need to create and foster an entrepreneurial ecosystem that encourages founders to see their ideas through to the end rather than selling early.
A Toyota Corolla stops in front of a withered bookshop on Pearse Lane. Two men in blazers, sitting around a tiny wooden table, look at the car. One of them quickly checks his smartphone and asks for the driver’s identity. Satisfied, he steps into the Taxifi vehicle, followed by his peer, who carelessly plays with his Apple watch. After almost getting hit three times by one of the typical yellow vans that storm Lagos roads, they manage to leave the street and get swallowed by one of the most trafficked cities in the world.
This scene might still look rare to the eyes of the average Nigerian, but it is becoming routine in Yaba. Filled with inconsistencies, this northern neighborhood of Nigeria’s largest city perfectly encloses the skirmish between new and old, stagnation and progress. It is here that the most tech-driven minds of the country gather to forge ideas that, one day, will foster the country’s development. Their love for technology is not just witnessed by their constant use of apps or sophisticated devices, but also by their desire to innovate and streamline businesses across all sectors.
Today, Yaba counts a growing number of business clusters where companies like HutBay, SureGifts and Andela share common infrastructures and networks to increase their levels of productivity. The inspirational model is clear, just as the goal. With an eye on Silicon Valley, “YabaCon Valley,” as they call it, proposes itself as the leading hub for high-tech innovation and development. Despite their differences in size, scope and capital availability, all start-ups share the same entrepreneurial spirit based on a valuable mixture of competitiveness and cooperation confined in major tech-hubs such as CcHub, iDEA Hub, Focus Hub.
The vibrant energy of the whole ecosystem has grabbed the attention of various seed capital funds willing to bet on these companies providing them with short-, medium-, and long-term funding. One of them, Leadpath, is based 15 minutes away from Pearse Lane. Its goal consists in “bridging the gap between start-up and market leader” through investments that span from USD25,000 to several million. This accelerator also offers guidance and capacity building, providing technology entrepreneurs with the necessary skills, mentorship, and facilities that allow them to transform their businesses. Among the major start-ups in Leadpath’s portfolio, URegista, Afriqbuy, and Simer are probably the most promising.
Hedging risks in a diversified portfolio is the founding principle of any investor’s guide. Nonetheless, most actors, in particular on the institutional side, prefer not risking at all. This is particularly the case for other tech-hubs spread all over the country, far from the flows of cash and people that Lagos offers. In the best-case scenario, businesses react by “redirecting their focus towards customers, rather than investors,” said Jason Nkoju, founder of iROKO, a web platform that provides paid-for Nigerian films on-demand.
Unfortunately, a grimmer scenario is steadily taking over.While tech-hubs offer a wide array of benefits, they recently started increasing equity requirements, driving down their attractiveness to the eyes of young, motivated folks who are reconsidering a work-from-home strategy rather than enjoying the benefits hubs offer. And, any entrepreneur knows saving constitutes the core of its business plan in the early stages. After all, there are numerous examples of successful companies that managed to emerge without the advent of incubators and accelerators. Konga and Paga, in this sense, are the brightest examples, based on a solid combination of resoluteness and long-term vision.
Those who seek to emulate Konga and Paga need to stick to their own ideas and value patience when making decisions, even if that comes with a higher degree of risk. But risk must be seen as the numerator of a fraction that has ambition underneath. The bigger the scope of your project, the easier it is to factor risk in your success equation. If the ultimate goal goes beyond profit and looks into eventually affecting the lives of millions of Nigerians, investors chip in.
Still, the recent wave of acquisitions of tech start-ups seems to cast doubts on the firmness of leadership within these hubs. Many young entrepreneurs may have excellent ideas, but the surrounding ecosystem still presents too many hurdles to jump. Thus, giving in to a buyer’s offer represents an easy, and lucrative, way out of a long, windy path. While comprehensible, such a choice highlights the weak confidence in Nigerian’s entrepreneurial environment.Start-ups that sell their companies lose not only the intellectual property, but also the enthusiasm behind them.
Incubators are supposed to provide all start-ups with the necessary tools to grow their ideas, develop them, improve them and one day watch them become major innovative players for Nigerians. But if most of these companies end up being acquired, the question should not be “are tech-hubs worth it?” but “how can tech-hubs be improved?” Fancy blazers, stylish smartphones and techy-watches are not enough to push the country toward the progress it has long yearned for. Without ambition, passion, and self-confidence, all the brightest ideas will get absorbed just like any Toyota Corolla in Lagos traffic.
Gabriele de Leva (Guest writer)
