‘Incubator Success Stories in Africa’World Bank/infoDev Experience

Oltac Unsal, Manager

AfDB-EMRC SME Forum, June 2011

What does “Incubator Success” mean?

Three levels and narratives (which may or may not overlap):

1. Network success – is infoDev

successful?

2. Incubator success – sustainable

incubator? Stakeholders? Inclusion?

3. SME success – ultimate beneficiary

4. Where do we go from here together?

infoDev is a World Bank FPD Group focused on

Technology Entrepreneurship & Innovation

Snapshot of Results

300+ incubators globally

100% locally owned and operated

6 Regional Networks

80+ developing countries

20,000+ SMEs assisted

220,000+ Jobs created

90% success rate of incubators

75% survival rate of incubated SMEs 3 years after graduating

~1:1 leverage with local partners

Focus on enterprises that use

technology to deliver innovative

solutions or to increase their

competitiveness and market reach

Regional Networks:

Asia, Africa, ECA,

Middle East / North

Africa, Latin America /

Caribbean

Global Communities

of Practice:

Youth, Women, ICT

High Growth, Agri-

business

infoDev’s Finland program leverages Nokia to

promote mobile innovation in Africa

M-Apps: 1. Mobile Application Labs USD5m, 5 labs in 3 continents incubating 50 SMEs by

2012. 2. Social Networking Hubs, 7 cities, 1000+ participants from 400 organizations by 2012

Regional M-Apps Labs:

• Testing and training

facilities for developers

• Incubation services for

entrepreneurs

• Locally owned and

operated PPP

Mobile Social Networks:

• Communities of practice

for developers and

entrepreneurs

infoDev provides TA

and seed

financing…

…

..While working to

improve the regulatory

environment

Results:

1

2

Network of CICs advances global innovation in

climate technologies and builds local industry

Building a network of 30 Climate Innovation Centers (CICs) that serve multiple priorities

CIC

CICCIC

CIC

CIC

CIC

CIC

CIC

CIC

CICCIC

CIC

CIC

CIC

CIC

CIC

CIC

CIC

CIC

CIC

CIC

CIC

CICCIC

CIC

CIC

CIC

CIC

CIC

CIC

Climate change

Energy security &

access

Private Sector Development

Kenya CIC: Over 120 stakeholder consulted , 26 market gaps analyzed USD 15.2m over 5 years,

USD 9 m in investments, 100% leverage, over 70% sustainable after 10 years, over 70 new

ventures supported over 24,000 jobs over 10 years at cost of <USD 850 per job, 1.5m tons of

CO2 mitigated, Increased energy access to over 300,000 Kenyans

Results:

CIC pilots launching in

Kenya and India, CIC

business plans

underway for other

countries

CICs are virtually or

physically hosted

centers that deliver:

Risk financing

Technology information

Business advise

Capacity building

Market analysis

Policy advocacy

Testing facilities

infoDev’s analytical and research products are a

trusted source of information

37% of infoDev.org users

say our products supported

development of new policy or

regulation

87% of infoDev.org

users say our products

provide important background

knowledge

>14,000 unique users

a month visit www.infoDev.org

“It gives a sense of authenticity, when the facts and

figures are from infoDev.”User discussing broadband debate in India, infoDev Website User Survey 2010

How do people use our

knowledge products?

Incubator Success: The Kenya Climate

Innovation Center

Finance

Risk Capital

Fund

Investment

Facilitation

Proof of Concept

Seed Investments

Syndication

Working capital &

consumer finance

facilitation

Business Training

Technical

Training

Basic & advanced

courses

Seminars and

Events

Advisory Services

Enabling Ecosystem

Center Visibility

Advice and

advocacy

Policy Support

Product design, &

tech courses

Advisory Service

Fund

Local bank

training program

TA Fund

Packaged services

International

Collaboration

CIC Network

Brokering of tech

transfer and joint

R&D

Access to Information

Technology

Information

Competitive

Landscape

Tech quality &

performance data

Market Intelligence Products

Finance

Information

Database

Access to Facilities

Outsourced

Computer

Animated Design

Testing and demo

Initial production

Office &

networking space

In-sourced

Rapid 3D

prototyping

Market

Information

7

Incubated SME Success

• infoDev Top 50 SMEs Global Competition

• Over 1,000 submissions from 64 Countries

– Over 100 Submissions from 18 African

Countries

• Top 50 Awards: 11 African Companies from 11

Countries

• 4 “Access to Markets & Finance Awards” on

June 1, 2011 at infoDev Global Forum in

Helsinki to African incubated entrepreneurs

EGG-energy TANZANIA

We deliver electric power to low-income African households. One

battery at a time. Welcome to the portable grid!

EGG-energy links electricity sources to end users with a battery

subscription service:

We take electricity from a grid connection or from an off-grid power

station and package it into portable, rechargeable, and affordable

batteries, owned and maintained by EGG-energy.

Each battery is rented to a customer in exchange for a subscription

fee.

Each fully charged battery is sufficient to power lights, cell-phones

and radio in a typical household for five nights. At the end of their

useful life, batteries are removed from circulation and recycled.

Our largest customer segment is the 5 million rural households in

Tanzania that will not be connected to the grid in the foreseeable

future. These households rely largely on agriculture for their

income, use kerosene to light small lanterns, chop wood for fires,

and use AA batteries to power low-quality radios. Their total

spending on kerosene and AA batteries is $500 million.

MFarm KENYA

MFarm Ltd is a software solution and agribusiness company. Our

main product is an application that delivers necessary information

for Kenyan farmers, thereby helping farmers to improve their

productivity and increase their incomes.

MFarm has adopted an SMS-based solution to empower farmers

through the following services:

Price information inquiry

The farmers inquire current market prices of different crop from

regions or specific markets via SMS. This application allows

farmers to have greater bargaining power with middlemen and

empowers them with information about different market prices

before they market their produce.

Buying/selling together

Farmers get connected to suppliers and, through collective buying

power (think Groupon), get 30% - 50% percent off of farming inputs

such as fertilizers, pesticides, and useful equipments that suppliers

have to offer. The collective buying will be done via SMS through

M-Farm.

Chahbani Technologies TUNISIA

CHAHBANI conceived and tested several innovations

related to the water resources (rain water and ground

water) mobilization, use, and conservation.

The top of these innovations is the “Buried Diffuser”

which has a worldwide patent. In 2005, Professor

CHAHBANI decided and started the creation of his

enterprise (Chahtech SA) under the umbrella of

Enterprise incubator.

This Enterprise will manufacture and commercialize the

product of this invention: the “buried diffuser”.

In 2009 company started building the factory, buying the

machines and all needed equipments.

End of 2009 the “buried diffuser” received the

“UNESCO International Water Prize” and the The

Tunisian National Prize of Scientific Innovation”. Now

everything is ready to start the production and the

commercialization of the different models of the “buried

diffuser”. This is programmed for end of June 2011.22

AlKhawarizmy Software EGYPT

alKhawarizmy Software is an Egyptian Company

working in the Arabic Natural Language Processing

(NLP) field. Despite the complex nature of the Arabic

language and its unique structure, alKhawarizmy takes

the challenge to provide the Arabic user with multiple

applications that understand and interact with the Arabic

language, in order to simplify the way the user interacts

with Arabic electronic content.

alKhawarizmy Software was established in January,

2006 by Dr. Hossam Mahgoub, who wanted to invest

his 20 years of experience in the field of Computational

Linguistics for the Arabic language, to provide the

Arabic user with applications that facilitate the

processing of Arabic content and present them in a

manner useful both to the Arabic user and to the user of

Arabic.

Access to Finance Program with the Kenyan CIC

Risk Capital Fund

Proof of Concept (US$ 25K -100K)

• Funding to allow entrepreneurs prove that a

business idea/model is feasible

• 0% co-investment required, entrepreneur skin-

in-the-game (cash and/or in-kind) required

Seed investments ($100K -750K)

• Financing for start-up companies to assist

them move from the PoC stage to

sustainability

Highly flexible and can involve equity, debt

and/or convertible debt

Target for 30% portfolio to receive 1:1 co-

investment

Co-investment & entrepreneur skin-in-the-

game in cash or in kind required.

Investment Facilitation

CIC facilitates entrepreneurs, SMEs,

government and industry with other

funding sources leveraging

center’s brand name and

relationships

• Syndication to leverage other

grant, loan and equity investments

– bring together multiple sources of

finance that maybe available in

the market but unknown

• Facilitation of working capital

financing and receivables

financing from banks

• Facilitation of consumer finance to

ensure adoption of technologies

once in the market

Possible partnership with CTI PFAN and

others hungry for viable investment but

want something vetted and a little larger

• Country: Kenya

• Company: Craftskillz

• Entrepreneur: Simon Mwachiro

• Clean Technology: Small Wind

• Current capacity: 10 to 20 turbines

a year.

• Employees: Between 3-20

Barriers Solutions

Lack of risk capital Center could offer start up risk funding. Simon is looking for approx

USD100k

Standardization Center could offer standards for various tech

Policy Center could act as an “Industry Association”

Business support Center could provide business training, market data etc.

Equipment and

tools

Center could provide facilities where entrepreneurs could prototype

their innovations and produce initial products for proving the market.

Building a Pipeline of New Ventures