iAccelerator Business Plan Nov 5 2010

8/6/2019 iAccelerator Business Plan Nov 5 2010

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Team - Midnight Sun

Innovation Accelerator(iAccelerator)Final Deliverable

November 5, 2010


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Executive Summary

A robust start-up infrastructure in Kenya is required to sparkthe innovation that will drive financial and other services to thebottom of the pyramid (BOP)

While start-up culture in Kenya is building, key gaps remain,particularly around funding and ongoing, hands-on supportThe Innovation Accelerator (iAccelerator) will help stimulate the

mobile entrepreneurs dedicated to the BOP iAccelerator will partner with emerging tech entrepreneursfocusing on the BOP and provide them with funding, mentorship,and plug and play services in exchange for approximately

20% equity. The program will nurture 30 entrepreneurs that will dramaticallyincrease financial and other services for the BOP, as well asdemonstrate the viability of this start-up space.

The program will require $1.7M in funding over three years


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Table of Contents

Context & Background

Key Takeaways from Feasibility Assessment

Program Design and Business Model

Implementation Plan

AppendicesTarget entrepreneur profiles

Overview of entrepreneurs metList of meetings conducted

Sandpit

Team bios


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CONTEXT & BACKGROUND

4


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MNOs are busy building thepayment platform and do not

prioritize innovation on

financial and other BOPproducts

The next generation ofentrepreneurs is required to

But, innovation is required to meet the challenge

of financial inclusion in Africa and elsewhere

inclients

GAP

to its full potential and drivefinancial inclusion

Kenya lacks the risk capital(esp. seed and angel

investments) and supportive

infrastructure to cultivatethese entrepreneurs

As a result, startups cant bringsolutions to scale

6

Idea

Stage

Grow

th

Proof of

Concept

Revenue

Generation

Growth

Business Stage


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Key success factors of the US venture industry

are missing in KenyaSilicon Valley KenyaLarge potential consumer market Market is relatively small , but increasing opportunity

for Pan-Africa solutions

Dense, highly energized techentrepreneur community

Tech community is growing and highly energized, butlack entrepreneurial experience and business acumen

Availability of early stage capital

through angels and VCs willing to

Early-stage funding limited to friends/family and small

competitions; investors are risk-averse and prefer

- . . ,

but some offer debt only on conservative terms

Open culture of sharing, trust,

and collaboration

Little sharing due to fear of stealing ideas, but this is

changing as networking and community builds

Free and easy access to

information on market

Little access to information; information available is

low quality and unreliablePotential for large exits through

IPO and trade acquisitions

No IPOS without physical assets; Acquisitions are rare,

but growing, particularly with multinational companies

Highly supportive ecosystem w/

many service providers,incubators

A few resources available, but limited and difficult to

access 7


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iAccelerator would support the start up ecosystem

and culture necessary to rock the BOP

There are hundreds of talented mobile

entrepreneurs in Kenya, yet they lack capital, criticalbusiness skills, and the supportive ecosystem to

launch ventures that can scale

nanc a ac ng an a more ro us ecosys em scritical for entrepreneurs to quit their day jobs topursue start-up opportunities

Without demonstration in this space, the localinvestor community will not address entrepreneursneeds

8


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KEY TAKEAWAYS FROM FEASIBILITY

ASSESSMENT

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Our meetings confirmed the need and demand for

iAccelerator There are hundreds of tech entrepreneurs in Kenya: 2000 programmers

participate in the iHub, 667 businesses applied for the ICT Board awards,70-100 people attend Mobile Monday on a monthly basis . Theseentrepreneurs are extremely dynamic with tremendous growth potentialbut entrepreneurship culture is still nascent

A number of elements of a robust, dynamic startup infrastructure alreadyexist, particularly around networking and building the community

LargeMarket

Potential &

EcosystemUnderway

Yet ke a s remain. In articular no one rovides ca ital to ver earl

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stage companies. With no angel community in Kenya, businesses arentable to fill the critical need for early financing and mentorship

Furthermore, existing incubators dont get their hands dirty byproviding ongoing 1:1 mentorship and business support to these earlystage companies

Funding +Ongoing

1:1 Support

The lack of supportive mechanisms, especially exits, and funding to growbusinesses is a key market failure

Donor funding is required to stimulate the ecosystem and build start-upculture

DonorFunding isRequired


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Existing incubators fail to fill the gaps of early

stage funding and hands-on supportServices Provided CapitalProvided

To whom Fee Gap

iHub Open community workspace,

connections, events and

networking opportunities

No Tech

community

BOP focus, Business

Support + Coaching,

Funding

Mlab Office space, training and

certification, access to market

studies, connection to

No Mobile

community

X BOP Focus, Business

Support + Coaching,

Funding

11

investors

NaiLab Office space, laptop, business

mentoring, technical

assistance, connection to

investors

No Tech

entrepreneurs

X BOP Focus

IFC SMEIncubat

or

Office space, resource library,training, mentorship,

technical assistance,

50 K-500 K

SMEs X Not open to start-ups

Enablis Networking, mentorship,

technical assistance

Matching

loan fund

SMEs X BOP focus, not open

to start-ups

*Equity Bank and InfoDev/DFID are also starting an incubator, but both are still in concept phase


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PROGRAM DESIGN

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iAccelerator goals and strategy

Goal

iAccelerator seeks to helpstimulate a startup

ecosystem in Kenya (andeventually East Africa).iAccelerator startups will befocused on the base of thepyramid (BOP) market,deliverin financial and

Strategy

iAccelerators strategy isto fill the gaps in this

ecosystem by providingfunding, mentoring, andplug and play (hands onservices).

iAccelerator will help

Impact

Demonstrate 1) its possibleto leverage mobile

technology to do meaningfulbusiness at the BOP; 2)entrepreneurship aimed atthe BOP is a viable careerchoice for dynamic young

eo le and Dias ora 3

other services that maketheir lives better.

bring 30 early-stageentrepreneurs from ideaconception to successfulgraduation.

early-stage investment insocial entrepreneurs makessense for those with funds.

Specifically , nurture 30entrepreneurs, resulting in 8new ventures reaching atleast 1 million new clients

with 8-10 new products. Atleast 5 new commercialinvestors and 10 serviceproviders into the space toreplicate our results.


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What is iAccelerator?

iAccelerator is an entrepreneur and early stage business acceleratorpotentially co-located with mLab (TBD). Through a rigorous selection

process, the iAccelerator will partner with an estimated 30 earlystage businesses / entrepreneurs over a 3 year period.

iAccelerator pursues a business partner approach, agreeing jointly ona milestone plan. iA will provide funding, mentorship, personalized

plug and play services, and access to contacts in exchange for anestimated 20% equity stake. The milestone plan is adjusted over time

as necessary depending upon progress.

iAccelerator will work with VCs, local and international angels and

potential acquirers to introduce and structure on-going commercialfinancing. Upon receipt an entrepreneur has graduated from the

program. For select businesses, iAccelerator may invest in a second

phase in order to bring them to VC funding (doubling down).


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. . . and provides three primary services

FundingGap: most

Mentoring

Gap: Entrepreneurs

Plug & Play

Gap: Entrepreneurs

Sourcing

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money from friendsand family, but notenough to start biz

Offering: Funding from

$10 to $50 K to bridgethis gap

lack business

experience and know-how

Offering: Business

Oriented 1:1Mentoring andCoaching

need specific services

to get their businessoff the ground

Offering: Plug & Play

services to helpovercome key earlybusiness challenges

Graduation


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Focus Area

These three services will be tailored depending

upon the maturity of the business

IdeaProof ofConcept

RevenueGeneration

Possible partnership through proof ofsales w/ select high-impact companies,

doubling down

Funding Hungry, notstarving

Mentor Go-to-Market

Strategy, Biz

Plan, Team

Bldg

Plug &

Play

Marketing,

Legal /IP , Fnc

& Act Pitch

Training

Funding Throughpilot

Mentor Strategic

Advisory,

Team Bldg

Plug & Play Marketing,

Legal /IP ,

Fnc & Act

Pitch

Training

Funding Launch andBuild

Mentor Strategic

Advisory

Plug & Play Marketing,

Pitch

Training

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iAccelerator would find entrepreneurs through

leveraging the existing infrastructure

Competitions: ICT Board (667

applicants)Apps4Africa (60applicants)

Human IPO 48-hour challen e

Networking

Groups:

70-100 peopleattend every

Mobile Monday

event

Training

Institutions:

30 studentsattend

Safaricom

bootcamp, 2X a

We expect

over 100potentialcandidatesin the first

Sourcing

SExit

18

(100participants)

World BankApps for

Development

Enabliscompetitions

have applied foriHub

memberships

400 membersparticipate in the

Enablis network

30 studentsreceived

training from

Africa Info Tech

Initiative

roun ; wewould select8-12businessesto participateper year.


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The iAccelerator willpartner with each

entrepreneur. As an

engaged partner, theiAccelerator provides

funding, strategic advice

and recommends 3rd

Entrepreneurs will receive funding . . .Sourcing

SExit

Entrepreneurs will manage theirbusiness as agreed with iAccelerator at

the time of partnership, and as

measured by milestones. Funds are transferred to the business,

and equity to iAccelerator, in tranches

party service providers. We envision the average

partnership to consist of

a $29,000 investment

over one year in

exchange for

approximately 20%

equity.

ase on m es ones.

Sample P&L:Participant P&L Year 1 Notes:

Revenue -$ Idea stage, no rev

Expenses

Salaries 23,100$ $550/mo, 3.5 hdsBus. Planning 1,000$ Plug & Play

Legal / IP 2,000$ Plug & Play

Marketing 2,000$ Plug & Play

Admin, other 1,000$ Colo at iA, travel, etc.

Total Exp 29,100$


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. . . hands-on mentorship . . .Sourcing

SExit

Strategy Mentorship is most useful when provided by a successfulpractitioner or high-value partner. As such, mentors ideally will be

potential funders, or former or current business leaders with background

relevant to the mentee. Philosophy rather than forcing structured mentoring relationships, iAwill provide the foundation for relationships to develop naturally and

change with the evolving needs of entrepreneurs.

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iAccelerator

Staff

All entrepreneurs will meet with iAccelerator staff regularlyStaff provides business advice and share their experiencesas entrepreneurs

Potential angel investors would view mentorship as away of guaranteeing the success of their investment

Mentorship Topics what it takes to be an entrepreneur, what makes agood leader, what makes an idea attractive to investors, exit planning, etc.

External

Mentors


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. . . and Plug and Play.

Need By Whom - Light By Whom - Heavy

Sourcing

SExit

In addition to mentors, entrepreneurs will receive hands-on training and supportin areas key to business execution such as marketing, finance and budgeting,

intellectual property protection, or how to successfully pitch potential funders.

Specialized services will be provided by external organizations vetted by the

iAccelerator and will be funded out of ~ $29K seed investment.

Below we have identified potential service providers in each area.

Go To Market Strategy / BizPlanning (market landscape,customer needs, competition,

execution & pilot plan)

Incremental Development

Marketing, Public Relations Business set up, IP Finance and accounting Representation in financing Pitch Training

Part of Mentorship

iHub

TBD TBD TBD Open Capital Part of Mentorship

TBD

iHub

Slick Advertising TBD TBD Open Capital Local VC, US entrepreneur


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Entrepreneurs graduate whenSourcing

SExit

Access to

Commercial Capital

Independent angelinvestor, venturecapital group ormultinationalorganization

Acquisition

Acquired by largerplayer such asSafaricom orEquity Bank.

iAccelerator equity

Financially Self

Sufficient

Business isindependentlyincome positiveand decides to nottake additional

Exit Program

No commercialcapital, not netfinancially selfsufficient, andiAccelerator does

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nves s n us ness.

Upon entrance ofcommercialcapital,iAccelerator mayeither retain equitystake or agree to

be bought out byincoming investor.

iA may doubledown with co-investors.

stake is cashed

out at time ofexit.

equ y nves men

at this time. iAccelerator

continuesrelationshipthroughpartnership end

date, retainsequity stake.

no es re o

double down. At a milestone, iA

or entrepreneurwishes toterminaterelationship.

iA preservesexisting equitystake andpartnership isdiscontinued.


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2 mths

An entrepreneur would receive $29 K in exchange

for 20% equity over a 12-month partnershipPhase 1

3 months

Phase 24 months

Phase 36 months

1 mth

Agreed

upon

Acceleration

Plan

Refine Biz Plan

$15 K, 10% equity

Develop Team

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4 mths

Legal Structure& IP Protection

Piloting (2 total)

2 mths

Mrktng Strategy andImplementation

OngoingMentorship

Capital Negotiation 2 mths

Investor Identification 2 mths

,

Milestone 2: Pilot completed=$7K, 5% equity

Graduation

2 mths

Product Dev. 1 mth


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Success of the program will be measured in a

number of ways

Program Management Indicator Year 1 Year 2 Year 3 Notes

1 Entrepreneur satisfaction 72% 72% 72% Will have to develop survey, assume > 3.6 out of 5

2Entrepreneurs meet

business milestones75% 75% 75% Milestones as agreed at beginning of partnership

3Entrepreneurs enter

program8 10 12 Increasing as ecosystem develops

Outcomes Year 1 Year 2 Year 3 Notes

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1 Graduation profile:r ves conversat on aroun + - o program as or g na y

envisioned (point in time, not cumulative).Access to private

capital, exit or fnc self-

sustaining

13% 30% 33%"Success", assume 1, 3, 4 success per year, ending with average

succcess rate of 26.7% or 8 out of 30.

In process 63% 50% 42%By end of program all "in-process" will move to "exit". May

have to adjust for changes to average length of partnership.

Exit program w/o

capital or self-

sustaining business

25% 20% 25% Metric to ensure program is being risky enough, assume 2, 2, 3.

2 Clients served 125,000 500,000 1,000,000Assume all iA businesses target BOP, avg 125,000 clients per

successful graduate.


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O i f E M P f f C S


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Overview of Entre. MetProof of Concept Stage

Name ofOrg

Overview Contact

Proof of

Concept

Mobile

Ventures

Kenya

Tests and scales new mobile

services tailored to the needs and

habits of low-income and poorly

served customers

Jesse Moore, MD

jmoore@signalpointpartners.

com

Krosspay Enables financial deepening and

sustainability through mobile tech.

Michael Asola, CEO

[email protected];

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applications and universal MMTdelivered via cloud computing. [email protected]

Shujaa

Solutions

Software and mobile solutions

including mobile websites, data

services over IP, apps store

platform, etc.

Michael Makahe, Director

[email protected]

Kipchumba Koimett, Director

[email protected]

Jambopay Online payment system that allows

shoppers and sellers to make and

receive payments purchases over

the internet through websites that

use JamboPay as a payment option

Danson Muchemi, CEO

[email protected]


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Overview of Entrepreneurs MetBuild Stage contd


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Overview of Entrepreneurs Met Build Stage cont d

Name of

Org

Overview Contact

Revenue

Genera-

tion

KACE Agricultural commodity exchange.

Has SMS-based system to collect and

provide market information to

agricultural buyers and sellers(farmers) using mobile phones. Allows

relevant and timely marketing

information as well as transparent

Adrian Wekulo Mukhebi

[email protected]

.ke

43

.

wants to grow this to a full e-commerce platform. Currently

serving 15,000 farmers.

Juakali Micro-pension plan for the unbanked,

laborer segment delivered via mobilein partnership with Zain, Safaricom,

and the government. Has now

reached 20,000 clients,

demonstrating demand for mobile

based products.

Muindi Do,

[email protected]

Elizabeth

O i f E t M t G th St


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Overview of Entrepreneurs MetGrowth Stage

Name of Org Overview Contact

Growth Pesa Pal Online mobile payments system used by

vendors as well as for school fees,

insurance, and brokerage accounts. Hoping

to go intl. Has funding from eVa Fund aswell as sister company, Verviant Consulting

Liko Agosta,

likoa@verviant.

com

Virtual City Supply Chain Automation, now focusing on

using mobile to automate buying processes

John Waibochi,

CEO

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in agriculture. Recently won $1 mill from

Nokia. Looking to expand internationallyAf & Lat Am.

jwaibochi@virt

ualcity.co.ke

Cellulant Started 2004 with ring tone business, now

doing mobile micropayments service, Goal

of 100 million customers, pan-Africa. Will

look at BOP to get those customers.

Ken Njoroge,

CEO

[email protected]

om

Mobile

Planet

Started in 2001. Write applications for

mobile devices with right of first refusal

from Safaricom. 22 people. Pan-East Africa.

Interested in BOP as market share.

Kigen Kandie,

CCO

kigen@mobilep

lanet.co.ke

List of Meetings Conducted


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AfricInvest: George OdoCassia Capital Partners:Francis Ogutu, ImtiazKhanEACP: Richard Bell

eVa Fund: VincentKouwenhovenGroFin: Rosemary MulwaIn Return: Steven OttoKSiX: Anzetse Were

List of Meetings Conducted

Cellulant: Ken NjorogeChangamka : Samuel Agutu,Zack RomboFocus Group withStrathmore students

HR MIS: David KimaniJuakali: Muindi DoKACE, Adrian MukhebiKilimo Salama, RoseGoslinga

EntrepreneursAfrica InformationTechnology Initiative:Michael GordoneMobilis TechTraining Academy:

Ken MwendaGoogle Africa: JoeMucheruICT Board: PaulKukubo and Kaburo

Tech Community Investors

FinancialServices

Equity Bank: James

MNOsOrange: Snehar ShahSafaricom: Pauline VaughnSafaricom Foundation:Sanda OjiamboZain: Sieka Gapabki

Zeller, Annie Roberts,Walter LambersonTBL Mirror: ElineBlaauboer

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,Oscar Ahere, Kimani KabogoMamakiba: GeoffreyMimanoMedia Edge: Lucy KiruiMobile Planet: Kigen KandieMVK: Jesse MooreOBTF: Amos Kibe

Pesa Pal, Liko AgostaShujaa Solutions, MichaelWakahe, Kipchumba KoimettSymbiotic, Mbugua NjihiaVirtual City: John WaibochiZimele: Sammy Muvelah

Enablis: Moses Mwaura,Palmer ThambuExcelsior: LaurenRawlingsIFC SME Incubator:Kiragu Maina

Nailab: Sam Gichuru ,Tonee Dungu

Incubators

Kobia

iHub: Jessica ColacoMobile Monday: JohnWesonga,Ushahidi: ErikHersmanProfessor HenryThairu, Inoorero Univ.

Dr. Ndemo,Permanent Secreatry,Ministry of Informationand Communications

Other

Angela Gachui, HR

ConsultantAPA: Pete OndengFSD Kenya: JamesKashengakiLegal Services:Leonard AlooNavraj Ghataura,Entrepreneur

Equity Bank Foundation:

James WanjohiFamily Bank: KevinKiharaKrep: Kimanthi Mutua


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Documents

iAccelerator Business Plan Nov 5 2010