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Thou shalt not form a startup

stopI still remember the ZOL Startup Challenge of 2010 like it was yesterday. A room filled to the brim with young and ambitious talent that wanted to make a difference and bring back their country from out of the cold limbo of the just past decade long crisis. Fast forward to today and many of those startups are gone, long forgotten and the few that have made it can only have their successes chalked up as modest.

Whilst I feel Silicon Valley has taught us that only a proportion of startups make it, I also think some of the failures were beyond the control of the proprietors. It is very hard to form a business in Zimbabwe and the road is littered with impediments and speed bumps.

Getting funding and expert business advice is going likely going to be your first hurdle. To be fair a good number of geeks do no know how to put a business plan together and the few venture capitalists and financiers that exist in this country not only expect a good detailed plan with financial statements but also expect a failproof way of monetizing the business. If this risk averse approach were to be adopted everywhere they would be no Google or Facebook both of which only figured out a way to make money years after they had been formed and funded.

Even with a good failproof model one is still unlikely to get a loan unless they have collateral in the form of a house or  a financially endowed surety to cosign the loan. Suffice to say if you have either of these you are unlikely to want anything to do with the pittance loan and a ridiculous 20% or more interest rate that is offered by our financial institutions. The fear of risk by financial institutions is understandable but it also must be understood that high risk tech projects also bring higher returns and if this country is to make any progress at all someone has to gamble and take a the risk.

If you have made it thus far; making a plan and securing the funding, another bump comes up in the form of over-regulation. Zimbabwe is one of the most regulated countries in the world with hefty licence fees that border on delusion. Considering how lean the market is, it might take years if ever before the initial capital outlay is recouped. Consider for example if one wanted to form a startup  to make internet available to ordinary folk using Wimax and a fibre backhaul. He would have had to go through POTRAZ paying US$2 000 000 as licence fees and pay a further US$60 000 minimum plus 2% of the yearly earnings every year to the government.

An alternative would be to find an established player and try and form a partnership with them. Whilst in South Africa  and elsewhere healthy value added services and virtual mobile networks thrive, Zimbabwe’s top players would rather die first before allowing third parties onto their network infrastructure and when they do they charge unviable prices. Rumors abound about how Telecoms have stolen startup ideas and made them their own.

Then finally the corruption will get to you. It can take up to a month to form a company in Zimbabwe despite all the two weeks promises you will receive. In this day and age of computers it takes most countries a mere 48 hours. You will meet quite a number of forms CR forms that may be quite a lot to handle and could leave your head reeling with all the abbreviations. Chances are by the time your company is approved you do not even remember what is it you wanted the company for.

The regulations, the bureaucracy, the anticompetitive behaviour by established players and the corruption all seem to point to some unspoken rule a commandment of sorts: Thou shall not form a startup.

By the way if there is anyone there who knows how I can get that $5000 loan please give me a hint on what to do.Of all the people I know who have applied for the loan no one has got it.


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32 thoughts on “Thou shalt not form a startup

  1. “Chances are by the time your company is approved you do not even remember what is it you wanted the company (for)”

    Dude, I love your humor.

  2. If not a loan, we can discuss off shore equity or debentures from diaspora comes with very few demands and no requirement for complex business plan or collateral. You still have to pitch the propo though.

  3. i hired a lawyer to do the company registration for me in february.it took her a month for her to get the name approved,as i write this article the registrar hasnt approved my company yet. i have lost steam nxaaaa

  4. Zim is still some years from being a startup friendly culture…sure there will obviously be the one or two exceptions that rise against the trumendous odds but wow is it tough to do business here!

    And not only that, most startups will make their money dealing with enterprise customers and unfortunately with our aging directors and executives in Zims big corps, adopting the tech of some fancy new startup will seem mad. Imaging trying to tell a company like Delta to switch from using Sage to something that YOU built that will infact benfit them!?…The directors will practically laugh at you.

  5. They don’t even give virtual office business licenses, this country is not a good place for any of us (iT Gurus and entrepreneurs)

    1. I think Masiyiwa had political influence to get his company up and running. Do you some one high enough i the office to get your idea running? Google didn’t need Bush or Facebook which came out of a student dormitory. Twitter, Whatsapp, Instagram, did not go through what Masiyiwa went through to get Econet where it is now. In Zim, you need someone higher up the authority to get your biz going else you are just but a dream

          1. When Telco set up a fibre line to the company I worked for in the early 2000s, I was told by the technicians that Shadreck Ndlovu played with the big boys hence his company had lucrative contracts with the Government.

  6. i remember someone posting something about fixing the politics. I look at the situation in Zimbabwe. Honestly if you cannot register a boutique shop with the relevant papers and all, how on earth can you form a start-up?

    Great idea needs money to flourish. OK go the bank for a business loan. Oh wait, it’s superbly high interest rates and mind boggling T&Cs will leave you asking yourself if the process is worth it. As mentioned in the article you need collateral. How many of the founders of the idea have houses? Or cars? No, not that car with a 5 year old broken tail light or one that emits enough exhaust fumes and spatters and people think the black boot have fired tear gas and rubber bullets? IF you do get the loan, then next it’s the working capital needed, the selling of the idea to potential clients, the registration of idea (patent/copyright), the trial costs, etc. Then yes our number 2 problem in Zimbabwe, CORRUPTION. Great idea for the banks or the telecom guys or even say the beer guys, but at what price to get it into the boardroom for the boss to approve? How much to pay off the Business development Managers who is the HR director’s muzukuru, the IT manager who plays angry Birds all day and not interested in the idea unless arikudyawo, the director who is sceptical of something that may improve efficiency and well, derail his “deals” or money making schemes being done within the organisation. And once pitched, you hear that the company has engaged a software company to develop your idea at half the cost. You complain but to who? What, the Ombudsman who is has just being given $2000 to keep your case at the bottom the broken drawer in his office for the next 24 months whilst their “idea” matures on the local market?

    I think not good idea till the business environment is ideal for people with great ideas to come out. Rather take it somewhere like SA or UK, for example and implement it where you know your work is protected, laws that give you hope, environments where the idea can grow and yes get more VC to grow it further. In Zimbabwe you borrow $ 5 000, that is just the start-up costs, What are the chances of the banks loaning you more money over and above what you owe them so that your idea develops further?

    Read these articles of this guy in SA who started, in the cloud. Maybe not a great example but another way of not going in to the “loan sharks” world.

    http://venturebeat.com/2013/02/07/startup-spotlight-nomaninis-orange-box-helps-poor-south-africans-see-more-green/

    http://googleappengine.blogspot.com/2012/12/mobile-voucher-sales-terminal-in-africa.html

  7. true entrepreneurship takes no hostages, stop whining and get a move on. there are businesses that are thriving in war zones because of enterprising entrepreneurs.

    if you want to start a successful business you need to adapt to your circumstances, you need to do what needs to be done to make your business work.

    If it means bootstrapping, then do that. Most entrepreneurs in Zimbabwe want people to invest in ideas, no matter how brilliant your ideas is, its just a bloody idea.

    Google already had a search engine that was way better than any other search engine that existed when they started looking for funding, so please no parallels there. have a demonstrable proof of concept no wait have a product that people want and you might not even need millions of dollars.

    all you need to have a web start-up is a pc, internet connection, domain and code. show me the code then show me the customers that want your code and then show me the money from the customers who want your code and capitch you have the dollar, gain market traction and funders will come running to give you money.

    For instance in 3rd world countries like zimbabwe, create a trailbazing mobile api. so please give us a break garikai and all you other pseudo entrepreneurs stop whinning and get your idea into action and then funders will come.i hate whinners.

    1. “true entrepreneurship takes no hostages, stop whining and get a move on. there are businesses that are thriving in war zones because of enterprising entrepreneurs.”

      Name these zones where businesses thrive?

      “if you want to start a successful business you need to adapt to your circumstances, you need to do what needs to be done to make your business work.”

      Explain with examples how this can be done in Zimbabwe in the current situation.

      “For instance in 3rd world countries like Zimbabwe create a trailblazing mobile api. so please give us a break Garikai and all you other pseudo entrepreneurs stop whining and get your idea into action and then funders will come. i hate whiners.”

      Nobody is whining. Garikai merely pointed out the difficulties of starting a start-up in Zimbabwe. He has difficulties in doing a start-up and needs advice from the people who may know how he can do so. Rather you give solid advice or ideas on how he can over come them than you complain that we are complaining about forming a start-up. Tell us which people to see, register his idea, how to go about getting finance, etc. That am sure is what he is asking us. he is not looking for a hand out as I think that’s were your “whining” statement is emanating from.

        1. Entrepreneurs such Aliko Dangote have remained were they are because of their links to government. And we all know what the links to the Prez can do for you in Africa!! Not everyone can afford/has such links to the higher echelons of power. We all know that Supa is were he is because of “links”. Chiyangwa, Mpofu, etc. We can name all but the truth of the matter is that to be like Strive Masiyiwa/Nigel chanakira NOW is nearly impossible – well even Strive had Nkomo and Mujuru to “link” him up.

          Can we have the likes of the Facebook startups in Zimbabwe with no Gvt official tapping their fingers on your shoulder before you move to next level of growth?

  8. You dont belong in the business world, buddie! Failure happens. Challenges happen. Wherever you are. Whatever the economy.

    To all, dont be discouraged. Whatever you do, be informed. When you try it,dont fear failure happens. Learn from it, try again or do something different

    1. You missed the point my assertions are:
      1. It’s harder to do business in Zimbabwe than in most places especially in IT. A thing I will prove shortly with the numbers all in place. These are not challenges the Zimbos face its a juggernaut.
      2. It should not be this hard to start a business.

      1. What business in IT? Web-related, hardware, third party services? How many companies have you featured on this website?

        Its not difficult. I have registered two companies, no issue. For web, I have a few domains, no issues(just need to pay up my taxes). Its about being resilient, putting effort and learning from failure. If you dont have the determination or the will for it do something else. Not everyone is built for business. Some will do and keep doing. Other moan and complain and are negative

  9. I think Zimbabwean tech entrepreneurs need to focus on developing businesses that need little or no capital but have the potential for high impact.

    These type of businesses will circumvent all the many challenges that are extolled above, some of these businesses are.
    1. mobile applications based businesses models
    -instagram, foursquare, whatsapp, binu, Angry Birds, Zynga

    2. web based businesses models
    -examples of web based business models that have been successful
    – facebook, google, amazon, yahoo, ebay, dropbox, pinterest, youtube

    3. software based business models
    -examples of software based business models that have been successful
    -microsoft, oracle, sap, symantec, adobe, intuit,

    So get a computer or laptop, get books on scribd + esnips learn how to code and create the next instagram, facebook or sap.

    Make the product first and sell it, capital will come flowing.

  10. Just a comment….if you look at the succesful startup biographies (Groupon as an example ) they started to make significant progress in their infancy when their lawyer advised them not to do everything by the book …in some cases this is very true.Regulations and rules have to be broken in business sometime.In a startup reputation starts to matter when you have a product..thats my own opinion.Venture capital is always there..there is always someone out there willing to invest money…the question is do they understand what you want to do with their money? in technology this is a skill you need, you need to translate complex ideas into simple language for the man on the street and potential investors because they will never come from the same industry as yours, if they did they would be funding their own startups.

  11. Isn’t Techzim a startup? I don’t think getting a loan for a greenfield idea is smart or prudent. Tech by nature is also a high risk space. Even in ‘proper’ economies for every Facebook there are 20/30 other flameouts in that space (Friendster etc). Which is why even in the US & similar countries venture capital is the way to go. Given the virtual lack of angel/venture capacity locally I would say don’t waste your time trying to squeeze water from a stone. If you are serious and have a decent prototype why not approach firms like 88mph, Savanah Fund, 4Di Capital etc. You definitely will have to think about implementing your idea in another country or at a regional/pan African scale. You really have to think laterally. If Zim Telecoms are a problem to work with them, forget about them – there are 50+ African countries find out which Telecoms companies are easier to work with. If Zimbos are willing to go abroad to work, why not go abroad to start businesses. The Chinese/Indians/Koreans do it. Entrepreneurship is an attitude not the idea or your skill per se as a programmer etc Entrepreneurship is about solving problems, so if you don;t have a problem solving mindset then it’s not for you. Get a job

  12. blame, no one for your failure.workup and startup if you want to startup.its a tough world everywhere. push push and push hard.nothing can beat faith.suprise everyone with that jab of faith.

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