Safaricom now has a venture fund: Will local operators do the same?

Nigel Gambanga Avatar
M Ledger is one of the startup ideas that Safaricom has taken up

The biggest news in East African tech entrepreneurship this past week has to be about the new venture fund that Safaricom launched a few days ago, aimed at encouraging the development of tech solutions and mobile application development.

It’s hardly surprising that Safaricom is the network operator to do this. It’s involvement in the tech startup ecosystem has been a lot more deliberate in the past couple of years.

First there was the Safaricom Appwiz Challenge started last year and less than two weeks ago there was the launch of the startup-developed M-Ledger app as an extension of the M-Pesa service. This came with an assurance from Safaricom that the network would be working with more local startups in the future.

In a lot of ways this shows progress for the Kenyan tech startup ecosystem. The private sector is now showing solid commitment to startups and helping them grow into viable businesses. It’s hopefully going to be just the first of many six figure funds from network operators and indeed the corporate world.

Safaricom has started what will hopefully be the new chapter in tech startup inspired Research and Development for telecoms firms. Rather than channel money into R&D centres, pass it on to startups that have validated ideas and have gauged market responses. Think of the venture fund as Safaricom’s new $1 million R&D extension.

In any case the Kenyan ecosystem is making huge strides. The Safaricom fund might be the first that is home grown but it’s hardly the first in Kenya. The country already has the Savannah Fund which has a focus on Sub Saharan startups, and not just Kenya, as well as The Seed Fund from 88mph which is sponsored by Google and Microsoft.

Safaricom’s fund however represents an investment from a Kenyan entity focused solely on the Kenyan ecosystem. Can we expect Zimbabwean network operators to do the same?

The steps being taken by Zimbabwean network operators in exploring various revenue streams suggest an adoption of strategies strikingly similar to the Kenyan telecoms market. One wonders whether if this will extend to investing in tech startups.

In the past 12 months operators like Econet have churned out several products and services meant to utilise whatever capacity they hold as the industry changes from being just about basic communication. A lot more services are headed our way.

The tide has turned and the need for these added services might just be the opportunity that local startups can seize to offer services that can be integrated with the networks.

This progression to investment and the signs of confidence didn’t come on a silver platter for Kenyan startups though. No doubt an even higher standard will likely be used for the local ecosystem where the business environment is far from warm.

The ideas always have to be bankable and the startups have to be ready for that level of engagement in terms of skills and appreciation of the business environment.

So perhaps Econet, which already has some presence in the ecosystem through its relationship with Higher Life Foundation’s Muzinda Hub, will do that first. Or it could be NetOne acting as a conduit for the government when it does decide to turn ICT (not just mining and agriculture) as a serious investment centre.

What do you think it will take to get Zimbabwean network operators to invest in local tech startups or partner with them?


One response

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