Reports that President William Ruto will be touring Silicon Valley during his latest visit to the US have stirred excitement within the Kenyan tech start-up community looking for a lift in the wake of shutdowns attributed to a funding drought and unviable business models.
A State House statement on Wednesday indicated the President, who is in the US to participate in the United Nations (UN) Secretary-General’s Climate Ambition Summit, will hold meetings with representatives of Big Tech, many of who were incubated at Silicon Valley – the global centre for technology and innovation.
“President Ruto will visit Silicon Valley in San Francisco where he will meet with tech leaders of Microsoft, Intel, Google and Apple among others,” read the State House dispatch in part.
“The visit aims to enhance investment opportunities and trade relations with the United States with a particular focus on nurturing Kenya’s thriving start-up sector. The President will emphasise Kenya’s young talent, green energy initiatives and its value as an alternative supply chain for American companies.”
Read: Puzzle of Kenyan startups in trouble after Sh34bn funding
The visit comes against the backdrop of recent media reports highlighting the hardships that Kenya’s tech start-up sector— commonly known as the Silicon Savannah — has been grappling with.
Dr Ruto has in the recent past sought to play up the country’s ambition to become Africa’s ICT hub, inviting US tech firms to pursue the investment prospects in Kenya.
During a side event at the US-Africa Summit in December last year, the President said Kenya’s aspiration to uplift millions of its citizens’ livelihoods through technology and innovation had attained a new impetus.
On Tuesday, the President was the chief guest at the Kauffman Fellows Africa VC Summit in Nairobi, which brought 300 of the world’s top venture capitalists from more than 45 countries.
The Kauffman Fellows’ regional summits seek to promote cross-border investments in burgeoning tech markets worldwide, with the most recent summits hosted in Mexico, Dubai, Japan, Israel, Singapore, Brazil, and China.
Kenyan start-up sector players hope that the deals struck during the summit and the President’s trip to Silicon Valley turn out be the magic bullet that will turn the tide in favour of a blossom for the industry.
“Through this visit, I believe the President will be able to strengthen the confidence that investors have in our country,” said Washington Mageto, the founder and CEO of automated e-commerce marketplace PLAT-DEL.
“The meeting could serve as a breeding ground for fresh ideas which could then result into formidable laws and policy directives that will favour investments sustenance in Kenya and in the region.”
Anza Now CEO Bobby Gadhia, whose initial tech firm PC World Limited collapsed in 2016 after being in the game for 21 years, expresses optimism that Dr Ruto’s visit will see Kenya attracting the attention of global capitalists.
“The President’s visit is fantastic for the country and the tech sector in particular. Our start-ups sector is so talented but underutilised at the same time. This visit will hopefully bring us in the radar and make us more visible,” states Gadhia.
“The current challenges the start-ups sector is facing is a separate issue. These challenges are being faced by other sectors too. So the visit will hopefully attract more investment which will have a positive boost to the sector and to the country in general,” he adds.
Since last year, the local start-up ecosystem has been sending disturbing signals of an industry in distress, choked by factors including harsh business conditions, inflation as well as investor funding hitches.
A recent Business Daily analysis established that at least eight start-ups have collapsed in the last two years despite absorbing a combined Sh11.2 billion (in current exchange rates) funding while a ninth one, agri-tech firm Twiga Foods, which has taken up a cumulative Sh23.4 billion in venture capital, is fighting for survival.
Among those wiped out in the wave are e-commerce platform Zumi, which dealt in non-food commodities, Sendy, and engineering technology firm Gearbox which laid off three-quarters of its permanent staff months ago, gave up half of the operating space and shifted to a low-cost business model on account of scarcity of funding prospects.
Others are SkyGarden, Notify Logistics, BRCK as well as agri-tech start-up WeFarm which ran an e-shop stocking farm products.
Read: Seven Kenyan startups shine at global awards
A recent report by London-based public relations agency Wimbart cited ineffective investor relations as the key impediment to funding opportunities, saying that 71 percent of African tech investors would hesitate to put money in a start-up that fails to provide regular updates.
Among the frustrations with startups that investors cited are lack of clarity and focus, vague performance metrics, absence of actionable insights, selective reporting as well as inconsistent reporting timelines.
“For start-ups in Africa and across the globe, effective investor relations communication is critical to securing funding, maintaining solid relationships with their existing investors, building credibility, and attracting new and long-term investors,” it reads.
“As the continent continues to witness a surge in entrepreneurial activities, fostering transparent and engaging communication with potential investors becomes even more essential.” BY BUSINESS DAILY