Why do majority of local ICT startups fail?

Antoine Sebera, the Government Chief Innovation Officer (Left) Alex Ntale the Chief Executive of the ICT Chamber of PSF and Atsishi Yamanaka, a Japan International Corporation Agency official during a press briefing at Telecom House. Courtesy.

Despite efforts by government and other stakeholders to boost performance of start-up firms within the local ICT sector, survival rate of emerging firms remains fairly low.

With the exception of a handful of firms such as AC Group, DM HeHe and most recently, Awesomity labs, among others, most startups incubated in hubs such as KLab, have not survived the sector.

This is also despite government efforts to improve the quality of higher learning in the sector.

This sector’s stakeholders says is often due to shortage of skills beyond technical ICT skills among new graduates and entrepreneurs.

Among the major challenges, stakeholders say include   customer acquisition, value proposition to potential clients among others.

Alex Ntale the Chief Executive of the ICT Chamber of the Private sector Federation said that among the major bottlenecks include customer acquisition which is often a function of resources.

He added that over time, they have realized that majority of local ICT entrepreneurs have adequate skills in product development and other technical aspects but fall short in areas such as financial management, customer acquisition and legal structuring among others.

“Our entrepreneurs are often strong on the product development aspect and technical aspects but not on aspects such as financial, customer acquisition, legal structuring of a contract among others. They require skills to be able to make sales that can translate to revenue for their firms,” Ntale said.

Atsishi Yamanaka a Japan International Corporation Agency official said that often, young entrepreneurs at local incubators such as Klab and Fablab have the right technical skills but often do fall short of business skills.

It is however out of such challenges that the ICT Chamber, in collaboration with Rwandan governmental institutions and Japan International Cooperation Agency (JICA) are rolling out an ecosystem strengthening initiative to boost the survival rates and quality of startups in the country. 

The initiative dubbed ‘250startups incubation program’ aims at nurturing over 100 companies with 50 million USD valuations by 2025.

“Given that Rwanda currently has the best infrastructure, education institutions and favorable policies in Africa when it comes to ICT, we, as Rwanda ICT Chamber, have set up an ambitious goal of nurturing 100 companies with 50 million USD valuations by 2025.” Ntale said.

The pilot phase of the programme was launched 6 months ago and is set to today graduate the first batch of eight enterprises.

The program has two approaches including availing financial and legal support through providing each startup with one junior lawyer and provide expertise to the start-ups.

 The program does not give funding but provides financial support for procurement process as well as courses on aspects such as business development and branding among others.

Atsushi Yamanaka who is the Chief Advisor of the Project said that with the right facilitation, local enterprises can be made profitable.

 “We believe the Rwandan youth has the right idea and technical skills, with right facilitation and encouragement, we could turn them into successful startups. It is also not a pipe-dream that these startups could compete not only at the continent level but at the global market as well,” Yamanaka said.

Antoine Sebera, the Government Chief Innovation Officer said that the government is keen on boosting the private sector contribution through development of start-ups that will among other things create employment, export skills and expertise and solve local challenges.