2014-02-20

Co.Exist

The Startup Accelerator That Wants Founders To Move To Africa

With the continent's economy poised for rapid growth, 88mph is hoping to encourage the entrepreneurs of the "African diaspora" to return to their roots.

A new startup accelerator is offering an enticing proposition to startup talent in the U.S. and Europe: move to Africa. For entrepreneurs, the emerging middle class in Africa may represent a big market opportunity. Widespread Internet connectivity is just arriving after years of mobile Internet delivered through feature phones.

Yet Africa is not for everyone, says Sylvia Brune, director of the 88MPH accelerator. Named for the speed at which the DeLorean in Back to the Future reaches the critical time-traveling point, the accelerator invests an average of about $25,000 in early-stage companies hoping to capitalize on emerging African markets on the web. 88MPH participants enter a three-month startup accelerator program in Nairobi and Cape Town, and (soon) Lagos.

"It’s for the insanely curious, tenacious people, and those willing to set aside any pre-conceived notions they have about Africa," writes Brune. "Instead of building the third, fourth, fifth photo filter file sharing app, you can solve big problems and disrupt industries."

Africa’s economies are surging. After decades in the doldrums, the continent’s GDP grew 5% annually between 2000 and 2008, doubling over previous decades and attracting a new stream of private-investment, according to McKinsey & Company.

So Brune and her team are scouring talent from around the world, from startups that include Africa's first "iTunes" to web services for rent payment. 88MPH hopes to reverse the brain drain from Africa to Europe and the U.S., and in the process open up Africa’s nascent markets to venture-sized returns for investors. "Our philosophy is that we want to encourage the [African] disapora or other founders from Europe and U.S. that have some experience to come here and market products that are beneficial in this market," says Brune. The West, she argues, is not just a market for African countries, but a source for new African startups.

The reality, at the moment, is far different. Despite inevitable comparisons with Silicon Valley (Silicon Savannah in Nairobi and Silicon Lagoon in Lagos), businesses face challenges that still spook many investors and entrepreneurs, says 88mph’s founder and managing partner Kresten Buch. "Talent is scarce, experience is scarce, there are no angels obviously, and there are no serial entrepreneurs," he says. While 88mph seeks to make investments in as many as 12 companies in each accelerator class, it has only accepted five or six companies in some classes due to a lack of fundable options.

Yet 88mph is gaining traction and is not alone. TechCrunch rounded up a list of five other startup investment vehicles in Africa, and a small but growing flow of U.S., European, and domestic investment is creating startup hubs in a few capital cities.

Now 88mph can point to one of its first successes. ApexPeak, which 88mph funded just 12 months ago, just announced its $2.4 million in venture funding. The firm, a financing company to help businesses manage cash flow from invoices, aims to raise a $200 million fund to help small and medium businesses access to affordable credit.

It may also be 88mph’s first breakouts. "Our goal with 88mph is to try to generate a ROI that will make European and U.S. accelerators look like African non-profits," writes Buch in a release. "ApexPeak puts us on track to do that."

[Image: Abstract via Shutterstock]

Add New Comment

4 Comments

  • 88mph invests $5,000 per founder in seed stage startups. It's not enough to move to Africa for. Nairobi is the second most expensive city in Africa. The opportunity is definitely here, but you have to be self-funded in order to exploit it.

  • Halona Black

    How refreshing! It is wonderful to see so much interest in creating new industries in African countries. There is so much potential to be tapped into. You can't have a continent full of NGO's and think that is the only way for progress to happen.

  • This initiative is very fresh and innovative, so far I came across another firm that encouraged the diaspora to return to Africa but the thought of encouraging westerners to also make the move is very original. As an engineer going back and forth for work and commerce I can attest to what now is no longer a secret: Africa is an opportunity for America, a market ripe for fast growth and America can supply Africa with the goods/services it can use to develop the right way.

    Private enterprise is what we need to exponentially increase in Africa: there are not enough startups yet we have many problems that can be solved by those businesses, this is why unemployment is high in Africa and money is not moving around. Wealthy Africans do not invest their money in intelligent startups and this significantly stunts the economic growth in Africa.

    Initiatives such as 88MPH can change that trend because Africans are very good at duplicating a winning formula...

  • I moved from London to Ghana and setting up a business already in Africa! A couple of months in.... Africa is not as scary as i thought! Yet to launch and looking forward to a successful year and helping the community in Northern Region of Ghana. Hoping to create a fashion production hub in the future!