Tech hubs must “innovate or die” – AfriLabs

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African tech hubs are fragile and have no clear path towards long-term sustainability, and must work together and innovate in order to prosper, according to Tayo Akinyemi, director of AfriLabs.

AfriLabs is a network of 36 technology innovation hubs in 18 countries across Africa, which is working through collaboration to build an innovation infrastructure to encourage the growth of Africa’s knowledge economy by supporting the development of startups, technology and innovation.

Akinyemi says the major challenge faced by hubs is long-term sustainability, with hundreds of hubs springing up across the continent and with a variety of names, service models and missions.

She said this “staggering” amount of diversity meant hub sustainability was a “ubiquitous” problem.

“As a result, we have 200 fragile young organisations with noble intentions but no clear path to long-term survival. Charting a sustainability plan for entities we don’t fully understand is no small task – a sobering thought to say the least,” she said.

She said the short answer to the problem was “innovate or die”, with hubs needing to address certain main challenges in order to move towards sustainability.

“We don’t know what we mean when we talk about hub sustainability, or why hubs should be sustainable in the first place,” she said. “Is a hub sustainable if it covers operational costs from revenue but not fixed costs, such as space rental? What if the hub has enough funding to stay afloat while it develops a working business model? Does that hub qualify as sustainable? The point is that we need to articulate specific sustainability criteria, and explain why those criteria are reasonable and meaningful.”

She said hubs faced “complex trade-offs” between what they want to do and whom they want to serve, and whether or not any funding is available.

“Many hubs emerge from a desire to benefit society, although how that benefit is defined and delivered, and who receives it, varies,” she said. “This means that many hubs invest in ecosystem-building activities, such as training and mentoring, which are critical to executing their missions, but don’t generate revenue.”

Akinyemi said there is no “one size fits all” for sustainable hub business models, which will evolve as the hubs do. Different hubs need different business models.

“This is hardly surprising when one acknowledge that several factors, such as a hub’s goals, strategy, clients, and partners will all influence its approach to sustainability,” she said.

“I would argue that most hubs have had, and will continue to have, an evolutionary path, changing what they do in response to community feedback and critical assessment.”

She said sustainability is a long term proposition, that requires experimentation and a licence to fail.

“Typically, funders want to “pay for impact” but are somewhat reluctant to cover the costs of the people, assets, and processes that produce the impact, leaving immature, under-resourced organisations in a bind,” Akinyemi said.

“Surely, there are reasons for this; funders want to maximise their capital efficiency and impact. However, understanding this doesn’t ease the burden of fundraising for tech hubs.”

She said this was especially true given the limitations on what hubs can secure support for, with hubs successfully finding funding for activities like events, competitions and training, but struggling for core funding.

“AfriLabs members, the majority of which use donor funding to cover many of their costs, cite events and service provision as primary revenue sources,” she said.

“Perhaps equally important is the fact that the sustainability horizon is probably farther away than we’d like to admit. For mLabs focused on ecosystem building and supporting idea stage startups, it could be 6-10 years. I would imagine the same or something similar for tech hubs. So, who wants to fund a hub for the next ten years? Anyone?”

Akinyemi also bemoaned the fact there is no shared ownership of, or collective response to, the problem of hub sustainability.

“Everyone who works with tech hubs knows there’s a sustainability issue. But we seem to live that reality in our respective corners, failing to acknowledge that this is an “all hands on deck” sort of problem,” she said.

“The challenge is too big and too fundamental for any individual hub, or even a collection of hubs to tackle. We need everyone who believes in the potential and impact of tech hubs to engage in some good old fashioned collective problem solving.”

She urged hubs to become clear about their reasons for existence and what they expected to achieve in what timeframe and with what resources.

“More specifically, we need to understand why tech hubs are the best mechanisms for the outcomes we’re trying to create, even if they’re difficult to describe and even harder to measure. We need to move beyond a superficial acknowledgement that tech hubs and the people in them are cool and do cool stuff. This is true, but we need more.”

Hubs, according to Akinyemi, also need to invest in understanding their ecosystem, and translate these insights into effective interventions.

“Hubs and their stakeholders need to do a better job of mapping the systems they want to support, articulating what they look like, where the gaps are, and who the key players are before launching a tech hub,” she said, praising the research initiated by Kenya’s iHub in charting hub development and offering insight on how and when to invest.

“Additionally, funders can pair technical assistance funding with implementation funding so that hubs can afford to learn and share,” she said. “For example, it would be fantastic if the tech hub fund launched by DOEN, Hivos, and Indigo Trust also supported business model cataloguing, experimentation, evaluation, and learning for its grantees.”

She called on hubs to “obliterate the box”, and shift perspectives on what is possible, saying building a healthy hub ecosystem required a “dollop of insanity” much like other entrepreneurial endeavours.

Collaboration is key, Akinyemi said.

“Let’s break out of our hub, funder, multinational, investor, and innocent bystander silos to tackle this problem together,” she said, suggesting a tech hub summit and lab dedicated to tackling the problem of sustainability.

“While there are several tech-focused events in Africa such as DEMO Africa, Mobile Web Africa,Pivot East, Tekki48, and Tech4Africa, there have been no major tech hub pow-wows apart from africagthering’s event in 2012, and AfriLabs’ annual meetings in 2013 and 2014,” she said.

“Clearly, we need to talk, but more importantly, we need to figure out how to collectively crack the hub sustainability puzzle. A social innovation lab, which emphasises bringing diverse stakeholders together to solve complex problems, is a good place to start.”

Akinyemi also said it would be positive to create a multi-donor fund dedicated to developing hub business models, measuring impact, and sharing knowledge.

“After all, supporting tech hubs is about more than building hubs. Tech hubs serve as the infrastructure needed to catalyse African technology, entrepreneurship and innovation. They provide the people, power and (internet) pipes that make great things happen. Plus, we’ve already seen multi-funder initiatives emerge – USAID’s Development Innovation Ventures (DIV), the Global Innovation Fund and the previously mentioned hub fund are great examples – which suggests that funders are joining forces to deliver systemic, sustainable, and scalable change.”

Though she said none of these suggested interventions are cheap or easy, they were crucial in order to optimise the investments hub entrepreneurs, donors and other stakeholders had already made in the hub ecosystem.

“At the moment, we run the risk of allowing the collective dream of empowered African tech communities and successful startups to founder along the rocky shoals of reality. Is that what we want? I think not. We can do better, and we will.”

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Passionate about the vibrant tech startups scene in Africa, Tom can usually be found sniffing out the continent's most exciting new companies and entrepreneurs, funding rounds and any other developments within the growing ecosystem.

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