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Incubators vs Accelerators: Identifying Which Is Right For Your Startup

December 12

As an individual who just came aboard the entrepreneurship train and is still learning the ropes, it might take some time to get with the program. And a crucial part of getting with the program is having a good command of the business lingo.

Well, unless you can lay claim to some kind of background in finance, however rudimentary, it might take some doing to keep up with what those business-type folks are yammering about when they begin to spill all the jargons associated with startup vernacular.

Be honest; how many times have you been in that awkward situation where you falsely nod your head in affirmation during some business conversation even though you haven’t the slightest idea what some other person is talking about? Well, if it’s any consolation, you’re not the only one.

So here’s the thing; it is not uncommon for startup founders who are venturing into an industry for the first time to get somewhat bamboozled by the barrage of terminologies associated with that venture.

Getting comfortable with a whole new set of terms – say from angel investor to crowdfunding, seed funding, venture capital, pre-seed funding, Series-A, and a host of others – is not exactly a cake walk. And most people with no prior background in business or finance will struggle somewhat initially – at least, I know I did.

Moving on to the crux of the matter; there’s something of an unspoken debate on the subject of incubators and accelerators with regards to what they are all about and which is best suited to the needs of startups at certain stages.

Although this gets very little attention as most people tend to just sweep it under the carpet as a ‘no-problem’ and use both terms interchangeably as synonyms that can replace each other without raising eyebrows, it takes nothing away from the fact that this is an awful misconception. And many early-stage startup founders can be found wanting with respect to this unlawful marriage of these two distinctly different aspects of the startup business.

Of course, both programs are of immense benefits as they provide guidance to startups, as well as help refine their business models and strategies into sellable ones. Clearly, both incubators and accelerators play vital roles in grooming startups into profitable ventures that can garner investor interest. But it would be utterly misguided to conclude that both are one and the same as obvious differences exist between them.

The differences between incubators and accelerators are well and truly brought to the fore when their respective selection and investment processes are put into perspective. If you are an early-stage startup founder who is having a hard time getting to grips with both terms or deciding which is ideal for your startup, then this x-ray of their different features should come in handy.

Incubators vs Accelerators: Purpose

For incubators, the focus is on startups that have just entered the initial stages of building their company. Incubators are best suited to startups that posses an idea that can cut it in the marketplace, but with no business model and direction through which those “lightbulb moments” can be brought to life in the form of an actually profitable venture.

The key function of an accelerator, on the other hand, is to speed up or advance the growth of a company that is already in existence and it is pretty much functioning with a business model in place. That is to say, accelerators are tailored for startups that have already hit the ground running per se.

An accelerator program functions to consolidate the startup’s position and build on its foundations with a view to propelling them high enough for investors and key influencers to spot them and be wowed and wooed in equal measure.

Incubators vs Accelerators: Duration

In terms of duration, an open-ended timeline is the most likely case for an incubator. Incubators are sort of in for the long haul; they place more emphasis on the longevity of the startup as against its speed of growth. It is quite common for startups to be mentored by incubators for a period spanning up to a year and a half, or even more.

As their name implies, accelerators are all about speed. They are all about putting one’s feet down on the gas and so they don’t take as much time as their opposite number – typically lasting anywhere between three to four months.

Accelerators operate on a set time-frame and it is during that period that startups improve on their products and offerings with the support of mentors, as well as capital made available by the accelerator. And there is also an interesting bit in that startups get to pitch their businesses to investors upon the completion of accelerator programs and who knows what doors could crack open.

Incubators vs Accelerators: Application Process

Incubators are designed for the long route. In these programs, a significant amount of time and resources are devoted to advancing local startups. Incubators generally prove their worth in creating employment opportunities or making moves to license intellectual property. And startups do serve up a path through which both can be accomplished.

Incubators are not fixated on delivering startups that can develop and proliferate fast, especially as advancing the development of local startups forms the bulk of their offering. With that in mind, it is not uncommon for many seemingly slow-growing or evidently less-scalable businesses to find their way into an incubator program.

On the other hand, accelerators place a premium on scalability, investment-worthiness, and high growth potential. That is, only startups that check all these boxes can even begin to fancy their chances of getting in.

Accelerator programs are pretty competitive; seeing applications from a good number of startups and having to select only those adjudged to have the most potential. Hence, such programs use a more traditional and formal model for entry as interested startups have to apply for a specific number of slots in the program.

Incubators vs Accelerators: Environment

This is one aspect where both programs share similarities to a large extent. An environment of collaboration and mentorship is on the cards with both programs and this does a good job of bringing startups together, having them share a space, and affording them access to resources and peer feedback. And all these are known to be vital to the advancement of startups.

Accelerators and incubators also afford startups the opportunity to pick the brains of seasoned business experts and successful entrepreneurs who have been there and done that, and whose experiences can serve up invaluable business lessons.

Incubators vs Accelerators: Investment Capital

It is quite common for incubators to be sponsored by universities or organizations that are focused on economic development, and as such, it is not usually the practice for an incubator to provide capital to startups. And in a similar regard, equity stakes are not usually taken by incubators in the startups they support.

It’s kind of a whole different ball game for accelerators as such programs are known to usually invest a specific amount of capital in startups for an agreed amount of equity. Thus, in some circles, accelerators are assumed to play a greater role in startup success by virtue of this financial commitment. However, this takes nothing away from the importance of incubators.

It’s not really a matter of hopping on the bandwagon of any program that sounds like music to your ears, it’s about identifying what’s right for your startup and acting accordingly. In truth, even though an accelerator program does have some perks which make it seem more appealing, an incubator could do actually do more of a solid to most startups than an accelerator.

Incubators are associated with startups that are still in their formative stages, do not necessarily require investment, and are already part of a local startup community. Although it may require a longer route to commercialization, an incubator is the best bet if a startup’s business model and some other essentials are yet to be resolved.

Through expansive national calls, application processes, and other formalities which would typically involve screenings and vettings, accelerators select their participants. These participating startups are expected to prove themselves investible, rapidly scalable, and also reflect a willingness to migrate to the location of the accelerator for the duration of the program at the very least if need be. Accelerators usually provide funding to startups, typically becoming the company’s first external investor in many cases.

Both programs can undoubtedly be of immense benefits to startups but their obvious distinctions should never be muddled up such that they are considered one and the same. For entrepreneurs and startup owners, the trick lies in identifying which of these programs is best suited to the needs of their respective businesses at their present stages of development. And this can only be achieved through critical reflection.

Did you know: Over $725.6 Mn was invested in Africa in 2018.
Keep tabs on the Venture Capital Landscape of Africa with the VC Report 2018 by WeeTracker. Find out the Latest Fundings, Top Investors, Leading Sectors & much more..

Meet Jean Bosco Nzeyimana: The Rwandan Entrepreneur Who Is Changing Lives One Briquette At A Time

January 14

From Nyamagabe – a small village in rural Rwanda – comes the story of a confident 25-year-old that is solving some of the problems of his immediate community one briquette at a time.

Jean Bosco Nzeyimana grew up in a poor, rural community that could boast of very little by way of infrastructure or even the necessities. Housing was shabby, clean water was hard to find, and electricity was a luxury most of the locals would rather not think about – mostly because it was more non-existent than it was inconsistent.

Even though he was only a child of school age, Jean Bosco did feel the pangs of the dire situation from those early times. Every morning, before he left for the only school in the community, he would have to meander through the woods in search of firewood – a precarious and exhausting ordeal for a child his age.

As was the case for most of the locals, life was anything but a rosy affair for Jean Bosco. But unlike many of his peers, the young Rwandan chose to look at the big picture instead of feeling distraught. And that mindset would eventually become the catalyst for what is proving a tonic for community growth and economic emancipation.

Image Source: italkstuff.com

Growing up in his village, Jean Bosco was no stranger to the hardships and privations that characterised rural life. Most of the community was living in squalor, and the young boy was greatly disturbed by those living standards, or perhaps, the apparent lack of it. Thus began his quest to give the locals a chance at a better life.

Due to the absence of electricity and because the community knew no other energy source, wood was the go-to guy for all things fuel. As is common in many parts of rural Africa, the villagers relied on charcoal from wood for cooking.

Apart from the fact that burning wood is unhealthy and inefficient, the wanton felling of trees for firewood and other purposes also has an adverse effect on the environment. Throw that in with the fact that a very significant proportion of the Rwandan population still use wood for their energy needs, and the environmental impact becomes even more alarming.

 

Jean Bosco was concerned by the devastating deforestation, but that was not the only thing that caught his attention. He was also disturbed by the many rubbish-laden landfills that dotted parts of Rwanda, and his village was seeing more than its fair share.

 

The idea of felling trees eliminated much-needed ground cover which left lands susceptible to erosion. The ravaging erosion created vast, gaping gulleys, and the idea of filling those gulleys with waste was nothing close to an ideal solution.

Jean Bosco Nzeyimana was only 19 when he began to explore better ways to solve the problem, and he soon came upon a single solution to what seemed like a two-headed problem. If his idea was anything like a slingshot loaded with a single rock pellet, it was going to take out two birds in a single shot.

Jean Bosco And Habona Staff At A Waste Site
Image Source: newtimes.co.rw

The then-teenager found a solution that involved turning waste into energy and the solution was unique in that it was going to take care of two problems – deforestation and waste. His idea involved turning organic waste into clean-burning and efficient briquettes, as well as fertilisers for farmers. If all went according to plan, gone will be the days of villagers felling trees and burning wood for fuel, and no longer would grotesque waste engulf the scenes of Rwanda’s landscape.

With the idea now in the bag, the next challenge was always going to be the toughest nut to crack – and that’s finding the funds that would breathe life into the idea. Being only a teenager in an economically-disadvantaged locale with very little by way of track record or experience, it was always going to be an uphill task to get the requisite financial backing.

But the young Rwandan entrepreneur remained undeterred in his quest to improve lives with his solution. Like the gospel, he spread the word of his idea to all and sundry, and it soon began to gather momentum.

By contesting for prizes in various entrepreneurship competitions and participating in some tech events, Jean Bosco had begun to generate buzz around his waste-to-energy idea, and before long, he was lodged in talks with potential partners from various parts of the globe including the U.K. and U.S.

With some financial support from African Entrepreneur Collective, Jean Bosco was able to set up a business called “Habona” which literally translates to “Illumination” after reaching an agreement with his district’s authorities which allowed him to use a waste management facility for free. He established the company back in 2013 while he was still studying Business Administration at the University of Rwanda’s College of Business and Economics.

But then came another hurdle. Since it was a relatively new business, it was hard to find employees with the requisite skills. Granted, collecting and sorting the trash hardly required any special skills, but when it came to processing, there was a manpower deficit as many of the locals had neither seen nor heard of briquets.

It was very unlikely that the workers would waltz in and start making a product they knew nothing about, so the Rwandan ‘wastepreneur’ went about training the workers himself, and spending funds in the process too. But those days appear to be over as Habona now seems to have found a foothold.

Jean Bosco’s startup collects and sorts garbage to make briquettes, biogas, and organic fertilizers for a customer base that encompasses restaurants, hotels, schools, businesses, farmers, and government offices.

More so, Habona’s biofuels are believed to be currently used by as many as 1,500 households in Rwanda while employing up to 26 people on a permanent basis and nearly 50 more as casual workers. Thus, empowering people and improving quality of life in parts of rural Rwanda.

Jean Bosco With Obama, Medhat, Checa, and Zuckerberg At The 2016 GIS 
Image Source: eetimes.com

Jean Bosco has seen his stock rise tremendously since piloting his idea. In 2014, he was named Top Young Entrepreneur of Rwanda while also going on to claim the African Innovation Prize. He also shared the stage with the likes of Former U.S. President, Barack Obama, and Facebook Founder, Mark Zuckerberg, at the Global Innovation Summit which took place in California back in 2016 – both of whom were impressed with the progress he has achieved his community.

Now 25, Jean Bosco seems to be thirsty for even more success and is showing no signs of slowing down. He hopes to extend his idea to other parts of Rwanda and beyond in the near future.

 

 

Feature image courtesy: @nzibosco via Twitter

Did you know: Over $725.6 Mn was invested in Africa in 2018.
Keep tabs on the Venture Capital Landscape of Africa with the VC Report 2018 by WeeTracker. Find out the Latest Fundings, Top Investors, Leading Sectors & much more..

Microfinance Software Company Musoni Services Gets Investment From Alterfin

January 14

Africa focussed microfinance software company Musoni Services has raised an equity investment from Alterfin; a Belgium based Co-operative society. Existing shareholders of the company joined Alterfin in this round.  The funds will be used for expansion into new markets, though the details of the transaction remain undisclosed.

Speaking about the investment, Jean-Marc Debricon, Alterfin’s General Manager said, ‘Alterfin understand first-hand the challenges that many rural microfinance institutions have when it comes to technology. We believe that Musoni can revolutionise the way financial services are delivered across the industry and particularly in rural regions where financial inclusion is at it’s lowest. The Musoni team has consistently demonstrated the system’s impact, and we are excited to work with them continuing our shared social mission.’

Musoni provides banking system to microfinance institutions in emerging markets, helping them to leverage technology and improve efficiency. The company claims to be used by a hundred financial institutions across 14 different countries (10 in Africa and 4 in Asia). Musoni BV is an investment company based in Amsterdam. It currently holds investments in Musoni DTM in Kenya and Musoni Services in Amsterdam.

The offerings of Musoni also include an integrated platform for multiple mobile money transfer services including SMS module for sending automated payment reminders. Apart from the core banking software, it has developed a tablet app for loan officers to process offline data collection and CRB integrations to assist in the lending decision.

To make the system accessible to MFIs, the Musoni System uses licenced SAAS pricing model; the annual fee is based on the size of the MFI licensing the system.

Alterfin was established in 1994 and focusses primarily on rural areas in low-income or middle- income countries around the world.

Did you know: Over $725.6 Mn was invested in Africa in 2018.
Keep tabs on the Venture Capital Landscape of Africa with the VC Report 2018 by WeeTracker. Find out the Latest Fundings, Top Investors, Leading Sectors & much more..

Branch Cumulatively Loans Kenya USD 10 Mn After Recent USD 5 Mn Issuance

January 14

San Francisco-based digital lender Branch has announced its commercial paper issuance of KES 500 Mn USD (USD 4,922,000) in Kenya.

The latest commercial paper follows a KES 350 Mn (USD 3,444,204) issuance that was announced in 2018, which was preceded by KES 200 Mn (USD 1,968,116) in 2017. This third and largest issuance which has been arranged by Barium Capital brings the entire commercial paper to a little over KES 1 Bn (9,840,583).  The investment will be used to expand the firm’s services in Kenya.

Branch had recorded a series of strides in the African landscape. Starting from its trade launch in 2015, it has grown by means of efforts made in Kenya, among which are internet penetration which has enabled users to access financial assistance using smartphones.

In competition with Tala, Okash and the likes, Branch offers micro-lending services in Nigeria, Tanzania, and Mexico. As part of this latest announcement, the firm revealed its intentions to expand into India this year.

Daniel Szlapak, Head of Global Operations for Branch, expressed excitement the firm draws from serving millions of Kenyans and easing them into essential financial service access. “ The huge growth and success in the Kenyan market have positioned Branch for strong global operation”, he said.

Branch offers M-Pesa loans of up to KES 50,000 (USD 491.64) via an Android application that can be installed from Google Play Store. The lending decisions are made by a proprietary credit score calculated by analyzing more than 2,000 data points on the phones of applicants. New borrowers begin with a loan up to KES 1,000 (USD 10), after which they can increase their credit limit based on their repayment performances per previous loans.

December 2015, Branch became the first African company to raise money from U.S-based VC fund Andreessen Horowitz who has Facebook and AirBnB included in its portfolio. The round was reported to have been USD 9.2 Mn. To date, the mobile-based financial services firm has raised more than KES 1 Bn in equity and debt financing.

 

Featured Image: Branch International Via Medium 

Did you know: Over $725.6 Mn was invested in Africa in 2018.
Keep tabs on the Venture Capital Landscape of Africa with the VC Report 2018 by WeeTracker. Find out the Latest Fundings, Top Investors, Leading Sectors & much more..

What If Sign Language Could Be Heard? This Kenyan Techie Is Making It Happen With His ‘Magic Gloves’

January 14

Roy Allela’s six-year-old niece was born with a hearing impairment. Being one of the 34 million children worldwide that are estimated to be battling disabling hearing loss, the poor little girl struggled to communicate with family and friends as attempts at conversation were often punctuated with moments of awkward misinterpretations and a general inability to convey her truest feelings.

Imagine not being able to hear or speak; while most people tend to jump at the idea of sight being the most essential of the five senses (or is it six these days?), I would like to think of hearing and speech ability as a rather close second – or perhaps the margins are even finer than I think and it’s more like a tie.

Roy Allela
Image Source: LinkedIn

In any case, that was pretty much it for Uncle Roy’s little niece who would be often be left distraught and throw ‘inaudible’ tantrums whenever she wanted something and couldn’t get it mostly because no one could tell what she wanted. Sad but true for most kids living with the condition, and maybe also living with people that don’t know much about sign language or facial expressions.

It’s not like the rest of the little girl’s family was having a swell time with the whole situation either. Folks at home were often tripping over themselves in attempts to communicate with her or answer her requests. This inability to communicate made it rather difficult for the family to connect with their little girl during the first six years of her life. But all that is beginning to seem like a thing of the past now.

Dejection. Frustration. Exasperation. Pain. Those feelings were mostly the case for most members of the poor girl’s immediate and extended families – well, everybody else except Uncle Roy, it would seem.

Roy Allela had always been fond of his little niece ever since she was an infant. When the unfortunate news of her condition became family knowledge, he cherished her even more. But with time now flying fast, the little girl was beginning to seem distant. Very disturbing, even his for his usually calm and optimistic self.

But he didn’t lose his head, though; which would have been some loss given that he carried a pretty good one on his neck. He began to think up ways to bring back his ‘baby girl’. Now, lavishing her with presents and spending quality time with her would normally seem like a plan, but he may have decided to give her more – something of the ultimate gift for persons living with her condition, as some might say.

Roy Allela opted to ‘gift’ his niece with something that was, to a large extent, neurologically unfeasible for someone with the condition – the ability to communicate by speaking. How he went about the whole thing, though, was nothing short of ingenious. The good thing about Roy was that he was more than just a doting uncle who was big on spoiling kids with chocolatey treats – he was also a highly-skilled engineer (you’ll sure get the idea why I mentioned the head he carries on his neck too).

As necessity is the mother of invention, Roy landed his wonderful creation. Inspired by his niece, the 25-year-old has brought to life a unique invention which is a smart glove that converts sign language gestures into speech.

Essentially, his creation could be thought of as a sign-to-speech device that makes it easier for people living with hearing and speaking disabilities to communicate better with spoken words through audio speech – which is also great for the multitude that doesn’t know the first thing about sign language; a win for both sides, so to speak.

The glove, aptly called Sign-IO, converts sign language into audio speech after identifying several letters signed by sign language users and passing along the data to an Android application through which it is then vocalised. Voila!

Through flex sensors fitted in each finger compartment of the glove, the degree of bend to which a finger is subjected to in the process of signing a letter is characterised and quantified. These signals are then processed and sent via Bluetooth to a mobile application that is also developed by Roy. The app takes up the baton from there and makes out audio speech from the signed letters.

Image Source: kenyans.co.ke

As Roy says; “My niece wears the gloves, pairs them to her phone or mine, then starts signing, and I’m able to understand what she’s saying. Like all sign language users, she’s very good at lip reading, so she doesn’t need me to sign back.”

Roy’s project went through preliminary trials at a special needs school in Migori County in Kenya’s south-western region. It was from the results of those trials that he obtained valuable data which helped him work on one of the most important aspects of the gloves – the speed at which sign language is converted into audio.

Just as it is with spoken language, people speak at different speeds and require varying lengths of time to put together their thoughts into sign language. Hence, it was imperative that this gets incorporated into the mobile application so that just about anyone could use it with ease.

Through the app that goes with the glove, users are allowed to set preferences in terms of gender, language, and voice pitch. Roy also claims that the gloves translation accuracy currently stands at an impressive 93 percent.

True to his fondness for kids, Roy Allela has also designed the gloves in a number of style variants – from ‘Spiderman-themed’ gloves to ‘Disney Princess-esque’ ones – giving kids something to be excited about and putting paid to the stigma and difficulties associated with hearing and speech disabilities.

For his efforts, Roy Allela has been the recipient of numerous awards and nominations. At the 2017 Innovation Showcase (ISHOW) competition organized by the American Society of Mechanical Engineers (ASME), he took home the prestigious Hardware Trailblazer award. The prize money that came with the recognition helped him upgrade on the prototype and develop gloves that give more accurate translations.

Roy Allela is also one of 16 young African innovators drawn out from six countries that were nominated recently for The Royal Academy of Engineering Africa Prize for Inventors. Clinching the grand prize will see him go home with up to EUR 25 K to support his project.

Image Source: Intel Corporation

Having made his bones at the University of Nairobi where he won numerous awards before earning a degree in Microprocessor Technology and Instrumentation back in 2016, he also successfully completed a number of Udacity courses in the year that followed, with stints at Microsoft, Soko Store, and Emobilis Academy sandwiched in between.

A 2018 fellow of the Royal Academy of Engineering, Roy Allela currently juggles working at Intel Corporation with tutoring at Oxford University for courses on Data Science and IoT. He also hopes to place at least two pairs of the Sign-IO in every special needs school in Kenya. Well, guess it’s true what they say – superheroes do not always wear capes, some only have gloves on.

 

Feature image courtesy: nairobinewsnation.co.ke

Did you know: Over $725.6 Mn was invested in Africa in 2018.
Keep tabs on the Venture Capital Landscape of Africa with the VC Report 2018 by WeeTracker. Find out the Latest Fundings, Top Investors, Leading Sectors & much more..

Naspers Fully Acquires Dubizzle For USD 190 Mn

January 14

The investment arm of South Africa’s Naspers – Myriad International Holdings – has decided to go all in and acquire the entire stake in Dubai-based Dubizzle for USD 190 Mn. According to the firm’s interim results, Naspers now owns a 100 percent stake in the company.

December 2012, Naspers made their first investment in Dubizzle, acquiring a 25 percent stake in the company through its MIH subsidiary. Through OLX, Naspers eventually went in for more to own 53 percent of the company, giving them the lion share. Having gone for the full deal at USD 190 Mn, Dubizzle is now valued at USD 409 Mn. 

Dubizzle was founded in 2005 by Sim Whatley and JC Butler and is the leader in online classified in the UAE, receiving nearly 8 million visitors each month. In August 2013, the founders announced that they were leaving the UAE to return home to the U.S, eight years after launching Dubizzle. They relinquished their day-to-day running of the company, which as at then had grown to include websites in 10 cities across the Middle East. According to an Arabian Business interview, both men were expecting babies in December that year, and needed to relocate to commune with family and friends. It was a difficult situation at the time, but it was a sacrifice both founders were willing to make.

The step down was also believed to have been as a result of majority stake acquisition by Naspers. After hiring talented staff who could act independently, both founders were reported to have felt less needed. Making good on their pre-intention to transition out of the business, Whatley, and Butler, both sold a portion of their equity to investor MIH. They had both built the company from scratch and had invested USD 12 K of their personal money, lived on passion and a 10-AED-a-day budget until they met an angel investor in 2006.

This isn’t the first mark of the newspaper firm’s prominence in investments, as they have a 30 percent stake in China’s Tencent Holdings, 28.7% stake in Digital Sky Technologies, others in Souq.com, Delivery Hero and another in Russia’s Mail.ru. Naspers, who is also listed on the London Stock Exchange, made the recent acquisition to increase its global presence in classifieds, payments and food delivery verticals. 

 

Featured Image: Techmoran

Did you know: Over $725.6 Mn was invested in Africa in 2018.
Keep tabs on the Venture Capital Landscape of Africa with the VC Report 2018 by WeeTracker. Find out the Latest Fundings, Top Investors, Leading Sectors & much more..

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