BUSINESS, IDEAS, TECH
Can Africa’s Challenges Become Tech Startups’ Opportunities?
Local Entrepreneurs Develop Sturdier Products Tailored to Continent’s Technological Needs
NAIROBI, Kenya—About a year ago, a nationwide blackout and accompanying power surge sent a jolt of electricity through this city’s grid that fried computers and other electronic devices. What was a catastrophe for many companies here presented an opportunity for another.
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Nairobi-based BRCK Inc. is about to release a surge-resistant, battery-powered router that can access data via cellular connections, in the latest example of local technology companies coming up with new commercial products specifically designed to address African problems.
“We said, ‘What if we had a device that when the power went out, it kicked in?'” said Philip Walton, BRCK‘s 40-year old American co-founder, when describing the brick-sized router, which founders dubbed the “backup generator for the Internet.” BRCK will ship its first 700 units next week.
Like other startups in Nairobi, BRCK is betting the future of technology innovation is on the African continent—and that there is money to be made addressing the technological needs of the so-called “bottom billion.”
M-Kopa Kenya Ltd. sells solar panels equipped with prepaid meters to villagers who are far from any sort of power grid. With the system, villagers are able to power a light bulb for less money than they would spend on fuel for a kerosene lamp. The customers pay a deposit for the equipment, then load money onto their account, which is debited every day they use the system. Once their accumulated payments surpass the cost of the solar panel, they get free electricity.
Another tech startup, Nasoft Technologies Ltd., has set its sights on tackling Nairobi’s traffic problems. Its platform, Ma3Route, aggregates tweets and text messages from motorists on Nairobi’s clogged streets for traffic updates via mobile phone.
Even deep-pocketed multinationals are piling into Kenya and the rest of Africa.
International Business Machines Corp. set up a research facility on the outskirts of Nairobi looking for technological solutions to African problems.
One service it developed, called “Flashcast (FlashCast operates a network of location-aware, dynamically refreshing text displays installed in public transit vehicles. We leverage this novel technology to offer businesses of all sizes an affordable, powerful, geotargeted channel to capture new business. We enable NGOs, government agencies, and social enterprises to broadcast vital information to a notoriously difficult to reach demographic.), provides targeted ads for small businesses. The service uses GPS to put adds on digital screens in public buses passing by the shops, and on text messages to passengers’ phones.
Microsoft Corp last month started offering help to entrepreneurs—at no charge—looking to register intellectual property developed in Kenya, a step to encourage more software development in Africa. And General Electric Co. is funding a series of prototype-development labs called GE Garages in Africa that will offer inventors machining and design equipment.
“There is so much innovation that you see going on here in Nairobi,” said Deo Onyango, a GE executive in Nairobi. “There are ideas that could be built out of Africa that we don’t know yet.”
Many ideas have surfaced from a small but growing group of technology entrepreneurs in Nairobi. They gather in the city’s shared office spaces and coffee shops with free wireless Internet. All aim to design the next product that will “leapfrog” the current generation of technology, similar to how mobile phones replaced the need to build landlines in much of Africa.
At the BRCK offices, a dozen young engineers and designers hunch over laptops at white Ikea-style tables, fueled by espresso from the coffee shop downstairs. Though it may feel like Palo Alto, Calif., Kenya is the ever-present backdrop. The building has a backup generator because power failures are so frequent.
Kenya’s difficult conditions actually helped shape BRCK‘s final product: Engineers had to cope with last year’s power surge, and came to realize that the country’s cell towers sometimes gave off a signal without having a real data connection. They made sure the BRCK would be able to make that distinction.
“We wanted our engineers to feel the pain,” said New Zealander Reg Orton, one of BRCK’s three founders along with Mr. Walton and Erik Hersman —both of them Americans raised in Africa. Mr. Hersman grew up in Kenya and Sudan, the son of missionaries. Mr. Walton’s father was a university professor in Burkina Faso.
The trio wanted a product that would allow people to get online—and stay online—anywhere they could get a mobile data connection.
During late-night brainstorming sessions, they came up with more ideas for what the little black box could do: Collect weather data; create a secure network in the middle of nowhere; allow remote repairs via the cloud.
They raised $172,000 in an initial campaign last year, then another $1.2 million from angel investors and venture-capital firms, including Boston-based Invested Development. The new product can be charged off anything from a computer to a car battery. It retails for about $200—less than the cost of buying a surge-protected battery and a Wi-Fi router separately.
Though the initial marketing focus has been to small and medium businesses in Kenya, the product is attracting customers globally. Buyers of the first 700 BRCKs come from 45 countries and include biotech and nonprofit firms working across the developing world.
The challenges that technology companies face in targeting the African market are formidable, particularly for those who need to manufacture a product rather than just develop an app. The BRCK router might have been designed in Kenya, but parts come from China and assembly is done in Austin, Texas.
The entrepreneurs chose to make the BRCK in the U.S. because Texas contractor Silicon Hills Design Inc. was flexible with design changes during the manufacturing process, executives say. That proved a prescient decision when last year’s massive surge hit Nairobi.
The original BRCK was designed for Kenya’s normal 220 voltage. After the surge, the three founders realized they needed something tougher.
“Let’s make sure it can withstand 400 volts without frying,” Mr. Hersman recalled Mr. Orton telling the team.
The startup has had its share of hiccups. BRCK executives struggled to find skilled electrical engineers. Every component had to be imported. And every time they tweaked the design, BRCK had to bring in more parts from abroad—often paying more than $100 in shipping and customs duties for a $15 component for prototypes that were produced in Kenya.
But the founders are confident they’ve hit a niche: “infrastructure-poor” places. “People who live in the U.S. or Europe don’t ‘get it,'” Mr. Hersman says. “But anyone who lives in the emerging markets, their question is ‘When do I get to buy it?'”
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