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Should Kenyan startups fear big business partnerships?

Kenya , 12 Feb 2014

Should Kenyan startups fear big business partnerships?

African startups need not ‘fear’ partnering with large mobile operators on projects.

This is according to Dylan Higgs, the chief executive officer of Kenyan startup Kopo Kopo, which is an official partner of Safaricom in terms of promoting the ‘Lipa Na M-Pesa’ online merchant payment system geared for small and medium sized businesses.

Lipa Na M-Pesa has so far managed to attract 10,000 merchants countrywide, with a shared goal of growing this number to 100,000 by April this year.

Kopo Kopo also has a presence outside of Kenya, working with other telecom firms such as Vodacom and Tigo, among others.

ITWeb Africa caught up with Dylan Higgins, chief executive officer at Kopo Kopo and sought to find out exactly how he steered his company into getting the partnership with Safaricom.

“My tip to anyone is, don’t be afraid of the operators, instead use the operators as an opportunity to grow your business,” Higgins told ITWeb Africa.

“You should approach operators with an open mind, knowing that you have strengths, and they have strengths, and focus on how to help them better their business,” Higgins added.

Higgins was; however, quick to add that the process of engaging operators can take a long period of time.

“The business development cycle with operators is very long, as you spend a considerable time working with the operator understanding how exactly your solution, in our case Kopo Kopo Merchant platform, can help them solve their problems when it comes to payments,” he added.

Kopo Kopo’s initial discussions with Safaricom started in early 2011, and the two teamed up in early 2012, according to Higgins.

“As you can see, we took one year talking to them about the concept before we launched, showing that this processes do not happen overnight,” said Higgins.

Furthermore, Higgins said Kopo Kopo never had that mentality of protecting their idea while partnering with them.

“I think it is all about recognising strengths, and being very upfront about what these strengths are. If you get into that ‘protective’ mentality while working with telecom companies like a lot of startups do, you are never going to get traction,” Higgins said.

“While working with Safaricom for example, we recognised the fact that Safaricom is very strong in certain things like innovation, and that is why they hired a head of innovation, as they also want to learn from startups,” he added.

Higgins; therefore, advises startups to engage with such companies and not be scared of them, because even large telcos have their weaknesses and are willing to learn from startups.

But despite the success that Kopo Kopo has had with partnering with Safaricom, intellectual property (IP) specialists hold out warnings with regard to negotiating with potential business partners.

Several startups in Kenya have tried following in Kopo Kopo’s shoes, only to be disappointed.

For example, after partnering with Safaricom, M-Kazi, an unstructured supplementary service data (USSD) job application service connecting job seekers to employers, shut down recently.

Speaking to ITWeb Africa, Lucy Njeri -- an IP lawyer and an advisor to Kenya Industrial Property Institute (KIPI) -- said that it is key that startups embrace non-disclosure agreements and also file for patents.

“An idea is only viable for a patent if it can be proved to be new, and has never been shared anywhere else in the public domain like in conferences or websites,” Njeri told ITWeb Africa.

Njeri admitted that the Kenya still has a gaping grey area when it comes to technological intellectual property rights.

“Filing for a patent in Kenya is also expensive, and takes a long period to be cleared, in the process utilizing monetary and time resources that in most cases, most startups do not have at their disposal,” Njeri added.

Njeri said this, coupled up with the high piracy rates in the country, have discouraged many innovators from pursuing the patenting route, with many of them opting to either push their products with the hope that no one will copy them, or try to enter into partnerships with larger companies.

Njeri advises startups to critically think about their innovations before exposing them to the world.

“If you think you have come up with a very unique idea that no one else has, it is advisable to immediately file for a patent with KIPI, and learn the ropes while you have already initiated the process,” Njeri said.

“Do not wait until the perfection of the idea for you to start the patenting process, as there is a high possibility someone else will file the patent before you do.”
Njeri advises startups to not look to sell their products before patenting as “pursuit for quick profits could be the beginning of your downfall,” she concluded.

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