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Global investors ignoring Kenyan startup opportunities, says GSMA

Kenya , 19 Feb 2014

Global investors ignoring Kenyan startup opportunities, says GSMA

Global investors are not taking notice of Kenyan startups as 60% of new tech businesses in the East African country are ‘bootstrapped’, according to a GSMA report.

The term ‘bootstrapped’ refers to businesses funding themselves in their initial startup phases with little or no money.

“As in many low-income countries, venture capital firms are dipping toes in the water but failing to take the plunge,” says the GSMA in its ‘Digital Entrepreneurship in Kenya 2014’ report.

“Investors in Silicon Valley are generally unaware of the challenges and opportunities in Africa’s technology sector (beyond outsourcing models), and those that have opened an office in Nairobi are not really finding the dealflow they’re looking for,” the report says.

The report also calls on mobile operating companies to collaborate with startups.

Currently, around 11% of startups in the GSMA report say they are collaborating with local telecom companies such as Safaricom.

“Mobile operators play a central role in the ecosystem and at present only a few startups have managed to secure such partnerships (11 per cent as per our entrepreneur survey),” the GSMA says.

“Nearly all mobile operators are starting to engage with entrepreneurs, through mobile application stores, toolkits and other support mechanisms. However, more effort needs to be made to work collaboratively and constructively to transform the digital services sector,” the GSMA adds.

The report also says that the low collaboration rate could be owing to a mistrust between the startups and telecom companies.

With more and more people accessing the internet through their mobile phones -- currently at over 16 million in Kenya according to local regulator statistics -- the report says there are bigger opportunities in the coming years for tech startups.

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