The most crucial aspect of Silicon Valley is its networks.
– Castilla, E.J, Hwang, H., Granovetter, E. & Granovetter, M. (PDF)
While funding is important and indeed necessary for a startup to be successful, another key ingredient plays a critical role. There is a strong argument for the value of networks. Silicon Valley leads the world when it comes to accessing capital for the express reason that it has very strong networks uniquely tailored to help conceive and grow start-ups. Its social networks are both wide, deep, and concentrated; from venture capital firms, to lawyers, to software engineers, to academics, and more, various players regularly interact, collaborate, and exchange ideas.
If a start-up with a great idea emerges in Silicon Valley, it’s in the perfect environment to grow and blossom. Is this the same in Zimbabwe or across Africa? Sadly, often not. In Zimbabwe, even well funded ideas don’t gain traction as quickly as they should. The ecosystem lacks the necessary levels of collaboration & connection, as well as the necessary wealth of skills, knowledge, and experience to help founders attain success.
Silicon Valley’s social and information networks have grown and evolved over a long period of time—as far back as the 1960s—molding companies like Microsoft, Apple, and IBM. Given the importance of such networks to the growth of successful Silicon Valley ventures, it stands to reason that they may also be a critical success factor for the survival and success of startups in Zimbabwe and across Africa. As such, much attention should be paid to growing and evolving strong and effective networks across the continent.
How Can Zimbabwe and the Rest of Africa Improve Networks?
Corporate Involvement in Startup Hubs and Incubators
The emergence of startup hubs across the continent has been encouraging. However, corporates need to be encouraged to work more closely with startups and incubators. In many instances, startups try to solve problems that do not have a clear market. In addition, the reiteration process necessitated in methodologies such as the lean startup may be more difficult to perform in African settings as collecting data is much more challenging. On the other hand, many corporates overpay for off the shelf software packages that are not well tailored to the Zimbabwean/African environment. Closer collaboration with enterprise software startups could be a win-win scenario. For the startups, the potential to develop a solution for a clear target market, and for the corporate, a cheaper, more customized solution. Such collaboration can help build long-term and long-standing relationships similar to those in Silicon Valley that are built around trust and competence.
A good and important step has been the emergence of African innovation funds to drive and stimulate entrepreneurial ideas forward. The $25 million Zimbabwean fund, managed by telecoms regulator, POTRAZ, can go a long way toward startup support. These funds should be used not only to invest in startups directly, but also to invest in building the startup ecosystem and providing training and mentorship.
Access to Legal Services
Affordable legal services is one of the bigger challenges for Zimbabwean and other African entrepreneurs. This is both at a relational and institutional level. In most instances, a tech entrepreneur in Zimbabwe has no support when it comes to addressing issues related to intellectual property. Furthermore, the existing local legal frameworks do not often address the complexities of developing future-focused businesses. This can become a handicap when commercializing services or solutions, or raising funds from risk-averse investors. Attorneys/lawyers should be encouraged or incentivized to work with startups who often do not have the ability to pay cash up front.
Engaged Academics from Universities
The role of professors and academic institutions in Silicon Valley cannot not be ignored. It is not merely the involvement of technologists and tech researchers, but also psychologists, chemists, bio-scientists, doctors, engineers, accountants and even artists. The critical word is ‘engaged,’ meaning that they are regularly interacting with and presenting findings to entrepreneurs. Academics can offer entrepreneurs the seedbed for innovative ideas as well as the empirical evidence for validation. The involvement of Stanford and other universities to Silicon Valley’s success cannot be taken lightly. Whether it is churning out the right skills, delivering groundbreaking research, or providing relevant thought leadership, universities are a critical part of the social and information network necessary for the development of high-growth startups in Zimbabwe and across Africa.
Involvement of Finance Experts
One of the biggest challenges that startups face locally is finding a workable business model. This can often requires commercially-minded individuals who can also lead discussions with potential investors. In many cases, startups in Zimbabwe find it challenging to bring these type of individuals onto their teams. As a result, many local startup never pass the idea or “cool app” stage. Perhaps, firms such as Deloitte should be approached to provide training and advisory services for startups by developing business templates or information packs that can be used by startups to transform their ideas into viable commercial operations and navigate the financial and regulatory minefield in Zimbabwe and many African markets.
A Startup-Centric Economy
The economy in Zimbabwe and the rest of Africa is still driven by big businesses such as large banks and telcos, though there is a burgeoning informal and entrepreneurial sector. What is important for participants in the informal economy is the right model for formalization, not necessarily to integrate with the ‘formal’ economy but to shape something new. In the ’60s and ’70s, Silicon Valley represented the birth of a new economy for America. It is important that Zimbabwe and the rest of Africa embrace the birth of a new economic paradigm with open arms so as to develop competitive and commercially viable technology startups that contribute to the national and regional economy.
Networks of Power and Influence
Whether economic or political, power and influence is a critical ingredient in the development of startups. As a crude example, how easy would it be for a Zimbabwean entrepreneur to launch a satellite that would improve access to information for rural hospitals and their patients? Such an idea would require strong networks and local connections to drive the engine of government, as well to drive the wheels of large banking institutions. At present, the necessary environment of open collaboration and thoughtful experimentation does not exist in the mold of Silicon Valley, and therefore it is less likely that ambitious yet relevant and contextual projects will take off.
An Alternative Exchange or Crowdfunding Framework
Given the difficulties of raising capital from traditional sources in Zimbabwe and across Africa, alternative methods should be considered and pushed forward. While entrepreneurs operating in Africa have successfully raised funds on platforms like Kickstarter, there remains an opportunity to develop African crowdfunding frameworks where not only can international backers support promising projects, but individuals on the continent can support each across borders as well. In addition, while companies like Facebook, Alibaba, Twitter, Amazon and Google utilized Initial Public Offerings (IPO) as they embarked on expansion, the opportunity to do so is limited in Africa. Africa’s capital markets are largely under-developed, and perhaps alternative exchanges tailored to stimulate local innovation should be explored.
Silicon Valley has grown to be recognized as the largest and most influential startup ecosystem in the world, and a significant portion of its influence and success is driven by the strength and depth of its information and social networks.
For Zimbabwe and the rest of Africa to achieve its potential as a startup ecosystem, ecosystem participants should embrace the development of a collaborative culture, and strong social and information networks both within and across countries.
A version of this article first appeared here.