Dan Evans of the Network Science Center at West Point (US) discusses insights from his trips to collect data on entrepreneurial ecosystems in various cities in Africa. Below he discusses two of Ghana’s key tech hubs.Also see his previous discussions on Kampala and Nairobi’s startup ecosystems.
Meltwater Entrepreneurial School of Technology (MEST) is drastically different than any other incubator I’ve visited. MEST was founded in Accra by Jorn Lyseggen in 2008. Lyseggen, a Norwegian, established an internet consultancy company in 1995, which has grown into the Meltwater Group, a software as a service (SaaS) company, providing cloud-based computing solutions to more than 16,000 global clients.
The Meltwater School House in the East Legon area of Accra
MEST has a rigorous application process and accepted students participate in a two-year, full-time, fully sponsored training program in which the students – known as Entrepreneurs-in-Training (EITs) – learn about software development and entrepreneurship from Senior Faculty. This two-year program includes a full scholarship, three meals a day, free housing, and a monthly stipend. I have not seen such a lengthy, thorough, or rigorous program at any of the other incubators or accelerators I have visited over the past two years.
At the end of the two-year training period, the EITs have the opportunity to pitch a business idea with the goal of being accepted to the Incubator Program. The Incubator Program does not simply accelerate the portfolio companies, but provides a hands-on support system to the selected companies. These companies typically remain at the Incubator between 12-24 months.
The MEST Incubator has more than a dozen full-time staff in Ghana as well as members in the Silicon Valley. MEST provides the following resources to the portfolio companies:
- – Seed Financing- Typically $50K to $200K for a minority equity interest in the business.
- – Office space, conference rooms, and high-speed internet connectivity in a 5,000 sq ft. building in the East Legon area of Accra, adjacent to MEST’s main campus.
- – Full-time, on-site staff of business advisors and cross-functional experts who work day-to-day with the portfolio companies to support application development, marketing, sales and distribution.
- – Centralized suite of resources and shared databases to assist companies in accelerating sales, marketing, finance, and legal issues.
The MEST Incubator Building
To date, the MEST Incubator has invested in over 15 companies and backed more than 35 co-founders. Two of the most prominent are Dropifi, an online tool that helps businesses sort customer feedback online, and Saya, which offers an instant messaging and SMS service to feature phones geared specifically to emerging markets like Africa.
Hub Accra is located on Klannaa Street in the booming and trendy Osu District of Accra. It is a not-for-profit organization; they charge members modest fees for membership and also rent event space. The hub evolved out of a Certificate in Entrepreneurship Program offered by Open University of West Africa (OUWA). Staff members of OUWA identified an opportunity and established Hub Accra.
Hub Accra in the Osu District of Accra
Hub Accra has grown to host over 20 startups and quickly moved from normal operational hours to become Ghana’s first 24 hours, 7 days a week co-working space. Over the course of the past year they have hosted numerous events, instituted programs, held workshops, brought in speakers, and established partners within the local community and across the world. John-Paul Parmigiani, Hub Accra’s CEO, describes the hub as a “startup ecosystem.”
Educate, Incubate, Invest!
John-Paul explained that HubAccra has “developed a three-phase impact model to help early stage entrepreneurs harvest their innovation and become investment-ready.” This model is known as, “Educate, Incubate, and Invest!”
Educate: OUWA is the primary partner in the education phase of the model. Located next to the hub, OUWA provides low-cost, online classes for Hub Accra’s members. A goal of the educational component of the model is to spark an interest in lifelong learning for the entrepreneurs, as well an awareness of various opportunities online for continuing education.
Incubate: Hub Accra has initiated an accelerator program for high-impact entrepreneurs with high growth potential – giving entrepreneurs daily structure and instruction on how to move forward with their ideas.
Hub Accra’s Collaborative Network
Invest: Once participants have graduated from either the incubator or accelerator programs, Hub Accra’s co-founding partner, SliceBiz, a micro-investment crowdfunding platform that provides seed funding, can gauge the investment readiness of their startups. Startups that show great potential with innovative business models will have the opportunity to raise seed funding through the SliceBiz platform.
As stated in the three-phase model, students who complete the certificate in entrepreneurship have the opportunity to enter Hub Accra’s incubator program, “Startup West Africa.” John-Paul’s plan is to enroll approximately ten startups biannually in the program. He anticipates that the average entrepreneur will progress from the entrepreneurship program through the incubator/accelerator to investment in approximately 18 months.
Hub Accra’s 2nd Level Working Space for firms in the Accelerator Program.
The incubator program meets several times per week offering workshops, team-building exercises, business plan development assistance, and connections to industry professionals for mentorship. In return for the services provided, entrepreneurs are asked to reserve up to 5% equity in their company for Hub Accra or pay modest fees to contribute to the sustainability of the hub’s business model.
The Way Ahead
John-Paul is dedicated to expanding Hub Accra’s presence and deepening its impact in Ghana. Within the next few years he hopes to shift to a larger facility that is specifically built for their needs, to truly leverage the current momentum, and realize the potential of their model.
This new hub will feature fully developed educational and investment facilities as well as ample space for startups to grow. John-Paul anticipates offering office space to key partners to operate out of their Hub to nurture the community. He would also like to provide living space to house entrepreneurs, entrepreneurs-in-residence, and international guests.
His goal is to accommodate approximately 40 startups concurrently in this co-working space, spawning 100 sustainable businesses over a five-year period. He estimates that these startups will employ approximately 400+ people within the first five years of operation.
What can we learn from these and other hubs across Africa? Please share your comments below, and keep an eye on the VC4Africa blog for more insights from other entrepreneurial ecosystems across Africa.