Category Archives: entrepreneurship

Software & Intellectual Property Law in Kenya

Last week, a team from the Nairobi law firm of Coulson & Harney Advocates gave a talk on the legal position and state of intellectual property (IP) in Kenya. This is at a time when foreign companies are investing in the local tech scene, entering into partnerships, signing up software service & cloud contracts, or acquiring tech companies. The team gave a run down of the due diligence process that should be followed with steps including gap analysis, scoping, and evaluations.

In addition, contracts signed should have clauses that ensure the right licenses are obtained, suitable maintenance, support, indemnities, upgrades, marketplace audits, and intellectual property rights are in place, confidentiality of data is assured, backup processes in place, source code is escrowed, and payment clauses etc. are all defined – and the law firm advises and represents its clients on these as well as on other copyright, domain names disputes (UDRP) and trademark remedies.

Citi Hoppa or City Hopper

 

Kenya’s judiciary does not deliberate many software and IP cases and the country remains lax in terms of piracy with domestic uses of pirated software being allowed, but companies being liable for piracy if software installed on office computers or used for official purposes.

The lawyers cited a 2010 piracy study which showed that Kenya has extremely high instances of using pirated software at 79%, higher than China 78%, South Africa 35%, US 20&, and much higher than the Middle East & Africa and global averages of 58%, and 42% respectively.

Companies are advised to have appropriate policies in place, as the consequence of these are spelt out in two Kenyan laws; the Anti-Counterfeit Act (2008) and the Copyright Act (2001) .

2011 Africa Awards

The award ceremony for the Awards took place in Nairobi on December 8. Sponsored by Legatum and Omidyar, this is the fifth year, and they received 3,300 entries from around Africa. Kenya has had numerous winners (AAR, Bio Deal, Colour Creations, Craft Silicon, Virtual City) , so it was not surprising that of the ten finalists, only one was Kenyan outsider (in financial services). Also it was nice to see and read about small and growing companies from other African countries that are not necessarily in the technology space

Criteria for eligibility consideration was the companies had to have a turnover of $1 – 15 million, a profitable track record of 2 years, at least 10 employees, not be subsidiaries of other companies, among other rules.

The overall prize of $100,000 went to Securico a woman founded security company that has thrived (edit) in inflation wracked Zimbabwe. It is an ISO certified company, with a turnover of $13 million and engage in diverse fields of security a workforce of 3,400 employees

There were six winners of $50,000:
– Chocolate City group which has a record company
– Expand Technology makers of smart card solutions from Mauritius. Their Kenya projects include Kenol cards and KWS Smart cards
– Pepperoni Foods from Nigeria
– SoleRebels from Ethiopia makes shoes, and are now available through Amazon.com
– Unique Solutions of Gambia which has grown from a cyber café to an ISP with reach in rural Gambia
– Victoria Seeds which grows seeds and has developed and trained a network of farmers in Uganda

Other finalists were:
– Cellular Systems of Senegal
– First Atlantic semiconductors from Nigeria
– Investeq Capital Kenya
The Africa Awards website has more info on the finalists.

Celebrating the Cocktail Napkin

In Nairobi, there are thousands of conversations that happen at restaurant lunches or over evening drinks in bars. Most are mundane, sports related, money driven, contemplation of sex, and sometimes they are about business.

A lot of conversations don’t go anywhere beyond the bar. But out of a few of these, some will – through a chat, watching TV, or other exchange of idea – experience a moment of clarity (Think Pulp Fiction) – a realization of logic, or a plan or an urgent action to be taken.

However, by having one more drink or a new conversation, the idea is forgotten, or shot down or entrepreneurial innovation is mentally discarded as being unfeasible

One way to transform the moment of clarity into action is by using a cocktail napkin – i.e. sketch out ideas, plans, or action points to be taken after the bar session. Some great ideas initiatives around here, are the products of cocktail napkins like Praekelt and SwiftRiver.

So how can we celebrate the cocktail napkin? Kengeles Pub used to have a bell that they would ring, when a bar VIP walked in – perhaps the person who has had the million dollar idea can use it to signal that (i) he is not to be disturbed or distracted (ii) he has to dash out to start working on his life-changing plan (iii) he will settle the bill on his next visit!

Also bars can avail pens & classy note pads for aspiring people to jot down their ideas. This will help when (the next morning) the entrepreneur empties his pockets to find a crumpled, soggy napkin with illegible writing Also the note pad paper will look important enough that the spouse or maid about to do the house washing, will not throw it into the trash.

Entrepreneurship Moment: Apprentices, Intellectual Property, Mentors, Partners

Over the last few weeks, I have been exposed to various events and lessons that touched on entrepreneurship. We had the Legatum business awards winners feted in Nairobi, talks by some young US technology start-up executives, and got to watch the movie ‘Social Network’, and final episodes of the Apprentice beamed live from the US.

Talk 1: Russell Simmons, a co-founder of Yelp.com, and a Jawed Karim, co-founder of Youtube, were here for i/o Ventures which aims to incubate start-up entrepreneurs and formalize angel investing – this is because giving back is a big deal in Silicon Valley.

They talked at the Nairobi iHub and some of the business advice they imparted to local entrepreneurs included:

  • What you are working on, will be different in 3 to 4 years, but keep going & don’t give up.
  • If you have bad chemistry with an employee/co-worker, fire them as soon as possible – as dealing with them takes up so much productive energy.
  • It’s hard to find good team members. But it may be better to recruit from universities, as enthusiasm trumps experience.
  • Get your product out immediately, don’t over tweak – perfect it as you go along. Also, instead of juggling many projects, focus and do one project really well – hit a home-run and people will line up for more.
  • On Intellectual Property: In Kenya, theft of ideas is a big worry with young companies seeking partners & financiers, but their advice was that in Silicon Valley, theft of ideas not an empirical problem.
  • If you have an idea, someone else has the same idea – and having an idea does not give you an advantage, it’s about being better to execute better than anyone else.
  • Don’t be afraid to share your ideas, because once you launch, everyone will see it anyway.

Talk 2: Paul English co-founder of Kayak.com who’s working on Join Africa, a last-mile (wifi) connectivity project with University of Nairobi, University of Kigali and MIT also gave a talk on entrepreneurship. Excerpts:

  • Most important elements for him were the team, customers and profit incentive.
  • Don’t make customers happy – blow them away – kayak.com is the best for getting cheap flights (actually make more money from hotels than airlines)
  • Take risks, but pick partners carefully.
  • He has no customer service, everyone in the company does that
  • Be the best; He said even if an employee took their code to a rival, he believes he’d’ still build a better travel site.

At the talk, Communications PS Bitange Ndemo also talked about push to have a sub-patent law and creative commons in Kenya, as opposed to unwieldy patents – these are suitable for local development of incremental innovations as many creations will not qualify to pass an IP test. He also believes it’s best country for have flexible laws until we develop further.

Apprentice: Got to watch the final few episodes of Donald Trump’s Apprentice – which this year featured Kenyan-born Liza Mucheru-Wisner. She was one of the 16 contents, picked from several thousand applicants, and made it to the final three. She would have gone further but for a sudden decision by Trump to fire her even when her team had won a challenge.

Earlier, in defending her decision on that project, she got into a debate with Trump about race as a factor in the marketing of products, and Trump said he fired her because she did not get along with her fellow contestants – and she was shocked because they were all in a competition to win, not be popular.

The Apprentice is a TV show with a plot, structure, bad guys, and a defined ending. But it’s a microcosm for business & entrepreneurs who face different challenges, have to play multiple tasks, whose plans don’t always go right, may not have the resources they need and don’t get to work with the right people – and there’s always a bit of improvisation to get a win.

It’s all cut and edited into a dramatic hour-long package for TV, which means that we don’t see a lot of the hard work that contestants put in. Liza said she actually got along with all the contestants and the harsh comments were never repeated in front of contestants during tasks, but only came out in the boardroom, when everyone was fighting to remain on the show.

Despite not being the Apprentice, she does not feel like she lost. She represented herself well, put a spotlight on herself and her passion (education, kids, technology), and as a result, she got lots of offers to consider, one of which may involve becoming a goodwill ambassador.

Social Network: This is a well-received movie about the origins of Facebook – and which leads Roger Ebert’s list of top movies of 2010. I got a 50/= ($0.6) bootleg copy in Nairobi and it’s a must-see for any entrepreneurs – with lessons on maintaining focus amid changing business concepts & expectations, management, and picking/rejecting partners.

Investing in Africa Moment

Legatum Africa Awards: Three Kenyan companies – Biodeal Laboratories (generic drug manufacturer), Craft Silicon (financial software developer) and Mellech Engineering (construction & engineering), have been selected as finalists in 2010 Africa Awards for entrepreneurship.

They are competing for $350,000 in fund prizes, with a grand prize of US$ 100,000 and five other prizes of US$ 50,000 each. The other finalists in the top 10 are Malcom-Ezindaleni Hydraulics (SA) NTR Technology (Botswana), Planbuild (Uganda) Sigma Electric ( Ethiopia) Steel & Tube Industries (Uganda), Tutuka Software ( SA) and Wilkins Engineering (Ghana) – who were also shortlisted from more than 2,700 entries.

Legatum, a privately owned investment group and Omidyar Network, a philanthropic investment firm, organized the awards, who’s winners will be announced on December 6 in Nairobi.

Agriculture Equity: The African Agriculture Fund, a private equity fund closed on US$ 135 million of funding in November 2010. The funds will be invested in the agriculture value chain from primary production to processing at $20 million per portfolio company.

The Fund also has a dedicated SME sub-fund and a technical assistance facility of 10 million euros, to support out grower schemes in large companies and business development services in SMEs.

Transparency Equity: Late in October, Omidyar and Hivos created the Africa Transparency and Technology Initiative (ATTI) – a fund that will support technology-driven initiatives that give citizens the tools to hold their governments to account. Omidyar Network will invest up to $2 million and Hivos will administer the fund.

Diaspora Fund: The Enkare Innovators Fund was launched and is seeking US$850 Million from Diaspora for investments in Eastern, Southern & Northern Africa with early focus on Kenya, Tunisia, Egypt and South Africa. This is via a private placement that will run from January to July 2011 and is promoted by Cauave Deaa Et Al Capital Partners

Silicon Valley Visits: The Kenya ICT Board will host a team from I/O ventures, comprising entrepreneurs & founders will from Silicon Valley who will visit Nairobi on December 14 & 15 and who are seeking young ICT entrepreneurs to mentor.
Mombasa housing development
Impact Investing: Impact Investments are a new asset class as per a report being launched this week in Nairobi, London and New York – by the Rockefeller Foundation, Global impact investing network, and J P Morgan.

These refer to investments that have an intended purpose of positive social or environmental good besides a financial return – and probably what Acumen Fund have been referring to as patient capital.
– Impact Investments are primarily debt or equity, and are investments not philanthropy investments
– They studied 1,100 investments and found that about 500 were less than $500,000, and only 35 were more than $10 million
– Impact investments are founds in sectors like agriculture, water, housing, education, health, energy and financial services (micro-finance is the most mature sub-sector)
– There are now metrics, tools, ratings, conferences – all devoted to impact investing and how to measure non-financial impact; One benchmark called IRIS (based on IFRS) and others are Pulse and GIIRS . Currently impact investments are measured primarily by investors own proprietary systems, or by a mix some investor goals such as job creation, asset accumulation, or energy efficiency
– The report has a robust outlook for the sector and concludes that there are potential impact investing requirements over the next 10 years of between $400 billion and $1 trillion, with potential profit of $183 billion to $667 billion, and with the bulk of these to be found in the urban housing sector.

Further Reading

Invent for Mobile: CGAP article which asks how viable companies in mobile health and mobile money can attract VC funding and interest.

Large Private Equity: FT article – about private equity in Africa by Andrea Bohnstedt (@andreabohnstedt), the publisher of Ratio Magazine