Despite attempts to boost local start-up efficiency within Rwanda’s ICT sector’s eco- system, resilience remains relatively small, public statistics indicate.
98 percent of companies are regarded SMEs, contributing 41 percent of all private- sector employment, according to the Ministry of Trade and Industry.
Before their fifth anniversary, however, most of them fall owing to problems linked to macroeconomic variables, company climate, growth prospects, and historical determinants.
A study conducted by the same ministry in 2016 identified the absence of raw materials, adequate working capital, restricted market and absence of skilled labor as the main problems facing SMEs.
The government has since developed numerous programs through its numerous organizations and stakeholders to assist SMEs enhance their company activities.
One of the programs was the concept of incubation hubs to help tech oriented entrepreneurs and young innovators characterize their ideas and make them viable and scalable enterprises
However, as they fail to succeed after the incubation stage, the initiative left a number of incubated projects in doubt.
Only a few local start-ups, including AC Group, DM HeHe, Hexakomb, have maintained their market.
Needless to say, the industry has not survived most start-ups incubated in hubs such as kLab.
A new approach in progress.
Speaking to journalists, Charles Shyaka, General Manager of 250 Startups, a local hub to nurture over 100 businesses that are expected to be worth $50 million by 2025, said hubs need to do more than just provide an environment-enabling concept.
To give an illustration of the 250 start-ups with a long-term strategy since a start- up is incubated for 6 months and followed up for 3 to 5 years based on the business model and business line.
A startup is equipped with in- depth analysis, raw feedback from different sources, and client base among others, product development skills, customer validation, and their project’s global contextualization.
“One thing that we have tried to change in many innovators’ minds is to think beyond the country’s market size, so we organize study trips to one African country and another outside the continent for the five best startups exposing them to think globally,” Shyaka explained.
He added it was a success because some startups have inked global deals already.
Shyaka reiterated that innovation hubs need to involve third parties in their eco- system such as consulting companies to assist with legal documentation, economic outlets, for better business models to be established.
Kelvin Odoobo, Chief Executive and founder of Shambapro, an agri- tech company still in the incubation centre, said the hubs helped innovators from prototyping into a sustainable company prepared to sell.
“I think incubations should create an environment that would enable innovators work on their ideas until they record their first sale” he said.
He added that incubation hubs must facilitate innovators in order to satisfy the expected market, receive raw feedback in order to be able to foster more of their demand-assured alternatives
Odoobo also said it was very essential for innovators to satisfy investors during the incubation stage so they could comprehend the requirements of the latter and operate on them so they would not experience any economic challenges once they left the hub.
However, he believes that the desire to own the business alone is one error innovators make. He recommended them to work first on setting up structures so they could persuade investors with seed capital.
“One thing innovators have to know is that investors and banks will always ask who is in your team and how you share responsibilities” he added.
Life after incubation phase
Ernest Kayinamura, Founder and Chief Executive Officer of HexaKomb, one of the country’s IT startup pioneers, said innovators need to do more market research so they can develop well-adjusted thoughts that can solve significant issues they recognized during the study.
“Innovators have to first understand the market they intend to serve, if they pass that, then making money will be easy once they leave the incubation” he said.