Having a business idea is good – in fact it’s great, but that’s not enough, says Markos Lemma, Co-founder and Manager of iceaddis. Ideas need to be developed through exchange; dialogue, connections, support both technical and financial and iceaddis does just that, providing a push to ideas to createaction. Established in 2011, iceaddis provide startups with the tools they need to launch their company and products. Though relatively unknown, and fairly new in Ethiopia, organizations like iceaddis are very well known in other countries for supporting innovative businesses to become successful. Capital’s Eskedar Kifle spoke Markos Lemma of iceaddis about the organization’s work as well as the challenges and opportunities for startups in Ethiopia.
Capital: Tell us about iceaddis.
Markos Lemma: We wanted to create a space where people from different backgrounds – startup businesses, investors, researchers and so on – can come and connect. When we started iceaddis, it was at Addis Ababa University’ s Ethiopian Institute of Architecture, Building Construction and City Development (EiABC). Within this organization, in the beginning, we asked very basic questions like where could youth go if they wanted to create something interesting and innovative. Especially if you are a university student about to graduate and have a great idea, it would be very difficult to transform that idea into a viable business.
If you have ideas and you want to open a company, you need connections and you need people to help such as legal advice and finding funding because most students don’t have the capital to start a company on their own. They also need to know the market and what kind of a customer base they need, understand customers’ behaviors. If the idea involves production, then they need to also have a prototype and see how that works. It really is complex work and most people drop the idea entirely because it is too complex.
What we try to do is make this process simple for them, sort of like one stop shop; they can get all these different services in one place. They can come to us and ask us what to do, we can match them with different teams, help them with product development and provide mentorship so that they can start putting their ideas into action.
Not many people know what a startup means so when we started, we had to conduct several public dialogues about what the whole thing means, what a tech community is and what working together can bring. We give the startups that come to us soft skills training on how to communicate with people, talk to people to find funding as well as more tailored trainings such as entrepreneurship trainings.
Capital: How big is your network?
Markos: Our network is not that big, iceaddis has about 5000 people in reach. For us, it is not small because we have a wide range of people to interact with, but as a technology ecosystem, its incomparable to Kenya, Germany or Silicon Valley. We have a lot of challenges, telecom sector is not well established and it is very expensive, which limits people’s interactions.
If you look at interactions within the public sphere, mostly it is in form of social media like facebook; there is a lot of dependence on that. I am not critical of it but there needs to be more face to face interaction be able to hold discussions. Not a lot of people know when new startups are launched or new products are launched because there is no platform for it. That is why we also hold product launch events here at iceaddis.
Capital: Tell us about the startup program you have.
Markos: It is a very well structured program, we take up to eight to ten startups annually and we work with them through the different processes. Our support consists of mentoring and one to one coaching. So far, we have been supporting 14 startups and most of them are already on the market.
Capital: Can you give us a clear definition of what a startup actually is?
Markos: We define a start up as a business at an early stage. A startup is an innovative idea with a very small team that hasn’t been established for a long period of time. It is a company run by two to 10 people and also established in the last two to five years; that is the startup phase. It is the opposite of corporate; corporate is usually well established with many employees.
For example Uber is a billion dollar company but it is still a start up because it is only managed by a few people. Startups are, for me, more innovative; they bring something new. But of course the definition of startup is different in different places.
Capital: What are the criteria for the startups you take on?
Markos: The major criteria are two; one is that the idea should be innovative; we don’t want to support something that is already happening. For example there is Deliver Addis, they provide food delivery service. So if someone new comes and says their idea is to provide food delivery system, we wouldn’t want to support that because it is already there and unless they don’t offer something different. It has too be innovative enough in the Ethiopian context and they have to prove that. They must have a well thought out and researched proposal on the market and their target customers.
The second criterion is that the idea should be sellable, it should have market value. People always come up with innovative ideas especially in universities and usually the idea is good but it can’t sell. It cannot be just for fun, it needs to have economic value.
Capital: Do a lot of people come to you with a lot of ideas hoping to make it a reality?
Markos: We have received several requests from many startups to get support; there is definitely a need for our services. There aren’t many organizations that do what we do; there is the government owned Entrepreneurship Development Center (EDC); they have a generic training for all kinds of entrepreneurs which is also really good, we send some of our startups to take those trainings.
There are also other hubs such as xHub Addis who are trying to support technology startups. So there aren’t many services out there, because of that we receive a lot of requests, over five to six every week, asking for our services but we have limitations and we only support five startups every six months.
In addition, when you look at universities, they are still having infrastructure being built and going through educational reform; they don’t really provide a creative space. So after leaving the university, most students don’t really come up with really good innovative ideas, they are more attracted to tested ideas like opening a shop and making a living. So the quality of the entries we get are also not very good and don’t meet our standards.
Capital: How important is the role iceaddis is playing to inspire young people to create their own jobs, because unemployment is an issue in Ethiopia?
Markos: There are very basic things that help entrepreneurship sector grow. Everybody knows it is an important sector; the question is, how do we grow it. There is a cultural shift in general; if you are looking at the Ethiopian entrepreneurial ecosystem, first if you are a business minded person, you are not admired compared to in other societies such as China, for example. That is changing, a lot successful business are being admired, so that cultural shift is already happening.
Also, business people now want to have something new, in most places in Addis you can see many cafés offering similar services lined up in one strip. If you go to Merkato there are different areas assigned to different commodities and in those areas the same item is sold for mostly similar prices. But now people want to create and provide something different to what is already next to them; they try to be different. The mindset of the society and of consumers is changing.
The government knows that the way forward is entrepreneurship and the Ministry of Education is promoting that principle. What we believe is that the sector requires basic things, such as a culture of discussion, information sharing and so on. The infrastructure is also missing; telecom is extremely important and of course there is need for funding as well. Banks should be open to support new ideas and investors should take risks. At iceaddis, our contribution is limited but we try to fill those gaps to our capacity.
Capital: You have mentioned some of the challenges and how you try to fill the gap. But lets say somebody doesn’t have access to your services and still faces the stated challenges, how should they pursue their entrepreneurial ideas?
Markos: Even though success mostly depends on the person, the external factors also have a huge impact. It is very difficult for me to answer this question because you at least need very basic infrastructure, basic skills and basic connections for the idea to work. Unless you have these things, I don’t think one can be successful in any sector of business.
Capital: What advice would you give a person with a really good idea but without access to your services.
Markos: When I speak to young people at the university or other places, my advice is that there are basic things that everybody can do. For instance, sharing your ideas with others; many think that if they do that then someone else will steal it. But I believe that the more you share your ideas, the more you create opportunities for yourself, someone my hear about your idea and then connect you to another person with a similar idea so you can work together or even find somebody that is willing to invest in the idea.
Branding is also very important. Right now, we have many technological tools to self brand, like anyone can create a blog, have access to facebook to promote ideas, and new tools will keep coming to the market. People in the university don’t really see the potential, they want to do self branding after they graduate, but why not do it before then? So by the time you graduate, your potential customers and partners know of you.
The last thing I recommend is that you need to prototype; a lot of people have good ideas but they don’t make it happen, you need to make it and show it to people that may help you move your idea and plans forward.