From tragedy to tech: Israelis and Rwandans partner to build the ‘African Start-up Nation’
Two Israeli entrepreneurs seek to use all their hometown resources to help support the Rwandan capital of Kigali on its journey to becoming the African Start-up Nation.
By SHTERNY ISSEROFF‘The Office’, a private office building with several floors of coworking spaces, some leased to different organizations and one of them leased to the Impact Hub Kigali, a coworking space for the creative community(photo credit: GUY CHERNI)
With a modest population of 12 million, bordered by the Democratic Republic of the Congo to the west and Uganda to the north, Rwanda today is renowned for its green highlands, active volcanoes and rare silverback gorillas.In the 1990s, the narrative of the Rwandan people revolved around stories of political strife, genocide and war, but today it is one of the safest places in Africa for volunteers, tourists and entrepreneurs alike.Relative to its sub-Saharan neighbors, Rwanda is a small, landlocked country lacking valuable natural resources with a population that does not fit the criteria needed to support a labor-based economy.As a result, the country developed a culture of innovation and entrepreneurship, often teaching its students not to “find a job, but to create a job.”At the geographical heart of Rwanda lies its capital Kigali, which has put its start-up scene at the center of its initiative to rebrand itself as a city of tech and creativity.Now two Israeli entrepreneurs, Hezi Bezalel and Guy Cherni, have tagged along for the ride. Their goal? To use all their hometown resources to help support the small African city on its journey to become the African Start-up Nation.“In a lot of aspects, they [Rwanda] are pretty similar to Israel; there is a great commonality that the two countries share,” explains Cherni, who has an MA in global community development from the Hebrew University and in 2012 was one of the first proponents of the Jerusalem start-up ecosystem.“Both grew out of a tragedy; Israel, in Europe, and Rwanda, with its genocide 21 years ago. This has created a link between us.”AdvertisementBezalel first arrived in Rwanda in July 1994, and has been taking part in the development of the country ever since through investments in fields such as infrastructure and telecom. During his frequent trips to the country, Bezalel, a Ramat Gan native specializing in banking and private equity, began to take notice of the city’s start-up potential.Through chance encounters, the two met and began brainstorming possibilities of what could be done to support the developing ecosystem in Kigali. But to have a real impact on the Rwandan ecosystem, they would first have to understand it – as locals. Next thing he knew, Cherni was on a flight to Rwanda to spend the next month mapping out the start-up ecosystem.He began working on identifying the local resources that were available to the community to assess the key challenges Kigali’s tech scene had been facing.He spoke to everyone and anyone who could provide information, interviewing local entrepreneurs, government officials and existing companies in the region.His findings concluded that there was a thriving local tech scene, including co-working spaces, academic initiatives, and active stakeholders – yet almost no link between them.A start-up ecosystem, according to Startup Commons, is formed by people, startups in their various stages and various types of organizations in a location (physical and/or virtual), interacting as a system to create new start-up companies.“We realized what was missing was an incubator, investments and a way to connect them. Based on this, we decided to build an incubator, invest in some later- stage companies, and work on creating connections between the different parts of the ecosystem,” Cherni explains.Interestingly, his observations in Kigali were quite similar to his experiences when first arriving on the Jerusalem hi-tech scene seven years ago. All ingredients for a successful ecosystem were there but not working collectively with one another. At the time, this led to the creation of Jerusalem’s first start-up accelerator program, Siftech, a grassroots project of the Hebrew University Student Union that is now preparing for its sixth batch of start-ups.Today, the 42Kura project is the outcome of all their planning. Starting its new program this month, 42Kura will accept 10 early-stage start-ups and provide them with Israeli and Rwandan expertise, mentorship and support.The program will operate on two core agendas.The first agenda is a communal aspect that attempts to act as a connector between all the different islands of innovation that already exist in Kigali. This includes weekly mentorship sessions from Israeli and Rwandan experts and monthly meet-ups for the Kigali entrepreneurial community.Entrepreneur Alex Genadinik, who often provides mentoring for Rwandan entrepreneurs from abroad, agrees with Cherni’s findings, citing a lack of community focused around entrepreneurship as a key challenge faced by the locals he advises.“It can be more talks and lectures, co-working spaces, grants or start-up competitions, but the main idea should be to create a culture of entrepreneurship by bringing entrepreneurs closer together to form a nucleus.”The second agenda is to provide capital by investing in more mature, established companies. In Rwanda, there are no venture capital funds, and only a few angel investors, who invest at most $25,000. This translates into a minimal amount of capital available for start-ups in the region.The lack of investor money creates two phenomena; the first is that entrepreneurs do not understand the world, and jargon, of investment (cap tables, investment options, equity). The second is that it forces many of them to take loans from the bank, with up to 17% yearly interest, a non-sustainable approach for a start-up company.There are several local advanced companies that have 40+ workers and create optimal revenues, but there are only 10 middle-stage start-up companies. Most deal with mobile payments, service and ‘localized’ solutions, which Cherni says is one of the biggest problems with international development.“Some Western organizations come to developing countries and try to solve their problems using one-size-fits-all products, without evaluating the assets that the local terrain has to offer. Part of what we really wanted to do is help local talent develop their own solutions, since a lot of the time, they know their problems better than we do,” he explains.The program is looking for companies in three of the fastest growing sectors in Africa today; alternative banking, supply chain efficiency, and smart transportation.Development of financial technology is part of a large focus in Africa where less than a third of sub-Saharan Africans have a bank account. Until mobile money, that meant that more than 65% of financial transactions in Africa were P2P, or hand-to-hand (World Bank). Mobile money enables people who cannot get a bank account to transfer money, get loans and make online purchases.Cherni works closely with several local partners and plans to pass the program on to them to manage. The goal of any work done within developing countries is to create a system that will ultimately become self-sufficient. The team’s vision for 42Kura is no different, hoping it will one day become a program that’s sustainable for local capacity, for people to help develop and support local Rwandan start-ups.“We’re not creating anything. We’re assisting the local entrepreneurs in creating a better ecosystem that is more connected. We’re doing this by providing them with the tools they need, and by becoming part of the stakeholders who really believe in this ecosystem and its ability to become the African Start-up Nation.”
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