 behind the scenes. Just hard to understand it without having someone break it down in English, plain English. So we have this test, actually, at Tech Safari, which is that my 16-year-old brother has to understand it and read it before we publish anything, just so anyone can get it. OK. And I've read most of it. And it's very easy to understand. You make it seem fun, which is a good thing, because many people think, when you think of tech, you think, ah, this is too complicated. And it has its own people, you know? So it's good that we're changing the perception around technology, because it's hard to stay with us. So now, when you talk about tech startups in Africa, give us an overview. How are we doing as tech startups in Africa? We're at an interesting time. We're at a very interesting time. So I feel like we're at the end of the beginning, in some ways. So we've just had this big, you know, there was kind of not much activity until 2020. And then in 2020, 2019, 2020, a lot of people started investing from around the world into African companies. And that was really interesting. We had all these new companies come out, a lot of new founders come out, a lot of really cool ideas. We're about to slow down, I think, a little bit, because funding's harder to get. It's harder to raise capital. We're in a different economic climate. But I think we have this amazing few years of just new founders and new ideas and new people who now want to be a part of tech in Africa. So it's a really exciting time. I think it's a good time to be building. It's a good time to be building in Africa. But there's this thing that has been happening, especially in Kenya, when we talk about funding and how startups are doing. Now, give an example of this one startup, Twiga. And they recently laid off 33% of its workforce. And that's even after getting this Hasla funding in Kenya. They got around, I think it's $300 million from Northrop, which was supposed to help. But they're still laying off several layoffs before that. So why are we in this situation? Yeah, and Twiga's one, there's many others. There's a company called Sandy, which also recently shut down or is in the process of being bought. There's a lot more companies like that. I think we're going to see more of that, to be honest. So it's kind of like two years ago, there was a lot of money that came into startups across Africa, across Kenya, across Nigeria. And then there was a lot of demand for those companies to grow at all costs. So it was like, hey, just like, go make money. But people didn't really think about how much they were spending when they went to grow. And so companies like this, where they were spending a lot of money to grow the number of users or the number of customers, they didn't think about how much they were spending. And they ended up spending too much. And now they're in a position where they're like, oh, wow, we're out of money. We need to cut the team. We need to scale things back. And you'll see, Twiga also, they've also changed what they're doing now. And they pivoted again to another idea. They're trying to figure it out. So I think there's been a lot of money coming in, but not a lot of responsibility. And this is kind of, I think it's a bit of a lesson too. If you're ever building something, you don't need a lot of money to make something good work. You can start small, build slowly, and build something that's sustainable. And those startups are doing very well. So the problem mostly was lack of mismanagement of the money that they had initially. So if they probably used the money well, then they would still be, they would be at a better place than they are currently. I'd say so. And I'd also say, part of its mismanagement, the other part is just the time. Two years ago, everyone was like, you're gonna spend that money, go get customers, it all costs. There's more money out there. Today, there's not much money out there, so. You can have changed a little bit. It's switched up, yeah. Okay, so what does the startup need to do now? Because you've said that now is the time, good ground for creators to come on board. So what does one need to do now in this time? To build a startup from scratch, or to keep going? Yeah, from scratch mostly. Yeah, so I think it starts with like, what are you trying to do? Like what's the problem you're solving? Ultimately startups exist because they solve problems or make life easier and better for us. Like Airbnb exists because it was solving the problem of like having to book a hotel all the time and having to go log in and make a booking and having this old system. So I mean, it's thinking about like, where do you find the hardest problems? Is there a problem you think you can solve with tech or with a new idea? And then how do you build that in a way that's like, that where you can just test things out? I think it's awesome that we have a lot of founders have these kind of like weekend projects or like nighttime projects that they work on, which is cool ideas they're tinkering with. And sometimes they'll find something that actually really fits and there's demand for. All right, so the thing, the main thing here is if you want to build something, look for a problem that's there or a way that you'll ease in the lives of people, then that will probably work out well for you. Yeah, totally. It's always like, if you fix a problem, customers will come and you'll have this, we call it product market fit. Have you heard of that term? No, not really. Okay, so it's like, it's like when you have so much demand for your doing that you can't take it. Like you're like, oh wow, I'm out of like all these pairs of shoes I'm trying to sell because everyone wants it. That's when you know you're onto something and founders build on top of that sense of product market fit. So create a good demand. Now about funding for startups that are just coming up, it's a major problem. It's a, most startups come and complain about finding funding. So how can they best to get funding if they need it or how can they operate without funding if possible? Yeah, I mean, the idea is that you're also a business, right? So when you start a business, you want there to be money coming in to pay for things too. So it's, in a lot of cases, if you're established, you want to be thinking about, hey, how do I grow my revenue so I can pay my bills, like pay for costs? So that's also important. I think if you're a new startup, there's a lot of places to find your first 50,000, 100,000 dollars in funding if you have a clear product and some traction, a lot of accelerators that help you do that and help you grow relatively quickly. But I think where the trouble is, is when you're a big guy like Twig up, you're not looking for like one million, two million, you're looking for like 30 million US dollars. Exactly, with money. It's a lot of money, right? And there's not much money going around now. And if you don't have good, like, say revenue or fundamentals, me, let's say I'm an investor, I don't really want to invest in that. And so there's a disconnect there, where these growth companies really need to sort of out and have like strong fundamentals. Okay, and can you elaborate for us on an example of a startup that, you know, is addressing specific market gaps and is doing quite well? Yeah, sure, okay. So actually good coincidence. I was in the office of a startup yesterday. I'll give you two, is that cool? Yeah, sure. Cool, so one was Cellulant. I think we're all kind of familiar with Cellulant or Ting by Cellulant. So Cellulant, yeah. Give us more details. So they're a payment processor. So if you go to buy a ticket, like say you buy a ticket from Nairobi to Mombasa on Jambo Jet, they will process that payment for you. And that sounds really easy, but actually processing payments is so hard. It's a lot of work. It's so hard. You need like licenses, you need to set up accounts everywhere. And so Cellulant was one of the first companies that let you accept payments within Pesa. In Kenya, and so that's how they grew. And they're doing really well. Like they have like clear demand for their products. They've been around for a while now and they're just growing across Kenya, solving the problem of accepting payments because that's actually really hard. Oh, okay. So that's the fast, what's the other one? So there's another one I was spending time with yesterday called Letta, and they're a logistics platform. So have you ever ordered like, say a pizza on, you know, an app and you just don't know where it is or like how it's getting to you and you're kind of like an hour later you're like, girl, where's my pizza? These guys built the software that helps the companies that do that track their writers and give you updates, but also more importantly, help those companies move stuff from A to B as efficiently as possible and like maximize how much they have in their trucks. And that's a big deal. A lot of companies spend, when you buy a product, about 50% of that product, whatever it is, is just the logistics costs. It's not the actual product. Okay. So they help companies cut that cost down. Wow, interesting. So they've made life easier and that's what you were saying when you come up with startups, you create something that will solve a problem or you'll help one or the other. Tell us what sort of ecosystem or what sort of conducive environment does a country need to create for startups to thrive and which country has really had this or really has this enabling startups? Interesting. Yeah, that's a really good question. I think first and foremost, you need like policy that allows for startups to thrive. And I think that looks like having startup acts are helpful having like free movement of talent. You know, like when you're building the best products on the continent, you want talent from around the continent. True. You want talent from Nigeria, from like Zambia, from like Rwanda to be able to move here freely. Stuff like that's important. It sounds boring, but it's actually important to building an ecosystem. And then it's like, how do you get all these global players and other players from around the world invested and interested? I think Rwanda has done this really well. They have this beautiful co-working space called Norskin, Kid Gali House. And it's this like really nice space just for entrepreneurs. And their goal is to have 1,000 entrepreneurs working from there in Kid Gali. And they have all these new accelerators and funds that are setting up shop in Rwanda because the government's saying, hey, we'll help you invest in these companies if you come here. So I think it's like bringing a lot of them over, like intentional about building the startup ecosystem. Okay. And I've really seen Rwanda coming up very fast. Kenya, I think Kenya, we are number three in terms of, in Africa, people who have the most startups. I think the first one in South Africa, then Nigeria and then Kenya. But do you see, how do you see us doing in terms of comparing us to Rwanda, how they've created that system? How are we doing Kenya compared to Rwanda? Yeah, I think there's potential. I think there's talk of more happening in the startup space in terms of policy. I would say like in East Africa, like Kenya's the powerhouse when it comes to tech and startups. And everyone, even if you're operating a company in Rwanda, generally CEOs and founders will move to Nairobi because they need to expand here. Rwanda's too small. Yeah. So yeah, I think we might be ranked third, but I think this is the most accessible and funny ecosystem to build in. So if you're building here, you're in the right place. Then you're in the right place. All right, what role does the government play in terms of we have seen how they can create good policies, but how do they hinder startups from thriving also? Yeah, so that's a good question. I think things like government or policy or just even having bureaucracy where you have officials who are cracking down on startups and making it harder for them to expand or to launch in different countries makes it hard. I don't know too many specific examples, but I do know that there are some countries where it's just really hard to start building anything because setting up the company is really difficult. It's hard to register a company. The authorities will ask you a lot of questions. They'll ask for all these statements just to begin and that makes it hard. Yeah, so I think those sort of things hinder the ecosystem. I think it's also the responsibility of big startups like a twigger or like a wassoko or whichever company to work with government and to build that relationship. And that should be going two ways. I think startups should be working closely. Government should be working closely with startups as well. Because I mean, it's a faster way to solve problems. Yeah, the consonants problems, right? Okay, makes a lot of sense. And for a startup that someone who wants to start a startup, I like key skills that they need to have for them to come up with, you know, sustain the startup initiative or something. Yeah, definitely, definitely, definitely. What are some of those? So everyone has ideas, but like you need to be good at execution, which means getting things done. So I think the best found is, I also invest in startups. So like I have to think about this a lot, like am I investing in the right person? And I think the best founders really have a bias towards action. They just do things. Like they don't ask for permission. They just go build it and they launch it and it's like they'll have an idea and they'll do something about it the next day. So I think that's the first one. The second is that as a founder, you're really building, it's really like you're building relationships with a lot of people, your customers, your partners, your investors, people who you hire. So you need to be good at like communicating with people, building networks, building relationships. That's important too. You can't build in your room the whole time. You know, you have to get out of the house. You need to be very happy. Yeah, great relationships. All right, makes sense. And you know, for startups, not all are into tech, but is there an upper hand for people who have embraced technology with creation? Yeah, yeah, yeah. Like not all startups, some startups are boring. Like they're like, we're just gonna do an insurance company but do it like way faster and for, you know, supply chain or something. That's not that exciting, right? And you don't need, yeah, I mean, yeah. So all the startups are very high tech and they use AI or like they're on blockchain or whatever. I think it helps to have that and eventually if you wanna grow quickly, you need tech. Like you need tech to help you scale. But they're easy things to learn. Like I'm not technical at all. I have never written like a line of code but I've been able to build really cool products with teams because we found the right person to do that. Aha, collaborating. So it's good to have someone who's taking in your team so that they help you at least get ahead. All right, for you as an investor because you said you invested in a lot of startups, what do you look out for just so that a startup would know what an investor looks out for? Nice, you can put my email in this too. So like, you know, I hit me with that. You did? Yeah, so I'm always looking for like, I always think about the founder, the person. If you think about it like when you think, when you look at companies like, I mean, we're talking about Apple before like Steve Jobs or like Uber, Travis, CaliCanis or Airbnb or like Mark Zuckerberg, all these people have been led, all these companies have been great but they've been led by single people. And it's been the strength of that person figuring out what works that has like caused it to succeed. So I always think about who's the right person to trust with this money to go and build something big. Cause even if the first thing isn't, most of the time you build something and like you think it's the best but it's not. And then the next thing you build is like a bit better. Usually the fourth or fifth thing you build is like amazing. So you need to trust the person to get that, yeah. All right, all right. And that, is there, okay, four, four pitchers, is there something that if they're looking for investors, how should they pitch? Is there a good way or something that you would advise them to do? Yeah, I think like a good way to, like the best way to pitch is by doing the work and like building the thing. It's like, it's actually like, it's interesting. A lot of people go and pitch you their idea or like where they're at and it's like, okay, what have you done so far? And it's like, we have a product but we haven't launched it yet. It's like, well, if you show that you're doing, you're working towards it. And you can show your traction as you grow. Like, hey, we just tested this thing out. Hey, we just got our first hundred customers. That's really, to me as an investor, that's a lot more exciting than someone pitching me with an idea. It's kind of like, do you know the analogy? Like if someone is like waves you down and asking for like a ride somewhere because their car's broken down, you probably will like drive past. Hopefully not, but like you're more likely to drive past. But if they start pushing that car. Ah, you're more inclined to help. And founders need to do a lot more of that. Okay, all right, nice. And now, are there particular trends or how do I put it? Are there some innovative business models and strategies being employed by tech startups to address local market needs? Good question. Yeah, there's a lot. Just trying to think like, what a good example might be. I think that there's a growing amount of things we can now do with AI, which becomes interesting. So I think even the companies I've invested in are starting to incorporate AI into how they build things. Let's say there's a company that helps guest houses monetize and get more bookings in. So you want to stay at a nice guest house, you book through their platform. Now they can help, this is actually a company called Tripitaka here in Kenya. Now they're gonna start helping companies launch websites in like minutes through AI. They'll just tell the AI, but hey, I want a website that has a nice picture of a beach or like this button here and this here. I don't think it's this far along, but this is the ambition and it will just generate that. And that's really cool, having that simplicity. Wow, interesting, yeah. And some tech giants like Google are also pushing for that. I've seen that they have an accelerator program for African startups and they want them to use AI to solve local challenges. So AI is really coming in strong. It is. Now finally, before we close this up, where do you see tech startups in Africa in the next few years? How are we going? I think we're gonna have, to be honest, I think in the short term it won't be great. There's gonna be a lot of Ls, like a lot of companies will fail because in the short term, like big companies too. But in the long term, we're gonna have some really, really impressive companies that will really change how things operate on the continent. I think we're seeing a few of those start to come up now. So in a few years, I'm very optimistic. So we're not doing bad. As much as companies are closing and they're laying off people, it's still the journey and we're heading towards something later. And also just to heads up, like 90% of startups that begin fail. So it's normal. Like what's happening at like a lot of these companies or them shutting down, totally normal. That's like, that's the rule of thumb. Like it's probability, most of them fail. They have to fail for Astros vaccine at some point. Exactly. Because the 10% will be big, right? Okay. What advice would you give to a startup, a founder who's just come up with an idea who wants to implement it, not sure how to go, where to go, what to do, who to bring in. So what advice would you give to a startup? Yeah. I think it's just do it, just get into it and start building. And it doesn't matter if you're doing the perfect thing, but just start doing something and build momentum. And you'll figure it out. I think if you're someone who is proactive and thinks about the direction of what they're building, you'll probably figure it out. Also everything you need to build that thing is on the internet. You don't need money to do it. You probably don't need to hire anyone to do it. You can start building the most basic version of what you need online. And some of our biggest companies were built on no-code websites that are free and they're billion-dollar companies still. So you don't need a lot of money to get started. Okay, so start with what you have, where you are. I had forgotten to ask this question. I have to ask it. Are there specific areas which have a lot of potential compared to others like fintech? If someone wants to start something, are there specific areas that would do well as compared to others? Yeah, so if you think about our startup story, even looking, like I'll use the US as an example, before eBay could really take off, they needed PayPal. So that tells you before online commerce could be big, you needed payments. So fintech's actually important. Before you can move an Amazon delivery from the warehouse to your house, you need strong logistics. So there's a lot of base stuff that still needs to be built for the rest to be built on top. So I'd be thinking what's a really fundamental problem that everyone struggles with that I can fix? Not like, you know, how do I make your food order get to your house faster? That's not really important. Like you want to think about the baseline stuff that are building blocks for the rest of the companies to build on top of. Okay, good advice. Thank you very much, Kalo. Where can people get you on your social media and how can they subscribe to your newsletter and everything, this is your camera. Oh, cool. So my newsletter is called Tech Safari. So tech, T-E-C-H, Safari, S-A-F-A-R-I dot I-O is the newsletter. And then everything's kind of on there. There's ways to follow me on there. I'm on Twitter at Caleb Maru, C-A-L-E-B-M-A-R-U on Twitter. All right, thank you very much, Kalo. Thanks for having me. It's great, it's getting the insights. I'm sure that one founder there has gotten some things that they can implement. All right, so welcome. This has been Sport and Tech. We've been discussing tech startups in Africa with Caleb Maru. Hope you've enjoyed it. We're going to take a short break and then we'll be back with some entertainment interviews. Stick with us.