Kenya’s Leading Telecom, Safaricom Launches a $1Million Venture Capital Fund for Startup Entrepreneurs
Safaricom the leading telecom in Kenya yesterday announced its plan to launch a $1 million Venture Capital fund, targeting the country’s mobile apps startup entrepreneurs. Dubbed the Safaricom Spark Venture Fund, the fund will give startup developers venture capital funding ranging between $75,000 to $250,000 per startup.
The Director of Strategy and Innovation at Safaricom, Joseph Ogutu said, “We see this as a much-needed catalyst that will help actualize our aspiration to nurture a vibrant ICT economy in Kenya. It will address the key startup and developers’ plan point such as the cost and speed of accessing a platform where they can test their solutions.”
The Spark Fund Venture Fund is set to run for an initial two-year period. The fund is being administered by Safaricom in partnership with an international tech fund, TBL Invest. Startups wishing to benefit from the fund will have to undergo a selection process by a cross-functional Investment Committee made up of representatives from Safaricom, TBL Invest and other experts from the industry.
Eline Blaauboer, a Managing Partner at TBL Invest said, “Despite contributing to over 60% of Kenya’s GDP, small businesses are under-funded and do not have access to the same level of advice as their counterparts in other countries.”
Startups willing to participate in the selection must meet some threshold requirements: they must have a working product/service with an active user base. Their product must demonstrate the ability to integrate easily with Safaricom’s technology. Once this threshold has been met, the Fund committee together with the startups will decide on whether to proceed with the investment as an equity investment or convertible security.
The move by Safaricom to support local startup entrepreneurs is being interpreted by others as a strategic move to clean up its image. Several allegations have been leveled against the telecom giant that is has been ‘stealing’ ideas from local startups. It’s alleged that startup entrepreneurs have been pitching their ideas to Safaricom, hoping to get some financial support and access to its mobile platform made up of over 17 million subscribers.
Safaricom’s leading innovative products; the M-Pesa (mobile money transfer service), M-Shwari (a mobile banking product) and Lipa Kodi (a rent payment service), have allegedly been ‘stolen’ from various startup developers.
The most recent product to be launched by Safaricom, the M-Ledger android app; said to be Safaricom’s first product to be developed by a startup that rose up in ranks in a recently concluded app competition started by the telecom. The startup credited for creating M-Ledger was one of the 18 startups that competed against each other at the inaugural Safaricom Appwiz Competition held last year.
For more information on M-Ledger follow this link.