You don’t need a hub “a physical space” to fix innovation in Africa.
7 years ago I was chatting with Brian Paul the founder of Studio 19, by then we were co-hub managers of Buni Innovation Hub. He asked me an interesting question. Do you think Buni Hub is the “Space” or the “people”? I was confused, but I immediately realized he was tricking me to see if I understand the importance of the community we had at Buni.
The biggest mistake we are making in the African innovation community right now is to believe every problem is going to be solved with a physical space called “Innovation or Tech Hub”. Everyone is starting an innovation hub of some form; government, development partners, private companies, startups, and everyone else. The key question is why the hubs? Why you should pay 100K USD plus on rent per year to train entrepreneurs once or twice per month in your physical space?
Getting back to Brian’s question we might need to reflect on our priorities. Do we still need to invest in bricks and motors to support innovation in the continent? If the right answer to Brian’s question was the “People”. Why there is less emphasis on the people and more focus on the “space”. There are more Accelerators and Incubators in Africa than investor-ready businesses. The ecosystem has more money than ever before but non of this actually reaches innovators and entrepreneurs. 50 percent of the money will go into administrative work and the rest to lobbyists. I can show you 600+ hubs and still I will struggle to present to you 100 growth stage “startups” with viable business models and potential to scale that you can present to Series A to C investors.
Spaces are Dying, The Future is Virtual
If there is something the COVID19 crisis has taught us is that people can work from anywhere. The future of co-working spaces and innovation hubs that relies on physical space for revenue is in jeopardy. If your hubs don’t have a strong community, support team, and value-added programs you are literally competing with restaurants, coffee shops, hotels, lounges, etc. You will be phased out.
The business model of running tech hubs is more complex than you think. That’s why over 90 percent of the hubs in the continent are struggling with the sustainability model. In advanced economies, the cost of running innovation spaces is highly subsidized by the government and corporates. That’s why you shouldn’t start a physical space unless you know how you are going to cover the rent and utility costs that usually takes 50 to 70 percent of your overall operational cost.
Taking equity and royalties doesn’t work either. It takes time and money to build and support a business to a stage where it can generate enough money for your to enjoy your investment. African landlords don’t have time to play those games with you. They need their rents in real-time. Space usage fees and events won’t cover even 20 percent of your running costs because most of the people you serve can’t afford to pay a significant amount. You will have a few options remain from where you can generate revenue from. Believe me, I have been in this game for almost 10 years now I know how bad is to generate your running cost from the users of the space. They simply don’t pay. Rethink your strategy if you haven’t, otherwise, you will soon go broke. It is a game of numbers. It is business like any other business.
Do you really need a hub?
There are so many ways to support entrepreneurs and innovators without a physical space. What defines a hub is not the space it’s the community, the program “activities” and the supporting team. You can build all this virtually and meet when is really necessary. There are good virtual Accelerator programs with clear value to entrepreneurs compared to physical spaces that just waste their time. Focus on building strong supporting teams, programs, and communities.
Instead of complaining if I had a “space”, I would have done this you better ask yourself if your goal is to support innovators and entrepreneurs what are you doing now? What stops you from starting a virtual community of practice? What is stopping you to run a digital marketplace? Our experience with our virtual marketplace with MyGrowthFund was astonishing. We achieved far better compared to if we would have run a physical event. My point is to focus on what matters if you want to run a hub as a business. If your focus is hype and attention then start a physical space. I’m assuming you have someone’s money to play around with because it is not cheap.
Capitalize on Existing Resources
Yes, hubs are lovely and sexy and make you or your organization look innovative. There are more important things to focus on if we are intentional in solving Africa’s challenges through innovation and communities of innovators. Instead of starting a hub without a clear vision or goals on what you want to do is better you focus on what you do best and build strategic partnerships that will foster the growth of the ecosystem. You don’t need a hub.
Our problem is not the hubs, our problem is strong institutions within the hubs, the capacity of supporting teams, seed and growth funds, strategic partnerships, policies and regulations, effective programs with clear outcomes, and toxic politics in our ecosystems. Find one problem that matters then fix it. The hubs are there with their physical spaces. Many struggling to survive and do what they do the best work with them. Help them to deliver. There are a lot of things you can do that worth your time and resources. If you can build a great program with clear deliverables, do that. If you can mobilize investors, do that. If you can create a skills program that supplies talents, do that. If you can work to build a conducive business environment through lobbying for policy changes, do that. That’s is the only way to add value to broken and immature ecosystems and support the existing hubs to do what they do best.
Just to Be Clear
There are some sectors that you can’t run away from investing in physical stuff especially Makerspaces and Fabrication Laboratories. Still even with those you can still capitalize on labs within universities and vocational education centers by equipping them with necessary tools and promoting the open-door policy for anyone to come in and use. Unless it is a lab for future and emerging technologies something which we don’t have already in abundance in the continent then you are welcomed to build one. If something already exists build on the top of that don’t replicate, don’t compete, just partner with someone. There is a lot that needs to be fixed a hub is just an entrance.