I spent the last one week at the CEBIT trade fair in Hannover, in a special area called the BMZ Community Space. I, and some other African Startups, were invited by the German Federal Ministry of Economic Development, and given stands to showcase our startups together with many German startups. It was a great week, packed full of talks about how best Germany can support economic development in Africa - and how this can be done through startups.
There were a ton of people and a great number of different ideas. I have my own unique idea about how we can create 10,000 really successful African startups, and how they can employ millions of people.
What does not work?
First of all - let's look at what does not work. Giving kids fresh out of African colleges 20k USD to found a 'startup' has not worked so far. There are a very few isolated cases it has worked, but often there were other factors at play. To quote P.T Barnum in his Art of Money Making (1880) - "Give a boy twenty thousand dollars and put him in business, and the chances are that he will lose every dollar of it before he is a year older."
The various competitions, incubators, grants, etc have proven this time and time again - it does not work. It does not even make logical sense: If you give a small amount of money to someone with zero experience, working in a really hard market, and with little interaction with other successful founders, the chances of him creating a big business are just bad.
What do I think works?
The core of my idea on what I think works came from Justin, who runs marketing at Hotels.ng - I paraphrase: People don't realise how much they need to know to run a startup. Most founders should work for 5 years at a startup before starting one.
To me, that's the secret - startups will be founded by the management level of other startups. Far more successful startups have been created through other startups than through incubators - either by founders funding other startups (like in Hotels.ng case, which was funded by Jason/Bastian from IrokoTV) or by founders leaving startups to create their own (e.g Supermart, ACE, TravelBeta, etc).
For any agency that is on a mission to create startups that actually employ people, I think it is a better idea to invest in improving the management level of existing startups.
E.g let's say you pick a startup like Hotels.ng, and instead of giving us money or focusing on the founder, you focus on the top 7 management staff. You invest in them, growing their capability and exposure. This grows the company, Hotels.ng as a startup. That means Hotels.ng employs more people, becomes bigger etc (because it now has better people). Those 7 people, after working at Hotels.ng for let's say 5 years, would move on to new roles. They can either go to another startup, bringing experience and talent, thereby growing it (and making it employ more people), or they can create their own startups.
When they create their own startup, they actually know what they are doing. They have worked in the environment, they know how to manage, they are highly skilled, and they are experienced.
So their startups will be far better, and far more likely to succeed.
The above method is much slower than giving $10k to competition winning startups, but it builds a much stronger fundamental for the startup economy, because it creates a big network of highly skilled people.
And to build an entrepreneurship eco-system, that's what you really need.