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Why Would Anyone Want to Launch an ICT4D Startup Organization?

By Wayan Vota on January 23, 2020

ict4d entreprenurship

We all talk about encouraging entrepreneurship in developing countries. Yet how many of us have launched our own business, or spun off an initiative from our employer into its own organization?

The startup life is hard, despite all the hype about venture capital funding and million-dollar exits. In the USA, only 50% of startups survive to the fifth year – and this is an “easy” startup country.

When you think about the high barriers to entry, the long sales cycle, and the meager returns, why would anyone want to launch an ICT4D business? In fact, at the Technology Salon on How to Launch (and Fund!) Your ICT4D Startup Idea?, one equity investor said:

“We don’t invest in ICT4D companies only targeting the NGO space because the market is too small and has too many disincentives to buying technology services.”

Still there are new tech startups every year in international development and we discussed the why and how of launching an ICT4D startup organization with key thought leaders, including:

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What Are the ICT4D Startup Challenges?

Entrepreneurship requires vision to see a market opportunity and then organize the resources required to address that opportunity.

1. An Overall Lack of Time

One resource that everyone agreed that was the hardest to find is the time to work on a new initiative while balancing a day job, family obligations, and life in general. Here is it key to focus on just what absolutely matters and discard everything else, and even then, expect the startup life to be mentally challenging.

2. Active Cash Flow Management

Experienced entrepreneurs spoke of the immense pressure to manage cash flows, especially when proposals take 6-18 months to go from invested idea to actual project activity that can be billed out and generate organizational revenue. This requires “patient capital” that could be from a parent organization that is willing to incubate an initiative until it has the maturity to spin out into a separate entity.

3. Disincentives to Purchase Services

The international development bidding process itself is also a challenge to ICT4D startup organizations in that prime contracting organizations have strong incentives to use the startup’s ideas during the proposal phase, but not in implementing the program.

During implementation, prime implementing partners are incentivized to invest in their own staff, and not external entities. Many entrepreneurs spoke of primes who would pay their own staff to recreate the ICT4D startup’s technology, instead of buying it from the startup, even if it took longer and was more expensive.

ICT4D Startup Founders Need Support Networks

A reoccurring theme throughout the Technology Salon was the need for strong support networks for entrepreneurial success. Support networks that were both personal and professional.

On the personal side, entrepreneurs need to have a trusting and supportive family, and in the USA, a spouse with affordable healthcare coverage through their employer. The personal support allows the entrepreneur to face the wild variability of startup founder salary – or lack thereof. Friends and family can be the first advisors too, helping craft the solution idea and refine its selling points.

On the professional side, all the entrepreneurs spoke of the need for parent organizations or outside investors to bring more than financial investments to support startups. Contacts, initial sales, and overall validation were mentioned as crucial to startup success.

Parent organizations, and entrepreneurs themselves, also need to know that there are no big equity exists in ICT4D, and therefore have their motivations in alignment with realistic expectations of what success (or failure) will look like.

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Written by
Wayan Vota co-founded ICTworks and is the Digital Health Director at IntraHealth International. He also co-founded Technology Salon, MERL Tech, ICTforAg, ICT4Djobs, ICT4Drinks, JadedAid, Kurante, OLPC News and a few other things. Opinions expressed here are his own and do not reflect the position of IntraHealth International or other ICTWorks sponsors.
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18 Comments to “Why Would Anyone Want to Launch an ICT4D Startup Organization?”

  1. Thank you for sharing this today. It’s refreshing to hear about startups attempting to work in the ICT4D space. As the founder of a startup that has been toughing it out for 8 years in SE Asia, all of this rings so true.

    We need stronger networks in this space, where we can share ideas and collaborate all without the fear of a prime coming in and duplicating our work.

    I’d love to hear more from others out there that are trying to grow their ICT4D startup!

    • Wayan Vota says:

      Honest question: what is wrong with a prime coming in and duplicating your work? Isn’t greater impact the overall goal? If you have a good methodology that can be replicated, having a prime adopt it can allow it to scale much faster than if its kept within a small organization. And if the prime replicates it through hiring the innovative staff, isn’t that a win for everyone (expect maybe someone’s pride)?

      • Honest answer, I have staff that need to feed their families too.

        And I was attempting to be kind with the duplicating work comment. Duplicating methodologies, strategies, etc are all normal part of what we all do. We try to be as open as we can with our case studies, showcasing the methodologies, etc.

        My issue comes in with primes court us through the bidding process, building in ideas based on our technologies, and once the contract is awarded, we never hear from them again. Only to find out later, they spent a year building out the same technology we’ve already built, making the same mistakes we already learned from. It becomes a giant waste of resources, largely at the tax-payers expense.

        • Wayan Vota says:

          If its any consolation, and even then its not much, but primes do this to every subcontractor, regardless of their expertise or size. I’ve seen iNGOs do this to each other as much as to local organizations, in everything from training to tech. It’s an issue with the whole industry, and again I see RFPs as the original sin here. Overambitious RFPs drive us all to do irrational acts.

  2. It sounds like the story of our cooperative… I found particularly interesting the observation that NGOs are motivated in using ICT4D solutions during the proposal submission phase, but not as much during the implementation. I found it very true and I was wondering what could be the reason for it. Could it be that NGOs are not really willing to adopt new solutions? Or could it be that our solutions do not really work exactly as we have promised?

    • From what I’ve seen, primes tend to use our information, pilots, etc to make a good case within their proposals. But like the article said, they’re not incentivized to actually work with the smaller firm. And they end up allocating resources internally, since they can cover more of their costs.

      I do like what some donors have done here and award to the prime, but building in an indicator that helps them focus on working with others within the local sector.

      • Hello Jesse, I see your point and I understand what you mean. That’s a little different from what we are experiencing in our own context (italy), though. Here I would say the friction is more related to a difficulty in accepting the changes implied by – at least some – digital solutions. Sometimes such changes, during the proposal submission phase, are “obfuscated” by the promise of innovation, and they remain underestimated.

        • Ah I see! Yes, that’s tough too. I guess I’ve seen a lot of requirements within the bidding process to include ICT4D tools, or innovation, but when it comes to implementation it’s a different story. And I am not sure why that is…

    • Wayan Vota says:

      I have lived both sides of this experience – as the small tech NGO and as the large iNGO – and I’ve found that the real issue is the unbridled optimism of proposal budgets. Donors like USAID, often ask for more accomplishments than can be realistically achieved with their budgets – and many are clear about this by requiring proposers to come up with additional donations.

      Implementing organizations then have every incentive to be fanciful in their proposal budgets, claiming they can achieve wonderful results within limited budgets. When they win, the cost cutting begins. All external organizations are usually the first to get budget reductions. Budget cuts happen regardless of how amazing the ICT4D solutions are.

  3. Cavin Mugarura says:

    What I have seen is interns selecting startups to fund. They are many grants available so its a good time to launch a startup. The people who select the innovations to fund, most of them know very little about tech.

    But it only gets worse. They are many startups that claim to use A.I. , blockchain and red mercury but its all lies, and the grant institutions dont have the skills to different from hot air.

    Even when you waste time to submit your proposal, you are ghosted. You recently posted a grant from the mastercard foundation and we were ghosted. So am not making this stuff up. I always advise startups to focus on selling their solutions to clients instead of wasting man hours applying to grant institutions who dont even know how to send a reply that you were not successful.

  4. I am an ICT4D entrepreneur from Nairobi, Kenya. My company, Hoji Ltd, provides mobile data collection and analysis software services. We aim to close the gap between data collection and decision making by empowering organizations to move faster towards actionable insights. We think that free and open source data collection platforms like ODK are great, but they can be improved upon in tremendous ways. That is what we set out to do.

    What I have learnt in 4 yeas of ICT4D entrepreneurship is that, compared to for-profits, NGOs tend to make their purchasing decisions in a very unpredictable way. In the business world, decisions to buy almost always come down to value. As long as you’re the guy who can save or make a company the most money, you get the business.

    NGOs tend to be especially allergic to spending directly on software. The general sentiment is that free and open source software is good and anything proprietary is not to be touched with a 10-foot pole. This heuristic is based on the false assumptions that:

    (a) Open source software is cheaper than proprietary software.

    (b) Open source software is unsustainable and proprietary software isn’t.

    What this thinking does is take away the opportunity for NGO customers to fairly appraise value when choosing between two or more ICT4D solutions.

    Last month, I wrote in detail on this issue. See: Why Health IT’s Obsession with Open Source Software is Unhealthy (https://www.linkedin.com/pulse/why-health-its-obsession-open-source-software-gitahi-ng-ang-a/). A slight variation of the same theme has also been addressed by the co-founder of SurveyCTO on his blog post entitled: Hope for a post ICT4D World (https://www.surveycto.com/blog/post-ict4d-world/).

    • Wayan Vota says:

      Gitahi, thanks for your points. I totally agree that NGOs make their purchasing decisions in a very unpredictable way. or at least a seemingly irrational way – it’s predictable if you know how they work, but the decisions aren’t always in the best interests of long-term software sustainability vs. donor desires.
      Could we republish your LinkedIn post on ICTworks, with attribution of course, to bring your ideas to our 22,000 email subscribers?

  5. Cavin Mugarura says:

    This statement is not true, or based on facts. (NGOs tend to be especially allergic to spending directly on software. The general sentiment is that free and open source software is good and anything proprietary is not to be touched with a 10-foot pole.)

    Most Non Profits and large institutions like the World Bank, will clearly state they are interested in off the shelf solutions. They will even want the software translated in Oromia (off the shelf remember)

    They want some software which is already existing, can sing and help you recite karoake. In the space of data collection, they are several robust open source applications, so I can understand why you raise that issue.

    I don’t think Non profits or any organization should choose a software based on the license type. They should choose the software which is better, but this is not true due to their limited tech knowledge. Procurement of I.T. projects is treated like procurement of tomatoes in a flea market, that’s where the problems start.

    • Well, it is not for nothing that “open source” is listed as one of the principles for digital development. Do NGOs sometimes use proprietary software? Of course they do. I acknowledge as much on the LinkedIn article I linked to. But that doesn’t mean they (generally) don’t have a strong preference for open source software.

      And that’s not even the problem. The problem is simply assuming, blindly, that open source software is inherently superior to proprietary software – particularly as relates to cost and sustainability. This’s simply untrue and I see that even you agree with this point.

      • Cavin Mugarura says:

        Maybe you didn’t read what I typed. No where did I state open source is superior, am sure you can’t quote any section where this is mentioned in my comment. Certain organizations like UNICEF generally ask for open source software, but if we are to go by numbers, this requirement is not spread across the board. It’s true they are several robust open source applications in the data collection realm, such as ODK, but this does not suggest they are superior. In any case even if they stated open source in the contract, what stops you from submitting a proposal using open source, unless you are locking yourself into a box of my software or the highway.

  6. Guess you have one less guy to worry about when you submit your open source proposals. It’s nice and warm here in my little box. 😉