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Think: A Tigo Rwanda Start-Up Incubator Idea Gone Bad

By Wayan Vota on August 8, 2014

tigo rwanda incubator

thinkRwanda is a new mobile application incubator in Kigali, founded by Tigo Rwanda. It is now accepting applications for a first round of start-ups, who will get close mentorship from Tigo, and access to Tigo platforms across Africa and Latin America. Start-ups will also get $15,000 in seed funding. All Tigo asks is:

  • Any application ideas can be used by Tigo.
  • Winning teams must move 2-4 team members to Rwanda.
  • Tigo gets 10% equity in the company.

At first glace, this might look like a good deal for a software developer hoping to take their idea to a global stage, but before anyone rushes over to Think and signs away their inspiration to Tigo, listen to these 4 points from Teddy Ruge:

think-signup
  1. It is telling that Tigo decided to create their own incubator as opposed to creating a funding/pitching partnership with Afrilabs for promising startups that could add value to the whole telecommunications ecosystem. For example, Klabs is just next door to them, they could have easily supported home-grown startups that already there
  2. $15,000 for 10% equity automatically puts a valuation on all the startups agreeing to receive this money at roughly $150,000. For early-stage seed capital this valuation might work for some but would be restrictive to others whose idea is worth a lot more.
  3. Only fools would trust Tigo to offer fair remuneration for quality intellectual property. Tying innovation to one mobile network carrier creates too many digital walls in an ecosystem that could use interoperability across networks and countries. Everyone is trying to create their own digital pie, but think what would happen telecom contributed to creating a massive ecosystem differentiated by service/product innovation.
  4. Tigo would have done better to open up their API’s to a developer challenge across its 14 countries. Then it could incubate the best technologies and startups out of the challenge. The biggest problem for African tech developers looking to monetize or gain traction in the market is that telcos are very greedy with their APIs. Opening up that API would do more to foster mobile innovation that another start-up challenge

Now Teddy is happy to see an attempt at early seed capital partners. It shows that mobile carriers are starting to be aware and pay attention to local talent bases. And as Mbwana Ali points out, venture capital terms in Africa are now getting standardized and competitive to the global average, which will quickly drive out questionable deals like this one.

So while Tigo could’ve done better, and I would council any decent developer to run from this offer, it’s great to see this lab set up in Kigali, not California.

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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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6 Comments to “Think: A Tigo Rwanda Start-Up Incubator Idea Gone Bad”

  1. Barrett Nash says:

    Thanks for the article Wayan.

    As someone on the ground living in Kigali, I feel quite different about Think then you or Teddy.

    Personally, I am excited by the fact that Think is doing outsourced R&D with a need to get value from their equity stake: this means they are serious about making the startups coming through Think successful. While I have a deep appreciation for the AfriLabs network in general, and kLab where I am currently sitting, I think the necessity of being accountable to shareholders will motivate Tigo to make these startups successful.

    While you can be cynical about Tigo as a company, especially where IP is concerned, I suppose I’m a sunny optimist who would like to see how Tigo handles this first round at Think before condemning them.

    No matter what, there is a killer coffee shop there.

    Barrett Nash

  2. @jonomist says:

    Thanks Wayan for the critical viewpoint, which is a welcome change to the ICT4D appreciation racket. Unfortunately, I think many of the points you and @TMSRuge presented are simplistic or misleading:

    1. “…as opposed to creating a funding/pitching partnership with Afrilabs for promising startups”

    Think has signed a partnership with The Office, a member of Afrilabs, to build a community workspace inside of the incubator. This partnership was reached to ensure that Think is integrated into the existing ecosystem and to avoid the creation of innovation silos as can be seen in many other ecosystems.

    Moreover, all Afrilabs members have been invited to circulate the offer to their members, and the Office has invited members of Afrilabs to provide direct feedback on the terms of the incubator and on the terms of the partnership between The Office and Think.

    2. “For example, Klab is just next door to them, they could have easily supported home-grown startups that already there”

    Members of kLab have been specifically encouraged to visit the Think space and to apply. Moreover, Tigo has supported kLab and other tech community activities in Kigali.

    kLab and Think serve different, complementary roles in the ecosystem.

    3. “this valuation might work for some but would be restrictive to others whose idea is worth a lot more.”

    First of all, let’s not forget that “an idea” by itself is worth nothing.

    Second, we’re talking about US$15,000, nice office space, and incubation services for six months in a context where entrepreneurs often list “lack of access to finance” among their main constraints. Of course this offer isn’t for everyone, but Tigo isn’t targetting everyone. The market (read: “some” entrepreneurs) will determine whether or not this is a good deal for them…let’s wait and see.

    4. “Only fools would trust Tigo to offer fair remuneration for quality intellectual property. Tying innovation to one mobile network carrier creates too many digital walls in an ecosystem that could use interoperability across networks and countries.”

    It’s very fair to be cautious when entering into a financing deal, and particularly with early stage investors…It would be foolish to assume that any investor (or grant giver) isn’t self-interested.

    Again, however, this argument is overly simplistic. Tigo and MTN, for example, have partnered on Rocket Internet’s expansion in Africa: http://www.ventures-africa.com/2013/12/mtn-invests-in-rocket-internets-africa-internet-holding/
    The carriers are running a business. They want to make money. period. Where interoperability and partnership can be used to achieve that goal, they will pursue it. Where interoperability isn’t in their individual corporate interests but can serve the public welfare, then it is the responsibility of our regulatory bodies to open up the APIs and to force greater interoperability.

    • Wayan Vota says:

      Thanks for the details of the linkages with AfriLabs, The Office, and kLabs. Good to see this wasn’t done in a silo or to cannibalize other start-up spaces.

      And good point about $15K/$150K for the Rwanda context. However, when I was first told of this effort, it was in the context of expecting non-Rwandas, and even non-Africans to apply. In that context, the money offered is quite low.

  3. Senam Beheton says:

    I tend to agree with Jon and others on this. It is true that MNOs and other Telco players have their own agendas and frankly haven’t been model corporate citizens. It is also true that so called VCs, angels and other venture players haven’t delivered anything measurable yet….well maybe snake oil. But that’s the name of the game now. The money and resources “offered” by Tigo are significant in our environment. Let’s see how it goes and hold judgement for now.

  4. Manu says:

    In theory this is an excellent critique. In practice, or at least considering context, I can make few comments as someone a tech entrepreneur in Rwanda.
    1. I see nothing wrong with variety and competition in incubators. KLab is there and will always be. Carnegie Mellon that runs it can use some competition from industry players that actually have conducive tech infrastructure and an active user base, just like Microsoft did with Kinect. The monopolistic argument proposed would simply not fly in Silicon Valley, Silicon Alley, or any other competitive business landscape, and Rwanda is no exception. Tigo has MTN and Airtel to compete with.
    2. Valuation: are you kidding? Ask yourself what $150k means in Rwanda. Then compare that with the equity TechStars takes when it incubates startups. If you wanna stretch it, compare it with local banks double digit interest rates. You could also tech the approach of opportunity cost using local incomes and the potential opened by accessing all of Tigo’s global networks.
    3. What intellectual property? Software IP is not only a challenge at global scale, it’s a nightmare in emerging markets. But, that aside, if an entrepreneur in Rwanda can find a local IP lawyer (personally I’ve not found one), I highly recommend that they consult one if they can afford it. Also consult other tech entrepreneurs, some will tell you that IP is far less important in software compared to business execution.
    4. I agree on the opening of the APIs fosters innovation. If you look at SMS Media or Comzafrica, you’d find that Tigo Rwanda has actually been open to this concept for a while through its value-added services. The problem is that not every technologist that can exploit these systems are entrepreneurial enough to develop the relationships with carriers. That’s why a Twilio, SendGrid or Paypal styles of API monetization could be more beneficial than the utility companies’ approach that’s been adopted by telcos. That said, I’d not be hasty to extrapolate business strategies from tech service companies to telco infrastructure operators since strategic advantages, cost structures, and business landscape in this case, are not necessarily commensurable.

  5. TMS Ruge says:

    These are all great points (on the optimistic side) and I have no problem if my fears pan out to be false and that this turns out to be a great thing for everyone.

    I do realize they are a profit-making entity and they are going to do things to increase their market differentiation in service to profitability.

    Not all start ups are going to jump on this for sure (nor should they). The deal is geared towards benefiting the Rwanda tech community and a select few outside who can make that move.

    Again, I hope that I am wrong in my criticism and that everything turns out positive for everyone. Like I said, if this triggers a lot more seed stage funding activity (where most of our startups are struggling) then everyone wins. If it fails, then we’ll need a new funding model.