Kenyan Start-up Eco system 2020 Outlook: Exploring Open Innovation as covid-19 Resilience Strategy

The Kenyan start-ups ecosystem has experienced tremendous growth the last decade supported by improvement of key development  indicators such as increased number of innovation hubs spread across the country standing at 50 (GSMA 2019), increased funding to start-ups accounting over 18 percent of funding into Africa (AVCA 2020), formation of national lobbying-advocacy bodies at both county and national level as well as vertical linkages to continental platforms such as Afrilabs and I4Policy among others.

Further the innovation eco system has seen support from government through; establishment of Konza Technopolis espoused to be a world class technology hub as well as Konza data center, Whitebox a platform initiated by the Ministry of ICT together with ICT Authority acting as a channel for sourcing innovation aligned to government development priorities currently the big4 agenda, establishment of national ICT policy and data protection act 2019, development of national optic fiber backbone,  Kenya industry and entrepreneurship project under the ministry of industrialization, trade and enterprise development whose aim is to strengthen the innovation and entrepreneurship eco system among others.

Innovation Hubs in Kenya are mostly based on the type of support or facility offered to entrepreneurs, and includes incubators, accelerators, university-based innovation hubs, maker spaces, technology parks, and co-working spaces with 25% offering co-working facilities instead of specifically tech-focused support programmes or funding (GSMA 2019). Sustainability therefore remains a big problem with more than half of existing hubs independently owned shutting down before reaching the 5- year mark due to the lack of proper strategy in the business model most of which doesn’t match the organization structure as well as risk associated with revenue composition skewed towards grant funding.

The covid 19 pandemic has greatly affected the start-ups eco system in Kenya with all physicals spaces closing down decimating  over 25 percent of innovations hubs at least theoretically who rely on revenue from co working and putting the going concern of another 70 percent plus at risk due to contracted revenue majority of which is grant funding with revenue from other internal sources dependent on physical interaction also taking a significant hit.

Kenya’s innovation hubs are therefore at a cross road; at a high level there needs to be conversations on how the community can immediately plug into existing government initiatives mentioned above such as Konza Technopolis, Whitebox and Kenya industry and entrepreneurship project as well as the SME credit guarantee scheme.

Second; innovation hubs must shift strategy from firm level to attractor state level an instance where the hubs view their going concern from a national eco system view rather than an single entity and pursing the value proposition of the intermediaries as a whole in view of start-ups. This will mean that all innovation hubs must evaluate their collective value proposition to startups as a single unit rather as individual institutions and develop a coherent working mechanism of creating and capturing value.

This is critical cognizant that covid 19 is not going away at least in the short to medium term translating to at-least 2 years and if innovation hubs don’t shift paradigm, they will close down due to depressed co working revenue and shift in funder priorities constituting major income to innovation hubs.

Attractor state strategy will involve open innovation in the short term during the peak of the pandemic and will involve identifying and prioritizing the most pressing challenges faced by society, taking complete stock of available resources and developing intervention that can both create and capture value which will be shared among all. This can form the foundation for continued collaboration and survival of many innovation hubs in Kenya.