Out Of Africa — A Whole MEST Of Startups Emerges In Ghana

Growing up as an adopted Korean boy in the cold climes of Norway, Jorn Lyseggen would have had no idea that one day he would be spearheading a technology renaissance in the sweltering heat of a West African state. But having created the successful $100m-in-revenue Meltwater SAAS company, which has made a name for itself in social analytics, he realised that it would be for nothing if he didn’t “give something back”. And so the Meltwater Entreprenerial School of Technology in Ghana was born.

Founded in February 2008 in Ghana’s capital city of Accra, MEST, as it’s known, started out with modest aims: to take the brightest and most willing minds they could find, and put them through a rigorous two year training programme to become tech entrepreneurs. Indeed, MEST pre-dates Y Combinator’s most recent overture to invest in people and ideas even before they have a startup idea.

As Lyseggen says told me in an interview for TCTV: “MEST is the worlds earliest early stage startup. We invest in people even before they know how to programme or have even touched a computer.”

After that two year training period around 5 startup ideas are selected to pitch to potential investors, many of them visiting form the US, and the successful ones are incubated as startup companies for another year. The average funding request is for less than $90,000 to last a year.

But why two years? Why so long?

“We think it takes time to mature in your thinking. Many of our EiTs [though college graduates] even haven’t touched a computer before, so it takes time to become a proficient programmer. A big part of it is preparing for the hardship of being an entrepreneur,” says Lyseggen.

The Incubation phase of the programme is where the rubber hits the road, with graduates afforded an opportunity to bring their business ideas to life via seed funding which ranges from between $30,000 and goes as high as $200,000 in return for a minority equity stake.

But that equity stake is is held by the non-profit Meltwater Foundation, meaning any returns are recycled back into the foundation’s work.

The foundation now regular attracts outsiders to visit and lecture. In the process it’s gathered a network of experienced tech executives, graduates and MBA students from universities such as Oxford in the UK and Stanford in the US to put their “Entrepreneurs in Training” (EITs) through their paces. The teaching faculty consists of Jim Kaubisch, a former CTO and Sun Microsystem Senior Engineer; Richard Tanksley formerly of Motorola and startups in the US and Africa; Kevin Schuster an Economics and business tutor; Maria Meier, who teaches engineering; Michael Wilson and Sam Ellis who teach business, media comms; and Rajoshi Ghosh, tech fellow at MEST who is soon to move on to launch a startup in Singapore. MEST faculty member typically work there for a year, meaning EiTs get plenty of variety in teachers.

They are in turn are augmented by skype calls with experts globally, and visiting lecturers.

When I was there two of those visiting lecturers were Adam Jackson, serial Valley entrepreneur and a couple of proven investors from the Valley.

“The companies that pitched us from MEST compete in quality, innovation and execution with Silicon Valley, China and any other innovative tech market I’ve been to,” he told me. High praise form someone so experienced.

Another who preferred to keep his Africa trip under the radar told me: “As an investor and entrepreneur for 20 years in Silicon Valley, Asia and the Nordics, MEST’s unique approach to identifying, educating and coaching entrepreneurs produces some of the best companies I’ve ever seen in my career.”

And “once MEST always MEST”. Everyone going though the programme that stays in tech remains part of the ‘family’ and able to draw on the MEST Mentor network.

Lyseggen is a firm believer in talent knowing no borders, and it’s his hope that successful startups and entrepreneurs emerging form MEST will act as the inspiration for generations that follow.

The first class of EITs graduated in Feb 2010, and the startups that emerged have formed the basis for the nearby MEST Incubator.

But it wasn’t all plain sailing. With the new companies funded, they needed a place to work, so a building was found nearby to house them.

Unfortunately, lying in the way was a huge ditch, as one often finds in Africa. But MEST graduates came up with an elegant solution: a rope bridge to connect the main MEST campus with the Incubator (as you’ll see in the video below).

Now, clearly, follow-on funding in Ghana can prove difficult. But then in an emerging economy like Ghana, the funding runway can last a while.

Any graduates of the MEST programme that aren’t successful in securing seed funding to enter the Incubator are usually snapped up by Ghana’s emerging economy which, in contrast to the developed world, is growing as much as 10% a year. Luckily Ghana’s economy itself is strong. Stable government, and a booming economic built on natural resources (gold, cocoa, oil) and agriculture means it has a stable background from which newer economies like tech have the potential to merge.

Perhaps unusually, MEST companies are not encouraged to generate regional ‘African’-focused companies, but ones that could have global appeal. It’s an admirable approach – the low hanging fruit would simply be to clone other businesses into an African context. But that’s to what MEST is about, says Lyseggen.

He admits there are limited exit opportunities for African startups at the moment, but he says that will change. Then again, why not just compete globally? “Software can be created anywhere so we wanted our EiTs to compete in the global marketplace,” he says. That means much bigger potential exits to bigger players outside Africa for now. That’s been borne out by the success of at least one MEST incubated company. Retail Tower is now one of 6 Amazon preferred partners, and still based within MEST in Ghana.

But it’s incredibly important to understand the cultural context of what is going on here.

While the EiTs and the incubated companies get the usual office space, teaching, mentoring etc, they are doing this with the huge support of their families. Because although EiT’s get three free square meals a day, they don’t get anything like a salary, just a small stipend.

That means their families, who would normally expect these high-fliers to be out earning a living for the family, really do massively support their efforts to become entrepreneurs.

And if you’d been to the graduation ceremony and heard the speeches by the faculty and the EiTs themselves, you’d realise as I did what a sea-change MEST is bringing to tech entrepreneurship in Africa. Indeed, you could sign up to be a visiting lecturer yourself.

Here’s a run-down of this the startups MEST is currently incubating and below them, this year’s graduating companies.

MEST Current Incubator Companies

ClaimSync says it has an end-to-end system that enables healthcare service providers to compile medical claims electronically which are later submited them to insurance companies for processing. The ClaimSync platform seeks to reduce the high administrative and labor costs, delays in reimbursements and data entry errors associated with manual processing of paper claims. They are in an interesting space: GoHealth recently landed $50 million for its health insurance comparison shopping engine.

Leti Games
Leti Games set out to develop single player and massive multi-player online role playing games. If you wanted to find the Stan Lee of Africa, you might be in the right place. Leti’s games are targeted at both casual and serious mobile gamers globally. They are aiming at smartphone – booming in Africa and tablets.

Nandi Mobile
NandiMobile develops tech to enable businesses to leverage the high mobile penetration in Africa for better customer relationships. Its enterprise solutions includes Gripeline and Infoline. Gripeline is for customer engagement via mobile, and Infoline enables businesses to providerelevant information that can be accessed by SMS.

Retail Tower
Counts Amazon as a customer, Retail Tower provides software solutions to online retailers, allowing them to manage their inventory across multiple channels from one platform. It automates data feed submission, monitors competitor pricing and product reviews on these channels, and allows merchants to measure and optimise their ROI for each sales channel.

Saya Mobile
This could be the WhatsApp for Africa. Saya smartly offers offers a mobile group messaging platform for both feature phones (huge in Africa still) and smart phone users. Saya’s application is cross platform and is roughly a thousand times cheaper than SMS because it uses data. Saya connects users through their phone book and facebook contact list.

Streemio is a mobile music, ad-supported streaming service providing on-demand access to music on the mobile. Launching in Ghana first, Streemio aspires to be a successful Africa-wide service

Dropifi is a messaging platform that seeks to bridge the relationship gap between visitors to a website and the business owners. Most web sites have a contact form which is dumb, just sending an email. Dropifi is a smart contact form which extracts the right data. Very much aimed at small businesses.

MEST Graduating companies

Think of this as a kind of Dropbox for your most recent files. People want to access their recent files across their devices. This is effectively a browser-based system allowing access to files (Documents, PDFs, MP3 etc) across devices. Oyyah doesn’t use folders so the last file you worked on it alway at the top. But instead of competing with Dropbox, Oyyah is a complimentary service and works with that an others such as Skydrive, SugarSync etc. Although the model is to charge for extra storage.

AdsBrook is aiming to be the web and mobile ad network for Africa. Right now African advertisers want to reach their local audience through new and targeted channels while web and app publishers want to monetize. The African Internet Advertising Market is worth, on some estimates, to be $2.9 billion. And although their competition is numerous in the form of TwiPine, Inmobi, Google and BuzzCity, AdsBrook hopes its lean and mean approach (it has only two staff) will be able to get some decent market share. Its already run numerous ad campaigns and signed up clients such as local publisher SpyGhana among 44 other publishers and 22 advertisers.

NevaHold is a service that allows consumers to request roduct and service support on the go from brands. The idea is that they charge companies to keep track of the problems. IN that respect it’s not unlike similar startups Gripe, and Gripevine. However the interface is pretty good, the site already has a few thousand users and its has already had enquiries form Delta Airlines and Dell.

The problem with trying to source freelancers is that there are now a proliferation of platforms. There’s now Elance, Freelancer.com, PeoplePerHour, Guru.com and more. The market is a mess. But it’s not getting any smaller. According to Evalueserve the online freelance market size will double in size from $1 billion now to $2 billion by 2015. And the recession means that demand for contract workers is up more than 60 since 2010 according to an Elance report. The solution of course of to aggregate the content on these freelance profile site instantly solving a problem for employers who can’t spent a lot of time trawling through freelance profiles on multiple sites, and for the freelancers who wout rather just update one site. That’s what FreelancePRo.me aims to do. It’s Natural markets are of course the UK, US and India.

Mpawa is a natural for Africa. Africa has millions of blue collar workers and a high turnover of jobs, but few systems to match employees with employers. There’s an estimated 422 million strong market in Africa for such a platform. But there’s no central location to find workers. So starting in Ghana, where there is a high mobile penetration, Mpawa plans to charge employers for filling vacancies. Althugh there are competitors such as MKazi, there’s probably plenty of room for a startup liked his.