From Africa to Seattle, Building Businesses to Solve Big Problems
Listening to a Zambian entrepreneur pitch his goat meat business in the middle of a first-world technology hub, I glimpsed the degree to which entrepreneurship and capitalism have been called upon to address the problems of the world’s poor.
Seattle-based Fledge, billed as a “conscious company” accelerator providing investment and Techstars-like mentorship and coaching to startups with an explicit goal of doing well and doing good, presented a half-dozen companies from its sixth cohort to an audience of impact investors and supporters earlier this month. While several startups from overseas or focused on non-U.S. markets have participated in the program in the past, this group featured an all-international lineup.
The accelerator received 170 applications from 45 countries for Fledge 6, said Fledge founder Michael “Luni” Libes. He evaluates potential “fledglings” first on the strength of the founding team, then on their potential for making a positive impact. “How is this company going to make the world a better place?” Libes said. Third, he considers whether the company will make enough money to create a return for Fledge and its investors—mainly impact angel investors from Seattle.
“What came to the top were six companies from Africa and one from Argentina,” he said. The entrepreneurs behind six of the seven companies received visas to visit the U.S. for the 10-week program.
Fledge calls the company presentations a demo day in keeping with the convention of other startup accelerators, but the point of the evening was to tell stories and show what’s possible, Libes said. The stories were good: Several of the entrepreneurs who followed Libes on stage had already completed an incredible journey, starting on subsistence farms or in rural villages with no clean water, spending hours each day to gather firewood, walking miles to school if their families could scrape together tuition.
Now here they were, in the vital center of prosperous technopolis Seattle, pitching for-profit solutions to some of the world’s most intractable problems—problems they know intimately, having grown up in the face of them, and thrived in spite of them.
Paul Nyambe, the entrepreneur behind Zamgoat, said he didn’t have shoes until after graduating high school. His goat meat business has generated $150,000 in the last three years, but needs capital to buy a truck and refrigeration for further expansion.
Another business, ColdHubs, is deploying solar-powered refrigerators to extend the shelf-life of produce, improving returns to smallholder farmers and reducing waste. Nnaemeka Ikegwuonu, the Nigerian social entrepreneur and broadcaster on Smallholder Farmers Rural Radio, said as much as 45 percent of the harvest is lost for lack of refrigerated storage and transportation, with 606 million tons of food wasted.
“In our world of so much advancement of science and technology, there is no reason for those numbers,” Ikegwuonu said. ColdHubs charges farmers 50 cents per crate of produce per day, eliminating their losses and increasing their income, he said.
In Uganda, where David Opio is a pineapple farmer and entrepreneur, the rural poor have little or no access to reliable savings and credit. His mother was able to put only two of her 10 acres into productive use for lack of credit, he said. Ensibuuko, the company Opio is building, provides mobile banking technology to the thousands of rural credit cooperatives that Ugandans use, many of which still conduct their business on paper and are “soiled with corruption and mismanagement,” Opio said.
“I applied to Fledge and came to Seattle seeking support to revolutionize finance for rural Africa,” he said. “Savings and credit is a basic need, and with Ensibuuko, our goal is to drive financial inclusion to the 80 percent of Uganda’s population that is unbanked.”
The innovation here is not so much about new technology or even novel business models. Rather, it’s about applying existing approaches that might be taken for granted elsewhere to specific problems in specific places that have been overlooked by businesses and left to inadequately funded aid groups and ill-equipped governments.
“While we look to the for-profit sector to make money and grow, we look to the nonprofit sector to solve the problems of the world,” Libes said. But the magnitude of the problems—malnutrition, energy poverty, inadequate healthcare—is far beyond what even the world’s largest philanthropies, including the one headquartered here, can solve.
Indeed, the Bill and Melinda Gates Foundation has made investments in for-profit biotech startups and other groups working on technologies and business models that could benefit people in the developing world. It brought two former biotech venture capitalists on board to expand these efforts.
Libes said he believes it will be new, for-profit companies that effectively address the basic needs of billions of people subsisting on a few dollars a day. “If you save them $1, that’s a lot of money,” he said.
The Fledge portfolio now includes several companies taking very similar approaches to the same endemic developing world problems, particularly in the area of clean, safe alternatives to burning charcoal and kerosene for cooking and indoor lighting. But that duplication doesn’t present a problem, Libes said, noting the size and diversity of developing world markets.
“There’s borders and there’s rules and there’s whatnot, so just because one company is doing something in East Africa doesn’t mean you can’t invest in another company doing the same thing” somewhere else, he said.
Moreover, Fledge is pursuing partnership and collaboration opportunities among its portfolio companies.
Green Energy Biofuels in Nigeria, for example, has sold some 350,000 cookstoves that use a clean-burning gel fuel, Libes said. But the stoves are built in China and imported. “Two of the largest manufacturers of cook stoves in Africa are Fledglings, so we are looking to see which of them can build stoves in Nigeria or ship to Nigeria,” Libes said.
Tom Osborn is another Fledge 6 entrepreneur. This young Kenyan developed GreenChar, a cleaner-burning cooking charcoal made of waste from sugar cane plantations rather than trees, after his mother developed lung disease from a lifetime of inhaling charcoal smoke. “There are 10 million women in Kenya like my mother,” he said.
His direct experience with the problem—it was his job to light the cooking fire each day—helped point him to the solution, and the business opportunity in scaling it up. In Kenya alone, Osborn said, charcoal is a $427 million annual industry. Its use is “ingrained in the culture,” so rather than trying to substitute a different cooking technology, GreenChar is “making a Kenyan product to solve a Kenyan problem,” he said.
The company’s distribution model relies on micro-businesses—local kiosks run by women and children. “Those closest to the problem are closest to the solution,” Osborn said toward the end of his well-polished presentation.
The same might be said of these entrepreneurs themselves.