Johnni Kjelsgaard, co-founder and CEO of GrowthAfrica, has been working with start-ups for nearly 15 years. Originally from Denmark, Kjelsgaard came to Kenya in 1998 and started a web development company that expanded to eight countries across Africa and South East Asia. But during the early 2000s when the dot-com bubble burst, the company’s investor went bankrupt so Kjelsgaard decided to sell his shares and exited the business.
He then set up GrowthAfrica to work with international companies entering Africa, local businesses expanding across the continent, and early stage ventures. Today Kjelsgaard sits on the boards of nearly 20 start-ups in the region and is a respected investor, advisor and mentor.
Kjelsgaard shared his views on entrepreneurship in East Africa with Dinfin Mulupi. Below are edited excerpts.
What is your view of the start-up ecosystem in East Africa?
It certainly is an interesting environment. I think it’s a little bit thin in the sense that there is not a lot of depth [and] not a lot of layers of real ambitious start-ups. There are relatively few new start-ups coming out of the ecosystem that you could say have the right potential and right circumstances for them to grow into something bigger. But I think entrepreneurship has, certainly in the last three or four years, become more of a viable option for a lot of people. I hear more and more people my age talking about leveraging their understanding of their industry, and the networks they have accumulated, to come up with something new. You would hardly hear that 15 years ago, when most people would build a home in their village and buy cows as their entrepreneurial exit from the corporate ladder.
So what do local start-ups need to do to grow and scale?
It is based on a number of things. One is to increase the awareness of what obstacles you are faced with for growth as an entrepreneur. The ability to analyse and diagnose your own environment takes an analytical mind. It also requires tools and partnerships to access the right data. If you ask an entrepreneur what is stopping them from growing, I guarantee you they will say money – but that is only half of the truth. Because if I give you a billion dollars, what are you going to do with it? How are you going to make your business grow if you had unlimited funds?
Second is understanding what you need to do and crafting strategies to overcome the obstacles you face. And the third thing is leadership, and leadership often boils down to confidence.
We see a lot of entrepreneurs when asked, ‘do you want to be a $100 million company?’, they say, ‘yes’. But once they are faced with the real choices along the path to becoming a big company, they often choose the less risky one. This is because there is so much pressure from society on an entrepreneur. There is pressure from your spouse if you are married, from your family, from your in-laws – especially if you’re a guy who’s supposed to be providing for your wife. There is inter-generational pressure that is not in favour of the entrepreneur making bold choices, so often they make very conservative ones. When they make it to a $1 million or $10 million company, that tends to be enough. Very few have the courage and the confidence to bring it up – and to keep going and keep taking those risks.
How do entrepreneurs get that boldness to go for the $100 million company?
You need to have some courageous conversations with your spouse, and other family members and friends. You need to arm yourself with an environment that is supportive. That is one of the things we emphasise a lot in our programmes. We choose cohort-based programming (10 to 12 start-ups) because it enables entrepreneurs to learn from each other – and often they know much more than they think. Unlocking that learning is much more effective when part of a group. The group also creates a nice size of network for fellowship, and we have seen our entrepreneurs continue to meet socially [and] use each other to varying degrees as a sounding board or as a shoulder to cry on. I think that fellowship is really important because when you are an entrepreneur you can be really lonely because a lot of people around you simply don’t understand why you have chosen such a risky route.
Most enterprises here getting significant funding and attention are run by expatriates. How come?
There are two problems with that. One is analytical thinking is not part of the curriculum in the Kenyan education system. Students are just asked to do things [and] solve tasks – and I think that locks the way you think and use the full capacity of your brain. The European and North American school systems, on the other hand, prepare people to think critically, to think analytically [and] to absorb learning in a much more structured way.
The second thing is confidence. If you put an American entrepreneur and a Kenyan entrepreneur in the same room, with the Kenyan having ten times more experience than the American, quite often the American will speak with more confidence than the Kenyan. So if you are an investor sitting on the other side, who are you going to invest in? The one who sounds the most convincing.
Incidentally most of the money here is foreign money. So a lot of the people sitting and making the decisions can relate culturally to the people who are asking for the money. So if an American is asking an American for money, compared to a Kenyan asking an American for money, the American is 100 times more likely to get the money.
We need to start investing in our entrepreneurs, that absolutely is the solution to this. We have so much money in this country held by Kenyans. We need to start motivating Kenyans to invest in our entrepreneurs.