Africa: The next big destination for Israeli start-ups?

The developing world is a natural market for tech solutions, and the Pears Challenge is preparing entrepreneurs to succeed there

Graphical representation of the Pears Challenge in action (Photo credit: Netta Canfi)
Graphical representation of the Pears Challenge in action (Photo credit: Netta Canfi)

If you still think of Africa as a backwater where people live in squalor, you’re behind the times, according to Dr. Aliza Belman Inbal. “Africa today is a lot different from it was even a decade ago,” said Inbal, director of the Pears Program for Innovation and International Development at Tel Aviv University. “Technology has reached even the most remote villages, with solar energy systems providing electricity in many places where the electrical grid hasn’t been installed, and cellphones being used for everything from Internet surfing to banking.”

This technology development means big opportunities for entrepreneurs willing to brave a foray into Africa. Traditionally, Israeli entrepreneurs have looked to the U.S. or Europe for funding and for customers, but it’s time to upend that tradition, said Inbal. “Six of the ten fastest-growing markets in the last decade were in Africa, and there is a great need there for the kind of things Israeli entrepreneurs do best, like mobile apps, environmental technology, agricultural technology, and more.”

Building business relationships with Africa is a win-win, both for Israeli start-ups and for the Africans who will benefit from technology. The Pears Challenge, which is sponsored by the TAU program headed by Inbal, will encourage Israeli start-ups to connect with the needs of Africans, developing solutions in areas like agriculture, health, water, ICT, education, and renewable energy.

The Challenge will take applications from start-ups, with selected companies enrolled in an accelerator boot camp program where they will develop their technologies and learn about “marketing to the base of the pyramid” — that base being the majority of the world’s population that is poor and in need of solutions to basic problems. “We are looking for solutions that can bring value to the lives of people,” said Inbal.

Besides doing good for the needy residents of the developing world, the Challenge hopes to encourage the concept of Africa as a potential market for Israeli start-ups. “The government in Israel realizes that in order to ensure growth, Israeli companies need to diversify, and the Chief Scientist’s Office is planning to offer grants to companies who develop innovative solutions for problems in developing countries.”

Dr. Aliza Belman Inbal (Photo credit: Courtesy)
Dr. Aliza Belman Inbal (Photo credit: Courtesy)

Doing business in Africa isn’t the same as doing business in Silicon Valley, said Inbal, and during the program, entrepreneurs will work with mentors who have had experience working in developing countries, giving them pointers on how things work there. “The biggest difficulty Israeli companies find working in Africa is a lack of information,” said Inbal. “There are no reliable electronic connections to draw on, so you have to be on the ground to see what is going on.” The expenses and logistics involved of coordinating activity on the ground is seen by many start-ups as too great a challenge to take on.

It’s also difficult to find partners to represent Israeli companies in emerging markets – unlike in Silicon Valley, where the many students from Africa and Asia who go to study there are available to consult with companies seeking to do business in the developing world. And perhaps most challenging of all is finding funding for doing business in places like Africa. “Venture capital funds tend to stick with what they know, and they don’t know the developing world, so the likelihood of getting funding for projects there is low,” said Inbal.

The Challenge, she said, will help entrepreneurs learn how to cope with these issues. The program will continue for three months, after which a winner will be chosen, with the grand prize an all-expense paid trip to a developing country, where entrepreneurs will be able to do more on-the-ground research, or even set up shop, if they’re ready.

And Africa is ready to do business. “In the past, you had to deal with the family of the dictator or the head of the army to get anything done in many of these countries, but in recent years the governments in Africa have come to realize that they need to be more transparent,” said Inbal. “There are large middle classes in many of these countries, and they are demanding to become part of the international community, which will only happen if their governments adopt Western standards.” In addition, technology has changed the situation even in the most remote areas. “You no longer need to be on the national electricity or water grid to get power or water,” said Inbal. “Solar energy systems are providing electricity in many rural areas, for example, with one person setting up a panel to generate power and selling it to villagers.”

Africa, in fact, boasts the most advanced and largest mobile banking system in the world. Called M-Pesa, it is used by tens of millions of people throughout the continent, and in Asia as well. M-Pesa was first launched in Kenya in 2007, and has become so popular that one quarter of that country’s GDP flows through the platform.

The Pears Foundation, which sponsors the Challenge and the Tel Aviv University program, is a proponent of “the Jewish values of social justice, individual responsibility and the imperative to make a positive difference,” which according to the organization, promote, inter alia, the concept of “Israel as a global citizen.” Also collaborating on the Challenge is the Global Social Benefit Institute of UC Santa Clara, social enterprise group Minga, and IsraelDev, which brings entrepreneurs together to harness technology for the developing world. “We believe this project can bring some important changes to Africa, and to the Israeli start-up world,” said Inbal. “The Challenge will hopefully be the beginning of a growing relationship between Israeli start-ups and Africa.”

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