COURTNEY&MATT: The Scoop

Welcome to the new and improved Kenya Handle This blog. This is our first joint entry and we’d like to take this chance to explain our project to the world. We’ve been joking about the fact that we’ve both received almost the exact same questions from friends and family and the conversation almost always inevitably ends in something like, “So exactly what are you doing? Maybe start from the top …” So that’s where we’ll start:

Courtney came to Africa on a trip with HBS/HKS in January and was interested in finding out about small and medium sized enterprises (SMEs). During her time in Nairobi, she conducted some initial interviews and research about the landscape of the market in east Africa. Her findings lead her to a number of conclusions about how to address the needs of the SME segment, culminating in an epiphany on her return flight home: start-ups are left out because they are too risky for the private sector and have real time needs that cant be met by the slow moving public sector.

After months of problem-solving and further research, Courtney built a framework to address this gaping hole in the Kenyan market. She discovered that the main reasons why SMEs fail are: 1) Start-ups in east Africa generally don’t have the human resources (skills, business knowledge) to succeed, 2) Funding is nearly impossible obtain before 3 years of operations (and even then is extraordinarily expensive, and 3) There are a host of other issues such as legal restrictions, access to market information, no credit bureaus, etc.

She built a model and pitched it to the Kennedy School in hopes of getting funding to return to Nairobi this summer to develop a business plan for a new non-profit that aims to help SME start-ups overcome these massive barriers. Harvard said yes. Courtney called Matt and asked him to move to Kenya for the summer to partner with her in making this idea become a reality. Matt said yes, too. Now we’re working together to refine this concept and test the waters to see if it will work.

The idea is to build a center that provides entrepreneurs that have outstanding innovations/ business plans with the skills and dollars (well, actually shillings) they will need to succeed.

It will all start with a business competition. It is unclear whether the competition will be our own, or piggyback on one of the many competitions that already draw thousands of entries each year. Some much smaller number of entrepreneurs will be invited into our center from that pool (likely anywhere from 30-100). The entrepreneurs will attend intensive classes in the core business areas like accounting, marketing, finance, strategy, and operations. The goal of each class will be to finalize that specific part of each entrepreneur’s business plan (e.g. the finance course should yield 3 years’ projected financial statements, etc). After that, the top tier (this will be a very competitive environment) of about 20-40 entrepreneurs will be given a small amount of capital to prove that there is a demand for their products and services over the next 6 months. Finally, the ones that succeed will be given “full launch capital” for 3 years plus mentors, consulting services and other types of support. However, the institution has to be sustainable so the money isn’t free. There will be a revenue sharing agreement with the entrepreneurs based on the desired return (it will be cheaper than any for-profit institution). The revenue will go back into the fund to pay for more entrepreneurs in the following years.

Make sense? Tell us what you think. So far, CEOs of banks, professors, other academics, local entrepreneurs and colleagues from other financial institutions seem to really love the concept. We’re more inspired with every meeting that there is really something to this idea.

And we’ll leave you with our favorite new lyrics from 2 Face, “You are my African Queen. You make my heart go jing-a-ling-a-ling.”

~Your favorite entrepreneurs