Dr. Eleni G/Medhin , an Ethiopian economist and a former Chief Executive Officer of the Ethiopia Commodity Exchange (ECX) has had many years of experience working on agricultural markets. Recently she and her team launched an incubator program under the company “blueMoon” that could accelerate the youths’ activity in the agribusiness industry. Below we have an exclusive interview and Dr. Eleni tells us all about blueMoon, startup culture in our country and business tips to all the emerging entrepreneurs.
A.I : could you Give as a bit of an insight on Blue Moon?
Dr. Eleni: blueMoon is an exciting way to match a high risk taking ideas that could have a high impact in the agribusiness industry in Ethiopia through four things.
- Intensive business development, coaching, mentoring and other support 2. Access of network to key people in the industry 3.links to business service providers such as legal, web design boosting, admin and finance, accounting and the so, and 4. Seed investment by blueMoon itself and access through other financing by Angel investors, crowd investors and eventually institutional investors.
A.I :What’s the meaning behind the name specifically to your project?
Dr. Eleni: The meaning behind the name is that, we are not trying to invest and support usual types of businesses but rather looking for that sweet spot between innovative ideas that can be scalable and transformational. Who have a track record of a combined and rich experience with the ability to understand Ethiopian agro business industry doing impactful and innovative things. And who are experts in finance from wall street or who have been working with startups and understand how incubators work.
A.I: what can you tell us about your team? And how long have you been working on the project?
Dr. Eleni: Our team is fairly young with lots of women and we’re all passionate about making a difference in Ethiopia.
We started working on Blue Moon in April 2016 and had our official launch to various stakeholders in September to flesh out the model we have designed. Then after a bit of a delay due to the unrest of the country we made our call for applications in the beginning of December.
A.I : If you could tell us about how you are running the project and what you are looking from the applicants?
Dr. Eleni: We will begin our first incubator program which we call the “Bega” batch in early February. The idea is to have two batches per year. The “bega” batch and the “kiremt” batch. Each batch will have 5-10 entrepreneur teams. Because we want to have 2-3 co-founders per company that are being incubated. We worry that a single entrepreneur has a higher chance of failure because they get discouraged, get lonely, lose motivation and the so. So our model is to have 5-10 teams of 2-3 people in each team so that’s between from 25-30 people that would be in our incubator at each time. And that’s basically a pretty big group and so for four months we will be working with those 5-10 teams giving them a lot of coaching on their idea starting with the narration of what the actual story is behind the business. Because every business, every good business has a strong story behind it. What is a problem that the company is trying to solve? Whose problem is it and why is that the problem they chose to focus on, how did they know it’s the best solution?. It they can sort that out then that will help them develop a business strategy which will then grow to a business model and a business plan, so often I think we make the mistake of thinking that we should start by talking about a business plan and that the business plan is how you make money. If you don’t have all the background then often we lose the identity of the business, we lose the core values of the business and it’s those things that keep that the business on track because it creates the ethos, the culture and eventually the brand of the business. So that’s our model, it’s to build the business starting from the story the customers identify with and do all the analysis, the research, the feasibility study, the financial costing, financial and revenue projections and from there the investment amount analysis, the returns on that investment that could be projected back over the 5-7 years. All the hard core financial stuff will come but it’s based on the core which is the story, the value preposition, the understanding of the customer base at the value that it’s trying to bring to the society as we are looking for those kinds of companies that are solving important problems.
A.I : You said you are seeking out Exceptional and risk taking ideas. Could you give us an example of such from your previous encounters?
Dr. Eleni: When we look at exceptional ideas, we are looking for ideas that can grow into an impact on other lives. To name some from what I have come across at a project I have visited, a young farmer in northern Ethiopia came up with a wooden bee hive. He built a wooden bee hive with a local material instead of the one made out of straw, he tested it and found out that it can double the productivity of honey production. With this entrepreneur, if we could figure out a way of scaling that up to every bee keeper/ honey producer, that would be a very interesting, scalable and innovative business. Another interesting innovation we came across was a farmer and a chicken breeder who noticed that the chickens were dying of certain diseases so he experimented on his own way by giving the chickens different kinds of plants by drying and creating some kind of poultry medicine. He basically created some kind of a tablet to feed the chickens to prevent them from getting the disease. Which again was a very interesting idea keeping in mind the challenges that come along in making sure if it’s in abundance, if it’s safe, if it’s locally available, the time it takes to produce and cost and how to market it and all.
A.I: Since you officially launched your program, what can you tell us about the applications so far?
Dr. Eleni: From our call for application we just had, we have seen that the applicants are coming from all over Ethiopia. 50% are from Addis Ababa, and the remaining are from Jijiga, Bahir Dar, Hawassa, Kimbi, Mekelle, Assela, Nazreth, Bishoftu and just across the entire country. We are amazed and thrilled at how broad the applications have reached and how people have gotten excited and interested. We have also seen applications that are very diverse. Going from production in agriculture to livestock, dairy, poultry, waste management services, mobile marketing solutions, IT services, financial services and solar power solutions and it’s quite amazing. Going through the applications, I got goosebumps over how much I’ve learned from each, to see the kind of projects coming out and these are just people who are from 19-29 and some even 17 and 18. I am so proud of this country and what we are achieving.
A.I: What challenges have you come across regarding to your program or your business model?
Dr. Eleni: We did our applications online and that was something that we knew could be a challenge as it requires access to internet and English writing ability. So when we factor that in it’s amazing that we were able to get so many very good proposals and I think we’re going to have a fantastic first batch. And after that, it will get better and better.
The other thing we were worried about was that people had not understood our model. That they would not either be willing to go for a model where they would have to give us an investment in equity. So we had a question about whether they had understood that was how the incubator was going to work. That’s because there has been so many NGOs who have been giving grants where people are by now used to getting some financial handout. So in the application, when we asked “Are you willing to take an investment from blue moon on a commercial terms and in equity basis?” 97.6% said that’s what they wanted.
The other interesting part about our model is that it includes what we call “skin in the game”, meaning where you look for somebody to invest in you, not only moneywise but also through time, experience and track record that’s globally recognized. To get that in addition to money is a huge investment in your business. so what we told them, we also want you to put something into your business which is your contribution, We said we want you to follow a 1-10-10 model meaning you put in 1000birr and we put in ten times, 10,000birr and four month of intense interaction with you and that translates into a 10% stake and that 1,000birr from then sums up to 22,000 birr. And we asked “Are you willing to contribute that to your own company?”, again because we have to get out of the NGO mentality. So we asked are you willing and able to contribute 22,000 birr and 87% said yes which was a very high percentage.
A.I: Who’s Funding the Project?
Dr. Eleni: The project funded by our seed capital for piloting the idea has come from the MasterCard foundation and we are also looking to raise a little bit more to continue to support the incubator. But the seed funding that goes into each company is coming from private capital sources.
A.I: What are your priorities?
Dr. Eleni: As a priority, we want to have at least 40% women among the entrepreneurs. That is having a gender inclusion or sensitivity. The other is on regional representation. Although we don’t have specific targets for the first batch, our idea is that at least 40% should be outside of Addis Ababa. And in addition to business profitability, the three key pillars would be, innovative, scalable and transformational impacts in which we will be applying to choose our applicants or companies.
A.I: What triggered the idea, what’s your story behind this program?
Dr. Eleni: I got into this because I thought it was needed, because there was a gap which came out of two things. On one hand we have a huge and growing population of youth in Ethiopia and on the other part we have an emphasis on youth employment generation but being done in traditional kind of microenterprise generation way. And I feel like we should also create a space for exceptional youths because the average way will be good for many people but for the exceptional youth it’s not enough and that’s the gap I’m trying to fill. Basically, we have many programs coming up by the government, by donors, aid agencies and NGOs to train many young people on basic business skills and then help them get a microfinance loan to start a microenterprise. So the impact of that is they will have 1-5 employees where they will take a small loan and do a traditional business. With that being fine, in some exceptional cases we also have youths who have ideas that could end up becoming huge businesses and not in microbusiness or small enterprises but big companies hiring thousands of people. And we don’t have many programs to support those kinds of projects. So I want to focus on that area, I want to create a small company that would have big dreams, so what we are trying to do is to take their big dreams and help them become big companies.
A.I: How do you assess the startup Ecosystem here compared to other countries?
Dr. Eleni: I think that our startup ecosystem is very underdeveloped compared to what it could be globally but also within Africa in some places. Overall, Africa is behind the rest of the world though it’s catching up. However, Ethiopia is even farther behind. From what I have seen in other places like Kenya, Rwanda, Legos, Ghana, South Africa is that there is a culture around innovative startups or an ecosystem that fits in the culture of innovative startups that is made up of several pieces. The first is that you have people running incubators, accelerators, and hubs and a lot of that is based on access to internet. so the countries that have stronger internet are also the ones where you see this kind of things emerging because people come to a place where there is really good internet and what they do is internet dependent so that’s one of the reasons for our weakness. The other part of the ecosystem that we have yet to see is that in those environments, you have a lot of inter capital investors buzzing around looking for those young startups to invest in. So when you have the demand coming from the interested capital you will also have a lot of ideas coming forward. One of the restrictions that makes it hard here is that we have a commercial investment code that requires foreign investors to have a minimum investment of 150,000$and that’s very high when it comes to investing on a small startup.
The other part is the policy environment, in some of the other countries, it allows people to start and close businesses pretty easily compared to Ethiopia. For example here we have a one year lease on a business address, and if you can’t work from a café or some simple venues how are you going to start a tech startup, so a lot of what we see in other countries is that there are companies that are not facing the amount of regulatory business requirements to get licenses and the so as it takes here. So these are the things I think we have to look at here, if we’re going to encourage innovative startups in businesses that don’t require a business like a factory, we have to be much more flexible with the way we are currently doing the business licensing. The great thing about Ethiopia is that when we decide to do something, things move fast and very aggressively so I don’t doubt that once we sort out the kind of things we need to do to encourage a startup culture in Ethiopia, we will get it right and when we do it’ll surpass the others.
A.I: What do you want to say to the emerging startups?
Dr. Eleni: We need to develop the culture of accepting failure. In Ethiopia, Culturally, we don’t dare this big ideas because we’re scared of failure. When you see startups in other countries, it’s okay to say this is my second or third startup, it’s okay to say my last one failed and I’m going to start another one. Here, even closing a business is so hard as if there is something wrong with you. But if you have innovative ideas and takes risks then you have to expect failure. And you have to know it’s okay to fail because every you learn through the process. In fact in the US I have seen incubators that only accept companies who have a track record of having failed. Because they say if you haven’t failed then you haven’t learned some important lessons of things not to do. So we need a culture that says it’s okay to fail. We need to celebrate bold and daring ideas.
No token or token has expired.