Where tech start ups are prey for big players

Where tech start ups are prey for big players

Truth be told Mpesa, mobile money transfer, is a revolutionary product that placed Kenya in the hall of innovation attracting investors to set up incubators to harness this wealth.

However 10 years into the mobile money revolution little innovation seems to be coming from the East African nation previously famed for its creativity.

Did its creativity well just dry up?

Moving from one incubation hub to the other in Kenya’s capital, Nairobi creativity is rife with many world changing solutions and mind boggling ideas.

However many start-ups in Kenya remain just that for just too long, with hawk eyed Tier one companies ready to tackle them and steal their ideas as soon as they are off their protective nest in the incubation hubs.

Companies like giant telecommunication Safaricom largely owned by Vodafone have been accused of stealing away ideas that crop up leaving their innovators broke with their lives destroyed.

This is facilitated by a weak legal infrastructure where receiving a patent for a technological product is a nightmare and more so software.

The theft if ideas sometimes even moves down to middle size companies where Safaricom has been accused by Faulu Kenya a microfinance company of stealing its Mshwari product that facilitates the issuance of loans through mobile phones.

Apart from this the company is further accused of having eyed a number of products to which similar products are expected in market soon.

As for the hardest hit start-ups include six Degrees which was started to offer contact back up before the telecommunication giant started a similar venture instead of acquiring or licensing the service to the start-up.
Many legal experts say apart from the legal loopholes the lack of legal education among many start-ups is the cause of alarm with many presenting their ideas to ‘investors’ without a pre-signed Non- disclosure agreement.

In other instances investors are out to steal start ups from their owners as regrets as happened with a start up Pesatalk meant to be an online business news vendor.

As the founder writes Joel Macharia the partnership with an investor led to the loss of his company:
“When most entrepreneurs write this kind of post, they are usually sitting in a bathtub, cigar in mouth and counting their dollars after a successful buyout of their start-up. This, unfortunately, is not the case for me. I chose to leave Pesatalk, the consumer finance info business I had started, handing over the reins to 88 MPH, the seed fund, at of December 2012.”

The case of Macharia is a case shared in tens of other start ups some of whom have been able to get back on their feet.

But with the start ups lacking the financial and legal backing this is surely not the last case especially with the construction of Kenya’s first tech city Konza that is expected to attract more big players in the tech scene.

Written By: samuel kamau

Leave a Reply

Your email address will not be published.