The delayed tech innovation fund is likely to be operational by the end of the year.

The $100 million (Rwf79 billion) announced last year was expected to be working by June, but minister of Youth and ICT Jean Philbert Nsengimana has said the much awaited fund will likely start by the end of this year.

Considering that there are few investment opportunities for ICT start-ups and SMEs; the Tech fund delays means tech entrepreneurs could continue suffering to access finance.

Steve Mutabazi, chief investment strategist, ICT sector at RDB said there are enough investors who have shown interest in contributing to the fund.

But he adds that the fund establishment is a journey with various steps. “There are legal frameworks and documentation the investors have to follow,” he said.

The Tech innovation fund which could be the biggest in the country’s history, raised hopes among ICT business community of alternative financing opportunity.

“Many investors are not the right investors for early stage startups and will negatively affect the later stages of the company,” said Nash Barret, the co-founder of Safemoto, a tech startup based in Kigali.

“Many novice investors believe every startup will be Facebook in one year and then are disappointed and suck energy from the company,” he said.
On the other hand technology companies have their own business management issues.

“My opinion is that too many startups try to access investment money too early, then are frustrated when investors give them the cold shoulder,” said Mr Barrett.

According to the Minister of ICT, the money is no longer the main issue, but he did not mention the amount mobilised in the fund so far.
“Now the issue is to have good pipeline of candidates’ projects which are finance ready,” said Mr Nsengimana.

Stumbling block

“When you talk to the entrepreneurs they always say that the first constraint is money, now the money issue is going to be resolved,”
Funding is still a stumbling block for many tech SMEs and start-ups as many banks don’t believe in the profitability of their projects; while serious investors are few.

Many regional investors are predatory or non-sophisticated and will make deals or write paperwork that future investors would turn their nose at, explains Mr Barret.

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According to the co-founder of Safemoto, many of the ‘elite’ investors who come to startup challenges and other events forget about the startup the moment their cheque clears, if they remember to write it.

Marie Claire Murekatete, alumni of Carnegie Mellon University and aspiring entrepreneur said the reasons some don’t invest in ICT is not because there are no successful products in the country; instead it is the lack of awareness about achievers who have created solutions to local problems.

However, she acknowledges some entrepreneurs are not result oriented and lack deeper research about the ICT areas they want to innovate in.
Think, a local tech accelerator offered some local and African start-ups financing opportunities in form of equity investments, but the hub as closed its doors.

Seven companies hosted by Think received equity investment to the tune of $15,000.
“The quality of your project is going to be the issue, which goes way beyond just having an idea.” stressed Mr Nsengimana, adding that only viable product that has survived test of the market will be funded.

The fund is not seed capital, meaning that projects that are at idea stage will not be financed; but it will have mechanism to also accompany start-ups on seed stage.

The fund initiators hope to boost ICT entrepreneurship in the country and increase job creation among the youth.