We had a chat with William Chitangala from Chitangala, a startup studio based in Germany and focused on building technology ventures for the African market, for a StudioHub Europe Member Spotlight. Here is what we learned about their approach and model.
How did you start your studio?
I saw that in markets like Africa, there is a huge shift in the adoption of new technologies. Nowadays everything in Africa is done on mobile phones, so there is a lot of opportunity for companies to build on this emerging infrastructure and provide a variety of services. However, the traditional approach to building startups doesn’t work there, and these technologies were adopted differently than in more developed markets.
Then, I was in Turin for about a year working with a German Innovation Hub and did some research on Blockchain and Internet of Things and how to bring the Fashion Industry onto the Blockchain. I discovered that if you want to roll out emerging technologies, then you need another approach than the traditional startup method. Someone told me “you underestimate what can be done in 10 years and overestimate what can be done in 1 year.”
This got my partners and I thinking about how to improve the startup process, and focus on bringing these emerging technologies into the African market. We felt that perhaps we could build companies to not focus on specific criteria or offerings, but design and build them to focus on a great customer experience. We thought this could be a way to get these new technologies to be adopted in the African market.
For the past few years, we have been following this approach but mainly working as freelancers to help corporations apply new technologies and innovations and build new ventures and spinoffs. We then shifted focus to set up a Startup Studio and build ventures on our own, particularly building companies for the African market
Why a startup studio? What are your thoughts on the studio model?
I have been trying to build startups traditionally myself, but the approach doesn’t work for me. It feels very isolated and risky. I much prefer the Venture Builder model, since it is more community centered and more socially oriented.
As a venture builder, you are not so focused on the venture itself, but on designing an environment or engineering a system that allows for companies to be able to build very quickly. When doing research, I saw that the Startup Studio, Venture Builder model can be traced as far back as Thomas Edison and Menlo Park. It can really help people become entrepreneurs and significantly reduce the risks of starting a new enterprise.
When you work with deep tech or technologies that come fresh out of sciences and academia, there is a lot of risk involved in getting these technologies to market. Particularly if you are like us and focused on how to bring these new technologies into emerging markets like Africa. Because of this, a Venture Builder process is much better to reduce these risks and improve the success of the new ventures.
What were your biggest challenges in creating your studio and how did you or are you overcoming them?
One of the biggest challenges is explaining what a studio is. It’s easy to use examples like Rocket Internet, but even still people don’t really understand that you are a company that builds companies.
Another challenge is to determine whether, as we start our studio, do we focus on our approach and process for building companies, or do we focus on actually building a few companies first and then developing a more structured process later. It is a bit of a Catch-22.
We decided to focus on an approach of building companies that are focused on new technologies, the African market, and a great customer experience design to increase adoption.
How does your startup studio find the right team for your studio and your portfolio companies?
You definitely need a strong team, when building your Venture Builder, but a team is not enough. Just having people with technical expertise and execution skills is not enough. You also need a good professional network and mentors as well.
In my mind, building ventures is all about networking and building networks. And you can’t do this alone, you need to have people who can help you with that. You need people who can help you professionally and help you and your studio grow and get connected to larger opportunities.
Our basic creed is to meet people where they are and connect with them personally to see how they could contribute to our studio. We try to also understand their needs and what they want to get out of being part of the process. And as a last resort, if connecting face-to-face is not possible, then we tend to use social media like LinkedIn to find people.
What have you learned in developing your startup studio that you wish you knew before you started?
One thing that we would have done differently if we were to start over again, is to design the cash flow differently. When your studio works with major corporations, they typically have the upper hand, and it takes a long time before you see the money.
How does your startup studio develop new ideas for potential companies? And how do you select the best ideas to focus on?
The strategic area that our Startup Studio occupies is around bringing new technologies to the African and emerging market, so we take that starting point and innovate around that area. We focus on the customer relationship and experience and how these technologies would be used in the local African context, and then we work out the hardware, services, and data infrastructure around that. This way, we can produce companies that can grow and then eventually be sold and also be profitable in themselves.
We realized that if you want to bring technological change about, then you need to focus on customer first. How can the end customer ultimately benefit from these new emerging technologies? What cultural benefits can be implemented by technology? Answering these questions will make it easier for companies, industries, and customers in emerging markets to adopt these technologies.
For example, take Beats by Dre. It is a pair of very expensive headphones, but it is seen as a lifestyle product in the mass market. There is a big cultural association with Dr. Dre and as a result of that, the product is hugely popular. Culture can really help with the adoption of technology.
Thus, our approach is to go into communities and see what needs they have and how can you build products using emerging technologies that contribute to their immediate needs. Our companies aim to sustainably develop these emerging markets and promote technologies that accelerate economic development in these communities.
When you look at Africa, for example, the mobile phone infrastructure is quite highly developed, with all kinds of services like mobile banking, etc. So how can this be extended and build upon to help Africa meet its key needs. Take for example agriculture. There is a lot of opportunity to use technologies like drones for spraying pesticides and for monitoring crops, etc. that could be built on top of this.
But you need to look at the cultural aspect of these technologies and look at the market and see how to get farmers to adopt these technologies to create the need and to develop the market.
How does your startup studio find funding and investment?
Right now the studio is financed through corporate innovation projects, so we are now more of a boutique Corporate Studio. But in the future, when start building own companies, we need to understand the best financing method. We hope to find either Venture Capital, Private Equity, or maybe even debt-financing for building our companies.
As I mentioned before, investing in emerging markets is a risk and investing in new technologies is also a risk, so a venture builder can provide a more secure way to invest in these markets. It makes a lot of sense for investors looking to enter into emerging markets to invest in the Startup Studio model rather than traditional startups.
What startups are in your portfolio now and what startups do you have in the works?
One company that we are getting ready to launch is a curated wine brand for the African customer.
We are also working on building some companies in the intersection of culture and IoT. Mainly trying to see how to bring great products into mass adoption through IoT technologies.
A company that is more of a long-term goal focuses on IoT interfaces and how to utilize IoT to contribute to economic development in Africa.
What is your vision for your startup studio and how do you see your studio developing in the future?
In the future, we very much hope that we transform. As we build our companies our vision is to give control of the ventures that we develop to the communities that we work with. This way our projects and ideas can live on beyond ourselves, and we can enable these ideas to grow through shared ownership with the communities that we build products for.
One example of this is a partnership we had with a team in Bremen, who are a community venture. Together we worked on a trade company that imports products from Africa and markets them in Germany. This has been a very interesting experience for us - working with communities and with people who want to be entrepreneurial instead of corporates to help them build their companies. It has provided us with valuable insights on how we build our companies and how we can involve the community more in venture development.
We want to build on this to see how we can do this more. Ultimately, we hope to shift our studio’s focus to building companies that promote economic development rather than our own personal wealth.
It will take a long time to get there, but we have started our journey towards this goal.