Kenyan telco Safaricom’s Alpha incubator faces uncertain future

Safaricom’s Nairobi based Alpha innovation incubator may have an uncertain future, according to sources.

With two high-level departures, and the passing of Safaricom’s CEO Bob Collymore, there are questions on how or if Alpha will continue to operate.

The space was established in 2017 to spur new product development for Safaricom, which is Kenya’s largest mobile operator and the provider of M-Pesa — East Africa’s most used mobile-money product.

As TechCrunch reported, one of the first objectives of Alpha was to build upon the success of M-Pesa.

As a telco, Safaricom has 69 percent of the Kenya’s mobile subscribers and generates around a fourth ($531 million) of its ≈ $2.2 billion annual revenues (2018) from M-Pesa. The fintech product has 20.5 million customers across a network of 176,000 agents.

While these stats have put Safaricom in a coveted position, the company’s former CEO Bob Collymore expressed concerns over the risk of too many eggs in one basket. For years, Collymore pressed his company to diversify product and revenue streams.

Through in-house development and partnerships, Safaricom added consumer and small business-based products, such as ride-hail app Little and website services, to its mobile and fintech network.

In 2017, Safaricom’s Chief Innovation Officer and first head of Alpha, Kamal Bhattacharya echoed Collymore’s mission to diversify the company’s offerings.

“We’d actually like to move beyond M-Pesa by leveraging its power as a social network to connect people to other product solutions,” he told TechCrunch.

Bhattacharya — who’d come to Safaricom after senior positions at IBM Research Africa and a stint restructuring Kenyan innovation center iHub — recruited a team for Alpha, led by founder and computer scientist Shikoh Gitau.

From a market perspective, Alpha was something to watch since corporate incubators in Africa were (and continue to be) a relatively new component across the continent’s tech ecosystem.

Alpha staff in 2018

In a space purposely set up away from Safaricom’s HQ, Alpha’s team of innovators set to shaping new digital offerings.

In 2018, the incubator rolled out its first product, a social networking platform called Bonga, to augment M-Pesa.

Since M-Pesa was already established as a commercial network, the idea was to amplify that by creating more social media type transactions around it — channeling Facebook, YouTube, iTunes, PayPal, and eBay in one platform.

With Bonga, Alpha appeared to have some momentum into 2018, before the innovation incubator lost two of its biggest backers.

First, Kamal Bhattacharya, exited Safaricom and his position of lead of Alpha in October 2018. The reason given by the company was a bit of corporate say-nothing-speak: “leaving to pursue other interests.”

The real reasons for Bhattacharya’s sudden exit were unclear. There was, however, plenty of scuttlebutt about powers within Safaricom — resistant to the brand of bureaucracy rattling change Alpha could bring — conspiring to push him out.

After losing its head, Alpha lost another key ally in Bob Collymore when he passed away in July of this year after a fight with cancer.

Zwuup SafaricomAlpha said farewell to another senior figure in August when Huston Malande left. It also rebranded Bonga to Zwuup this year — though Safaricom’s last two annual reports don’t indicate how the product has fared under either name, with no mention of Bonga, Zwuup, or Alpha.

What’s next for Alpha?

Several sources close to Safaricom (speaking on background) expressed doubt that it would have the support within the company to continue with Collymore’s passing.

One source suggested Alpha would more likely be morphed into the larger Safaricom bureaucracy rather than shut down completely, to avoid negative news that an abrupt closure would bring.

TechCrunch asked Safaricom directly on the future of Alpha, and specifically if it would confirm or deny reports the innovation incubator could shutdown. A Safaricom spokesperson said it could not comment on anything related to Alpha’s products or performance before Safaricom’s next earnings reporting, scheduled for November 1.

So Kenya’s tech community will have to wait a couple more weeks to see if Safaricom sticks to its experiment to spur inside innovation by creating an outside incubator — or not.



Marieme Diop and Shikoh Gitau to speak at Startup Battlefield Africa

Startup Battlefield Africa is set for December 11 in Lagos and investor Marieme Diop and ICT expert Shikoh Gitau will be there to lend their perspective and expertise. The Lagos TechCrunch event is a return to Africa for the Startup Battlefield series after its debut on the continent in Nairobi, Kenya.

Shikoh Gitau

Diop — who is a VC investor in early-stage African startups at Orange Digital Ventures — will speak on venture capital in Africa. And Gitau, who is head of product at Safaricom’s Alpha incubator, joins TechCrunch to discuss talent, innovation, and repatriate entrepreneurs in Africa’s expanding startup landscape.

Alpha opened in 2017 and Gitau led a Pan-African and global search for candidates to form its team. The incubator was established to innovate new products and apps for Safaricom: Kenya’s largest telecom, globally recognized for its M-Pesa mobile money product with 27 million customers.

In April this year, Gitau and her colleagues rolled out Alpha’s first product, called Bonga, to leverage M-Pesa’s extensive financial web as a social and e-commerce network.

Marieme Diop will share insights with the Startup Battlefield crowd on Africa’s VC market. Under her tutelage, Orange Digital Ventures (ODV) participated in a $16 million round for South African fintech startup Yoco and the $8.6 million round to Africa’s Talking—a Pan-African business enterprise software startup.

Marieme Diop

Formed in 2017 as the venture arm of French telco Orange, ODV is a €150 fund with €50 allocated for Africa, according to Diop. It has made 17 investments globally, with 2 in Africa. These follow pre-fund Orange investments in startups Jumia (Africa’s first unicorn), Afrimarket, and Afrostream.

Orange has €40 left for African startup investments, according to Diop. “Our target is to make 4 African investments each year,” she told TechCrunch.

Diop will join Startup Battlefield Africa to discuss investment at a time when VC rounds and funds on the continent are surging. A recent Crunchbase survey found 51 viable Africa-focused VC funds globally, with 22 (or 43 percent) located on the continent. Of those 22, nearly half (41 percent) were formed since 2016, with 9 in Nigeria.

TechCrunch’s Startup Battlefield Africa in Lagos will be a day-long affair and include a competition with pitches from Africa’s top early-stage startups. TechCrunch will also offer panel discussions to explore the continent’s rapidly growing tech ecosystem, including venture capital. You don’t want to miss out. Buy your tickets here.