DIGITAL NIGERIA

Many cities are looking to replicate Silicon Valley's magic formula to become the tech start-up hub of the future. Lagos remains the underdog, for now.

Google's country manager Juliet Ehimuan-Chiazor speaks during an interview with Reuters in her office in Lagos, Nigeria May 9, 2017.REUTERS/Akintunde Akinleye


From its humble beginnings as the center of telegraph and radio communications, thanks in part to its proximity to San Francisco's port, the San Jose area is now synonymous with the global tech industry.

As the area progressed from telegraphs and radios to aerospace industries and computing, it was renamed “Silicon Valley," a reference to William Shockley's silicon transistors.

And even back in the mid-1900s, entrepreneurs and leading tech experts would join existing companies only to leave shortly after to start their own ventures.

Over time, however, Stanford University anchored these entrepreneurs, engineers, and visionaries to Palo Alto.

Today, cities across the globe are looking for the ingredients and perfect recipe for creating their own Silicon Valleys, even choosing spin-off names such as “Silicon Wadi" in Tel Aviv, Israel, Santiago's “Chilecon Valley," and Germany's Silicon Allee in Berlin and Silicon Saxony in Dresden.

We can now add Yabacon Valley in Lagos, Nigeria, to the list.

Recent attention from Facebook and Google has put Nigeria on Africa's start-up ecosystem map.

Yabacon Valley, named after the Yaba neighborhood in the country's economic and cultural capital, has worked to establish itself as Nigeria's start-up hub. Thanks to start-up Co-Creation Hub, Yabacon Valley has incubated country's biggest start-ups.

Facebook CEO Mark Zuckerberg visited Lagos in 2016, sparking a lot of talk around town. It was the CEO's first visit to Africa, and he chose Lagos over other prominent African tech hubs, which include Cape Town, South Africa, and Nairobi, Kenya.

Over a year later, in November 2017, Zuckerberg announced Facebook's first tech hub in Africa will be located in Lagos.

Facebook's expected presence in Nigeria follows Google CEO Sundar Pichai's announcement about its first Launchpad Space outside the US in none other than Lagos.

The attention from top tech CEOs mirrors interest from investors.

In 2016, Nigeria attracted more start-up funding than any other African country, beating out South Africa by over USD12 million. According to data from Partech Ventures, Nigeria was the only African country to raise more than USD100 million, with a total USD109.37 million raised; South Africa and Kenya pulled in USD96.75 million and USD92.7 million, respectively. Fourth-place Rwanda was nowhere close to these African start-up powerhouses with a meager USD16 million in start-up funding raised.

As Co-Creation Hub co-founder Bosun Tijani told the Financial Times in November 2017, “Serious money is beginning to hit the market." Recognized venture capital firms (VCs) and incubators such as Greycroft, Kholsa Impact, Green Visor, Social Capital Partnership, and Y-Combinator all demonstrated their growing interest in Africa through investment in Lagos.

Among other accolades for the continent's most populous and fastest growing city, Lagos is also Africa's most valuable start-up ecosystem as measured by Startup Genome's “Global Startup Ecosystem Report 2017."
Valued at USD2 billion, Lagos dwarfs Cape Town's USD172-million valuation despite Cape Town's higher number of active tech start-ups.

Lagos' strengths lie in its engineering talent, which is cheaper and has a high-level of English proficiency.
Also, according to startup Genome's 2017 report, globally, Lagos' ecosystem has the ninth highest rate of founders with an undergraduate degree at 59%. An even greater proportion—93%—have a technical background. One of Yaba's many advantages as a neighborhood is its proximity to the University of Lagos and Yaba College of Technology.

And as Africa's fastest growing city, many attribute Lagos' rise as a start-up and tech magnet to its swelling mobile use and Internet connectivity.

It is no coincidence that Nigeria is both Facebook's biggest market in Africa and a location in which Google Maps service numbers doubled in the past year.

While Yabacon Valley and the broader Lagos ecosystem have many advantages over Cape Town and other African hubs—Nairobi was not even mentioned as a global startup ecosystem according to Startup Genome, Lagos still has a long way to go on the global stage.

In the first half of 2017, before the announcements from Facebook and Google, many questioned Lagos' viability as start-up tech hub, worried that its hype was disproportionate to the reality. The average early-stage funding for a Lagos start-up is USD77,800; the global average is USD252,000—more than triple Lagos' figure.

Andela, arguably Nigeria's most successful start-up, moved to Ikeja, another Lagos neighborhood. Konga, the country's supposed e-commerce success story, also moved from Yaba and fired 60% of staff.

Flutterwave, Nigeria's fintech poster child, actually operates out of San Francisco with a Nigerian team in Lekki, not Yaba. This is largely because infrastructure in Yaba is lacking, and other areas of the city offer better and/or cheaper advantages.

Despite the fact that the growth of Lagos' start-up ecosystem holds more promise than Cape Town, the hub is far from globally connected. Only 11% of Lagos-based start-ups plan to go global.

In general, it seems that African firms on the whole are not yet respected enough to get an invite to the leading worldwide tech start-up parties. South Africa and Nigeria only appear in Startup Genome's report in the three-city (token?) Africa chapter. An African city failed to crack their top-20 rankings, or even the list of runners-up to the top 20.

The World Economic Forum (WEF), in collaboration with Business Insider, ranked the top 22 cities in the world for tech. The regions of North America, Europe, and Asia Pacific boasted six cities each, and the US and Europe dominated the top 10.

MENA and Africa each managed to get one city on the list with Silicon Wadi (aka Tel Aviv) and Cape Town.

If you factor in criteria like GDP per capita and average commute, it only makes sense that Cape Town appears in WEF's list over Lagos, albeit in last place out of the 25 cities.

Which area will become the next Silicon Valley remains up for debate, and this debate does not even include an African city as an option—yet.

Facebook's Zuckerberg, Google's Pichai, and Venture Capital firms the world over see something in Lagos; and, with increasing funding and attention, Yabacon Valley may one day rival Silicon Valley or the next Silicon Valley to become the next “next Silicon Valley."

 

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