Safaricom has launched a $1 million Venture Capital fund targeting local mobile app startups in Kenya, likely giving it the first opportunity to adopt some innovative technology.
The Safaricom Spark Venture Fund will offer venture capital ranging from $ 75,000 to $250,000 per startup.
"We see this as a much-needed catalyst that will help actualize our aspiration to nurture a vibrant ICT economy in Kenya," said Joe Ogutu, director of strategy and innovation at Safaricom. "It will directly address the key startup and developers' pain points such as the cost and speed of accessing a platform where they can test their solutions."
Safaricom had previously been accused of "stealing" ideas from local startups that pitch business plans in the hope of accessing a mobile platform, 17 million subscribers and the financial marketing muscle that the company commands. In the last two years, Safaricom has moved to clean up its image, partnering with innovation and startup acceleration hubs to provide support to developers.
Last week, Safaricom announced the launch of M-Ledger, an Android-based application designed to provide subscribers with a simple and easy to use financial journal to track and monitor transactions on the company's M-PESA mobile money service.
Although Safaricom has partnered with other local startups to provide innovative products, this was the first product launched with a startup that came up through the ranks in an app competition. M-Ledger was one of 18 applications developed during the inaugural 2013 Safaricom Appwiz Competition. Modeled on traditional ledgers used in the accounting profession, M-Ledger provides historical data on past transactions as well as providing the option to extract data in spreadsheet form.
The application also has a universal search functionality for other mobile-money based services provided by Safaricom, such as bill payment and e-commerce.
The new Spark fund will run for an initial two years, and will be administered together with international tech fund TBL Invest.
Prospective applications will be subject to approval from a cross-functional Investment Committee made up of Safaricom management, TBL Invest staff and external industry experts.
"Despite contributing to over 60 percent of Kenya's GDP, small businesses are under-funded and do not have access to the same level of advice as their counterparts in other countries," said Eline Blaauboer, Managing Partner at TBL Invest.
Two years ago, the World Bank provided $3 million grants for startups, but the funded companies have performed dismally.
To qualify for funds from Spark, startups must have a working product or service with an active user base, making it easier for Safaricom to integrate the technology with existing products. The Fund committee and the startups will decide whether the investment will be either through equity Investment or investment convertible to other debt instruments.