Many Do-Good Startups Begin In Niarobi

nairobi startupStephanie Koczela arrived in the San Francisco Bay Area in 2010, when everyone was moving fast and breaking things. She had been working for the microlender Kiva in Nairobi, Kenya, and transferred to the company?s South of Market headquarters to build its global field operations. For an ambitious twentysomething with an interest in development issues, it seemed like a dream job. The work was engaging, but Koczela was miserable. She longed to be back in Nairobi, where expat entrepreneurs were launching startups of their own.

In Africa, ?you are surrounded by people that are living a very fun, very hard life,? Koczela says. ?You are working from 7 a.m. to 9 p.m. at least. Most people are working to 1 a.m. to make phone calls back to the U.S. If you text someone at 10 and say, ?Do you know how to do this Excel calculation?? they will call you right back.? Koczela expected that same camaraderie in San Francisco but found it had been more vibrant in Nairobi.

Koczela packed up and returned to Kenya, where she co-founded Penda Health, a chain of for-profit medical clinics. She?s one of a few hundred mzungus?foreigners?in their 20s and 30s who have come to Nairobi to build social enterprises, which are for-profit but aim to improve the lives of their customers and bring about social change. They?re selling solar panels and vegetable seeds, setting up schools, and, like Penda, opening health centers. The chain?s two main clinics each see about 1,000 people a month, making money one $6 patient visit at a time. With its facilities getting close to breaking even consistently, Penda is gearing up for a Series A round of financing next summer.

Charlene Chen, who?s worked at several local social enterprises, considered staying in the Bay Area after getting an MBA at the University of California at Berkeley. She came to Nairobi instead, believing that startups can help find solutions to profound global problems. ?We may be excessively naive,? she says, ?but we land here thinking that?s what we should be doing.?

Photographer: Pete Muller for Bloomberg BusinessweekKoczela at the clinic in Penda.
According to a survey by J.P. Morgan (JPM), so-called impact investors?those who fund companies they think will create financial returns and societal benefits?put $10.6 billion into almost 5,000 companies worldwide in 2013. More than half allocated money to sub-Saharan Africa, the most of any region in the world. A preliminary study by Open Capital Advisors, a Nairobi-based consulting firm, estimates that $650 million has been invested in Kenya alone, mostly in the last five years.

But Nairobi can test anyone?s patience. You have to deal with hellacious power failures and traffic, widespread corruption, and uncertain security. ?There are tons of 23-year-olds from Brown, and they?ll be back in the U.S. in 18 months,? says Peter Gross, who left Atlanta to build the Africa business of MicroEnsure, which provides health and life insurance to more than 10 million people globally, the majority in Africa. ?I?m not knocking that, but you?ve got to enjoy the tough stuff.?

Gross, whose wife works for Penda, has committed to Kenya for the long haul. So has Koczela, now 28, who considers Nairobi the place where she feels ?really alive.? Together, these entrepreneurs are trying to prove that new kinds of businesses can do a better job of helping the country?s poor than do nonprofits or governments. ?????Despite its drawbacks, Nairobi?s a pretty good place for a foreigner to start a company. English and Swahili are the official languages of Kenya, and Nairobi has several excellent universities that produce sharp graduates. Kenyans take pride in their country?s entrepreneurial hustle. There are direct flights to much of Africa and Europe, making it a convenient place to expand regionally. And if your business targets people with low incomes, Kenya has plenty of potential customers.

?It?s got this Silicon Valley-like feel of innovation,? says Radhika Thakkar, who runs business development for Greenlight Planet. Her company has sold more than 3 million small solar lamps with a round, smiley design that makes it feel like a Disney sidekick. Greenlight is based in Mumbai, but Thakkar, a former consultant in Washington, D.C., chose Nairobi as a base for global expansion. ?Setting up a company is so much faster than in India,? she says.

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