At VC4Africa we are in touch with many entrepreneurs across the continent and we are always interested to learn from their experiences. We recently spoke with Nigeria?s hardware guru Saheed Adepoju, the man behind Encipher Limited ? the company that introduced the country?s first Android-based tablet computer. He talks about his efforts to build one of the continent?s most promising?technology hardware start-ups and?the challenges inherent to his business.
After he returned from the UK in 2009, Adepoju and his partner, Anibe Agama, had originally set out to launch a mobile phone. But when tablet computers were introduced in 2010, this provided an opportunity to launch a similar product but from their own perspective. With a background in developing Android based applications, he sought out hardware needed to test software he and other developers had built. This gap inspired his company to produce the Inye tablet both for local developers and the Nigerian market. Saheed says: ?Our objective was two-fold: You have mobile developers who wanted to test their applications with our hardware and then also serve a mass market that want alternatives to the high-end tablets available in the market.?
Meet the Inye tablet
With his personal savings, and funds from family and friends, his company Encipher launched the Inye tablet version 1, pushing out 100 devices of the Android based tablet in 2010. The company received many responses from their consumers. ?From the feedback we learned to use a 3G SIM card, rather than a modem that plugged into USB. Also to change the resistive screen to a capacitive screen,? says Adepoju, adding that the resistive screen was initially used because of cost implications.
Based on the many responses from the users Encipher launched Inye version 2 in May 2011, an improved tablet computer with pre-installed Nigerian applications, for instance one that informs people about HIV in the local Yoruba language.??Our mission is to express and preserve culture using technology and ensure we use our platform as a vehicle to keep on doing that,? he says.
Servicing hardware locally is critical
Adepoju believes strongly in the success of the Inye 2. He says even when Apple decides to target Nigeria, the Inye tablet will do well: ?One of the reasons why most people will pick up our tablet is because of the price [between $250 and $300] and local service support. A lot of people downplay local service support, but I can say if you break your Apple iPad or your Samsung Galaxy tab here in Nigeria and you can?t fix it, you are forced to buy another one. We know a lot of people here in Nigeria that probably wouldn?t want to do that. People would probably just want to fix the screen if it?s broken, and we offer that. We have the power to fix our devices here.?
Expansion, funding drive and challenges
In the past year, the Nigerian tablet pioneer has been in search of funds to bring in the version 2 of the ?Inye? at an affordable price to the consumer. In his words: ?We are talking to various tiers of investors. We have a business plan to let them understand there is a viable market with good decent price points and good return on their investments. That is the stage we are in right now.?
If Encipher succeeds, and gets the maximum funding of $3m it needs, Adepoju says the company will break even with 8,000 units of the Inye 2 sold in a 3-year spread, and start to make decent profits afterwards. ?Break even means the business will be able to sustain itself without needing external cash to keep running it.?
The investor search before joining VC4Africa
However, inspite of Encipher?s seeming track record, which includes reviews and coverage by global media outlets like CNN and Forbes, the company is yet to get the required funding needed to expand, a situation Adepoju describes: ?What I have seen so far is that most VC firms are averse to technology hardware start-ups. You apply and you don?t get a quick response. They give excuses as to why it may be a volatile business, because hardware changes so quickly, which to me seems unfair. We are aware that hardware changes and we never said we were going to keep the technology constant. So it?s one of the things that I have faced personally while dealing with venture capitalists.?
Investors are risk-averse when it comes to hardware
Adepoju thinks that a number of VC firms are not willing to take risk. He explains: ?Investors outside the country don?t understand how African businesses work; investors within the country want to ensure whatever they invest in gives them returns, which I believe is not venture capitalism, because in the backdrop of venture capitalism, there?s a gambling mentality. I believe the mentality we have here is that ?I want that company that will definitely make a hit.?
He continues:??Talking about venture capitalists in Africa, I am yet to see one that will invest? when I mean invest, I don?t mean give like seed funding of 50,000 dollars. I mean actually give like 2 million dollars to a business that is already gaining traction. So I believe they are very risk averse in investing in a market where they are not sure of a return on investment.?
Building a track record and growing an investment culture
Adepoju indicated that with time, investors could start showing keen interest in his kind of start-up as the Nigerian start-up scene grows and records success stories. ?In a way, I don?t really blame the VC?s because if there has been a company that was funded that has a track record, then they will say, ?fine, whatever you do, follow that company?s model, look closely, try and innovate on what they have. But, there?s no reference point yet. That?s what I believe is going on, and like I have always imagined, all you need is just one. That is us. We are willing to let them know it can work here and that there is a market,? he says.
?Bite the bullet?
Adepoju is encouraging entrepreneurs not to give up on their dreams, and for investors looking the way of Africa, he says, ?bite the bullet because everything is a risk, and not investing in Africa is one of them.?
At VC4Africa we are always inspired by entrepreneurs like Saheed. Nigeria certainly should be in the business of hardware and he is pioneering a way forward. Check out his venture profile, help us spread the word and lets champion the future of Nigerian tablets!
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