Fortune News | Dec 14,2019
Anduamlak Mehariw and Egzieryalew Ayele graduated from Addis Abeba Institute of Technology three years ago with degrees in mechanical engineering.
For their final year project thesis, they chose to design a coffee drying machine that can replace the traditional way of coffee drying using the sun.
Then they used that idea to start a company, Green Bean Manufacturing, about a year and a half ago and later joined Bluemoon, an agribusiness incubator and seed investor.
Eleni Gabre-Madhin (PhD) founded the agribusiness incubator two years ago with the intent of discovering and helping to grow Ethiopian youth agribusiness startups that can have big impacts. In the first year of the incubator, it hosted six startups, of which four were able to get investment from external investors.
“The reason we joined Bluemoon was that we needed some funding for our project to become a reality,” said Anduamlak.
They submitted their idea, and we were accepted to join the agribusiness incubator. The machine they invented aims to reduce the month or so it takes to dry coffee beans under the sun to just a day. The two friends also say that their machine will improve the quality of the coffee that is being dried, because the beans are dried with reduced risk to contact with foreign substances.
When coffee is dried using sunlight, the beans are laid outside where it can get hit by rain or get contaminated by other foreign substances.
Eleni Gabre-Madhin (PhD) (right) and Engineer Getahun Mekuria (PhD), Minister of Ministry of Innovation and Technology.
“Our machine dries the coffee in a closed environment, where the variables can be controlled to achieve the best quality,” explains Egzieryalew. “Coffee tasters have tested coffee that was dried using our machine, which they praised as having relatively good quality.”
This machine is not a new invention. Some large companies in Ethiopia already use imported ones. But the purpose of startups like Green Bean is to provide service directly to coffee farmers and coffee unions, according to the co-founders. With their invention, the two friends took part in the competition that was held as a side event during the tech exhibition that was held at Millennium Hall from June 6 to 10, 2019.
Startup Ethiopia was held during the week-long ICT Expo exhibition that was co-organised and hosted in collaboration with the Ministry of Innovation & Technology, Bluemoon, Iceaddis, Gebeya, ICog Labs, British Council, African Mosaique, XHub, Reach for Change and Gobeze.
“The purpose of such events and competitions is to create our own heroes,” says Eleni Gabre-Madhin (PhD), chief happiness officer of Bluemoon. “We should have the startup giants that we look up to. We can’t keep looking at Mark Zuckerberg or Elon Musk. We need to have the heroes that look and feel like us.”
The Startup Ethiopia event was inspired by the Youth Connect Africa event that was held in Kigali, Rwanda in July 2017. The event was hosted by President of the Republic of Rwanda, Paul Kagame, and was attended by Jack Ma, founder and executive chairman of Alibaba Group.
“I remember hearing about this event and thinking we need to do that,” said Eleni. “We need to make sure that the next time Jack Ma wants to come and visit an interesting place to discover African talent and startups, that place has to be Ethiopia.”
In 2018, African startups were able to secure investment of 334.5 million dollars, according to a report by Disrupt Africa. From the total amount, Nigeria received 94.9 million dollars for 58 startups, taking the top spot. But Ethiopian startups came back empty-handed.
“We are literally leaving money on the table,” Eleni told Fortune. “One of the reasons is because we have neglected early stage investors and totally focused on large-scale investors who want to work on fertiliser or textile factories.”
In Ethiopia, almost a third of the population is under the age of 24. And 70pc of the students that graduate from universities are trained in STEM fields (science, technology, engineering and mathematics), but unemployment hovers around 19pc in the country. Having more startups that can bring solutions to local issues, create more employment opportunities and help the country’s economy become more vibrant is the way to tackle the unemployment problem and better utilise the huge human resource available, according to Eleni.
The Startup Ethiopia event also ushered in the formation of the first ‘angel investors network’ in the country, Addis Ababa Angel Investors Network. Angel investors are investors that provide the small but necessary funding to budding startups in their initial phase, and thus take most of the financial risk the young venture is facing.
Nonetheless, this kind of investment has become very popular in some developed countries like the United Kingdom where 850 million pounds of investment was made by angel investors last year, according to Sir Richard Branson’s organization, Virgin Startups. This year Total Ethiopia also held its own startup competition, dubbed Startupper Challenge, where three winners were able to split 50,000 dollars. One of the winners of that competition was Green Bean Manufacturing along with GreenKetema Landscaping S.C and Grohydro Manufacturing S.C.
Selam Wondim, CEO of Grohydro Manufacturing, believes the government’s approach toward startups is not a very welcoming one. But she appreciates the recent movement the government has undertaken to make starting a new business easier than before. Grohydro was established about a year and a half ago with four founding members to manufacture materials for hydroponic farming, a farming system where the plants are grown using only water and nutrients and no soil.
Startups in Ethiopia have to deal with stringent laws, find a source of finance, a suitable working place and try to convince the public to use their new product, according to Selam.
“Having an incubator like Bluemoon has helped us to overcome these problems, because it provided us with working space, initial investment, opportunities to network with potential investors and government officials and expert advice,” Selam said.
Six months ago Grohydro got its business license and got a contract to provide 10 structures that can grow fodder for 400 goats in Somalia Regional State. Selam thinks competitions like Startup Ethiopia and Total’s Startupper Challenge are a great way to finance startups and help them stand on their own feet.
The competitions also serve the purpose of energising and inspiring others with ideas that can make a difference to actually work on their ideas and turn them into a reality, she stated.
In March of this year, the Ethiopian government moved to ease the procedure for obtaining business licenses. The improvements will ease procedures such as the requirement of authentication and confirmation for a memorandum of association, place of business, business seal stamp and publication of a business name in newspapers. During the expo, Abebe Abebayehu, chief of the Ethiopian Investment Commission, also expressed the government’s commitment to supporting startup businesses.
“We are preparing new laws that will make the Ethiopian business environment much more attractive and a thriving innovation ecosystem,” said Abebe.
The steps the government is taking are encouraging, but more should be done, according to Markos Lemma, co-founder and CEO of Iceaddis, an eight-year-old incubator that focuses on tech-related startups.
“Facebook wouldn’t have gotten off the ground, let alone become as successful as it has, if it was started in Ethiopia,” says Markos. “That’s how stringent the rules and regulations used to be. But now we seem to be moving in the right direction to make it easier for new businesses to join the market.”
The purpose of startup competitions is not providing finance but to stimulate the startup ecosystem, in Markos’s opinion, and having more of them would help reach more startups in the country.
Motivated by their recent win, Anduamlak and Egzieryalew are very much hoping that their product will be able to replace the imported driers and also be accessible to smaller companies and farmer unions.
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