Research on Suitability of Creative Capital Model in Africa (Kenya, Nigeria) Tender

Procurement Summary

Country : Rwanda

Summary : Research on Suitability of Creative Capital Model in Africa (Kenya, Nigeria)

Deadline : 30 Mar 2023

Other Information

Notice Type : Tender

TOT Ref.No.: 80389808

Document Ref. No. : 83433009

Financier : Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ)

Purchaser Ownership : Public

Tender Value : Refer Document

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Tender Details

Expression of Interest are invited for Research on Suitability of Creative Capital Model in Africa (Kenya, Nigeria) (Re- Advertise).

Expression of Interest (EOI): Re-published

Research on suitability of Creative Capital Model in Africa (Kenya, Nigeria)

Reference Number: 83433009

Context
The Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH is a federally owned international cooperation enterprise for sustainable development with worldwide operations. The GIZ Office in Kigali covers GIZ-s portfolio in Rwanda and Burundi. GIZ Rwanda/Burundi implements projects on behalf of the German Federal Ministry for Economic Cooperation and Development, the European Union and other commissioning authorities in the following priority areas: Sustainable Economic Development, Good Governance, Climate and Energy, Digitalization, Extractive Governance and Peace and Security in the Great Lakes Region.

Background information
Digital Entrepreneurship

Digital entrepreneurship is a key driver of economic growth and digital transformation in Africa. Entrepreneurs have the potential to modernize the economies and societies of their countries, to find innovative solutions to development problems, and to create new perspectives and employment opportunities.

Nevertheless, many young technology start-ups in Africa are often still unable to make the leap to international market maturity. There is a lack of access to capital, customers, talent and digital infrastructure. In order to be successful, entrepreneurs need a functioning ‘entrepreneurial ecosystem- consisting of startup support organizations, reference customers, investors, funding agencies and training partners. However, many ecosystems are fragmented, and tech start-ups lack important networks, access to (additional) financing and opportunities for further development.

GIZ: Make-IT in Africa II

GIZ implements the project "Make-IT in Africa II" on behalf of the German Federal Ministry for Economic Cooperation and Development (BMZ). It is part of the BMZ initiative "Digital Africa". "Make-IT in Africa II" is a multi-year program (10/2020-04/2024) that follows on from the predecessor project "Make-IT in Africa", which was implemented in the period from 2017 to 2020. The main focus of the project is to support national and pan-African entrepreneurial ecosystems to become resilient and sustainable.

Specifically, Make-IT works in three fields of action:

Competence development in the area of market-oriented corporate management - through capacity building of start-ups, gender-specific "human capacity development" measures and the establishment of partnerships between start-ups and key ecosystem actors
Competence development at the level of intermediaries - through capacity building of intermediaries such as startup support organizations, angel groups and the organization of networking events between African and European start-up and innovation actors.
Harmonizing framework conditions for innovation ecosystems - by organizing targeted policy dialogues and networking events, evaluating the gender sensitivity of the cooperation partners and publishing a toolkit of instruments and methods.
For further information on Make-IT in Africa, please see https://make-it.africa/.

Brief description of the project
Around 90% of startups ultimately fail, and the reasons leading to failure are well known: Undercapitalization, scaling challenges, lack of a competitive advantage or realistic IP. However, what about the 10% that succeed? What did they do to beat the odds?

To create a pathway for market success, startups need two essential assets groups: venture capital and creative capital.

Venture capital is formed of the financial and operational assets invested in a new, unproven business enterprise. Creative capital comprises the design and development assets that bring an ingenious idea to life. But while venture capital gets the most attention, it is the creative capital that helped many of the 10% startups stand out by creating and amplifying stories and visualizations that deliver on customers- needs and wants. Several of the Tech unicorns like Airbnb, YouTube, Pinterest, Behance have benefited from “creative” founders who were physical and digital product designers, educators, developers, and visualizers. The secret of selling technology is not to talk about technology.

The Challenge

Early-stage startups rarely have the expertise and resources in place to realize their product vision. According to the minimum viable team theory, a startup should ideally consist of three different types of founders with three different character traits and resulting tasks: The hipster, the hustler, and the hacker.

The reality however often looks different. Many tech startup teams in Africa are geared towards tech talent. As a result, building or securing creative capital capabilities is either left out or too expensive as they need to be purchased externally. Hence, despite the key role creative capital plays, startup founders do not have the luxury of committing to the journey as it usually requires financial commitments they cannot afford.

In sum, the following concerns have been observed:

Startups are usually largely focused on the product (technical side) as opposed to have a distinctive brand baked into their idea as early as possible
While there is a lot of focus on Venture Capital, it is the creative capital that can ultimately last longer and deliver bigger, sustainable returns
Having access to these expertise and resources gives startup a real jumpstart in the market, however its access is often out of reach as startups cannot pay market prices
The Opportunity:

Creative Capital is a model that delivers the expertise of industry leaders across Product, Brand, and Growth to startups on an equity for services basis allowing startups to access these critical resources even in a state of limited cash inflow. The model is successfully being applied in more mature markets and has proven to be able to provide startups with an invaluable jumpstart, to better prepare them for scale and investment, and to help de-risk an already arduous journey. But ultimately startups need to own their product which means being self-sufficient as soon as possible as seasoned investors aren-t going to be confident about investing in a startup whose product is “outsourced”. As such, creative capital is short term. It´s aim: to get startups to a valuable 1.0 or 2.0 and ready for scale and investment.

Creative Capital as such can be seen as “co-founders” for hire. It is partnering with startup founders and providing them with hands-on support. Given that a Creative Capital Provider (so-called Creative Capital Studios) are delivering in return for equity, they are incentivized to do the right job and stay involved for precisely the time and depth required to make the impact and then get out of the way. Given the high risk involved, some Creative Capital Studios opt for cash plus equity deals when engaging the model in order to offset costs, plus establish a two-way ‘skin in the game- relationship.

While technically creative capital can be applied across several fields and disciplines, the following focus areas have been found to be the most impactful:

Brand Strategy & Execution
Product Strategy & Execution
Growth Strategy & Execution
Creative Capital differentiates itself from other startup support resources by strongly focusing on execution capabilities (action) as well as investing in what can be vs. what is.

Source: https://creativecapitalstudio.nl/

The Creative Capital model can either serve both as an alternative and complementary funding stream for startups depending on how they intend to maximize its benefits. On the latter, founders can leverage the growth garnered through creative capital to further raise funding for their businesses.

“The fastest new risers in the post-Covid era will take their investor pitch deck and immediately hold a brand mirror up to it.” sifted.eu

Make-IT in Africa-s key objective is to provide relevant support to the innovation ecosystem across Africa. We hence seek to explore existing potentials in fully supporting the growth of businesses across the continent. As Creative Capital has proven to be a successful model for start-ups in other continents such as Europe and US, our goal is to perform a comprehensive assessment of its potential for African start-ups.

Scope:

The Creative Capital model tends to work better with later stage start-ups and in more advanced ecosystems (a certain level of trust needs to be there already). As such, the research should be conducted in Nigeria and Kenya.

Period of assignment: From 03.04.2023 until 02.06.2023.

2. Tasks to be performed by the consultant

We are looking for a contractor to assess the feasibility of the Creative Capital Model for the African context by conducting comprehensive research.

The consultant will therefore support GIZ in managing the following work packages and the accompanying milestones of the implementation of this project:

Conduct Desk Research on Creative Capital. This deliverable aims at assessing existing data on creative capital to enable the formulation of an informed hypothesis for further testing. The following activities are hence required:
Map out (potential) ecosystem actors and their roles within an African Creative Capital Model.
Identify and gather the pain points of startups and ecosystem enablers - accelerators, VCs, etc. This will serve as a basis to further assess the role of Creative Capital in mitigating these challenges
Identify potential Creative agencies that fit into the African Creative Capital model for further engagement.
Formulate hypothesis for validation through engagements and assessments.
Documents to be provided (ENGLISH language):

Summary of Creative Capital Model based

Documents

 Tender Notice