SCALING up on the EDGE of the RIFT VALLEY: How to Accelerate the Entrepreneurship Ecosystem for Local Scaleup Companies in Nairobi, Kenya a Report From

SCALING UP ON THE EDGE OF THE RIFT VALLEY: How to Accelerate the Entrepreneurship Ecosystem for Local Scaleup Companies in Nairobi, Kenya a report from:

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EXECUTIVE SUMMARY

Kenya needs to generate more than 3.9 million new jobs for young people by 2020, and Nairobi must play a leading role in creating these new employment opportunities. Unemployment is very high among young Kenyans and the nation’s labor force is projected to grow by another 3.4 million people between 2014 and 2020, due primarily to new young adults entering the job market. In total, more than 3.9 million new jobs must be created for young Kenyans in the next six years. Assuming that the need for new jobs will mirror the distribution of Kenya’s population, more than 600,000 new jobs will need to be created in the Nairobi area in the next six years.

Scaleup companies are some of the most important job creators across the world and have great potential to help reduce unemployment in Nairobi. A significant body of research demonstrates that scaleup firms are the drivers of job creation in cities like Nairobi. The World Bank Enterprise Survey, last conducted in Kenya in 2013, also demonstrates the significant impact that scaleups have on job creation: only 5 percent of Kenyan companies were scaleup firms growing at 20 percent or more each year, but these scaleups created 72 percent of the total new jobs generated during the previous three years.

There is a framework for action that leaders in Nairobi can use to foster the development of more scaleup companies by improving the local ecosystem for high-growth businesses. Cities that wish to foster the growth of more scaleup firms and become hubs of entrepreneurship must foster the development of the local entrepreneurship ecosystem – the way individuals, companies, organizations, and governments interact to influence the development of local entrepreneurs and their firms. This is the single most important task a city can undertake to improve its economy.

Successful ecosystems for high-growth companies follow a specific cycle of growth, in which entrepreneurs who succeed in building scalable firms go on to reinvest their financial, intellectual, and social capital into the next generation of local entrepreneurs and companies. This increases local access to funding, talent, and customers, which are the three most important resources for growing companies. The combined impact of these improvements creates a virtuous cycle of growth. SCALING UP ON THE EDGE OF THE RIFT VALLEY / 3

Interviews with Nairobi entrepreneurs suggest that the local ecosystem for high-growth companies has four major strengths: excellent access to customers, great access to a skilled workforce, high entrepreneurial ability, and entrepreneurs with a desire to reinvest in the ecosystem. Endeavor conducted interviews with over 30 founders whose companies had achieved high-growth rates consistent with scaleup firms or were designated as high-potential by a local investor or entrepreneurship support organization. Entrepreneurs in both groups shared very similar views regarding the strengths listed above.

However, founders in the city noted that the local ecosystem also has three significant challenges: a lack of entrepreneurs promoting entrepreneurship, low levels of mentorship from successful entrepreneurs, and a relatively small number of employee spinouts. These challenges were common among both groups of local founders surveyed for this report.

Analysis of stakeholder interviews from the project identified a number of promising ideas to address specific needs of Nairobi. The researchers leading this project identified a number of recommendations for improving specific aspects of the ecosystem for high-growth firms in the city. We draw these recommendations from an analysis of over 1,000 policies and programs from 100 cities, as well as from discussions with leading stakeholders in government and the private sector. 4 / SCALING UP ON THE EDGE OF THE RIFT VALLEY

Kenya needs to generate more than 3.9 million new jobs for young people by 2020 and Nairobi will need to play a leading role in creating these new employment opportunities.

The economic turmoil of the last six years has created a global jobs crisis. The International Labor Organization (ILO) estimates that the world’s economies need hundreds of millions of new jobs to create opportunities for two groups: those currently unemployed and the growing population of young people entering the workforce during the next decade. This jobs crisis is apparent almost everywhere in the world, and it affects countries at every level of development.1

In Kenya, unemployment is especially high among young adults. According to the ILO’s most recent estimates, the unemployment rate for Kenyans between the ages of 15 and 24 is 17 percent, which means that over 580,000 young Kenyans in the labor force are out of work.2 Economists note that unemployment among young adults has an adverse impact on skill development and future earnings for years to come.

As more young people enter the labor force, demand for jobs will continue to grow. Kenya’s labor force is projected to increase by 3.4 million workers between 2014 and 2020, due primarily to new young adults entering the job market.3 The number of people in the age cohort of 15 to 64 years will continue to grow until about 2040. When combined with the 580,000 15-24 year olds who are currently unemployed, this suggests that more than 3.9 million jobs need to be created for young Kenyans who will be looking for work in the next six years.4

Nairobi is the nation’s leading center for business and will need to play a leading role in creating jobs for young adults in the country. Assuming that the need for new jobs will mirror the distribution of Kenya’s population, more than 600,000 jobs will need to be created in Nairobi in the next six years.5 SCALING UP ON THE EDGE OF THE RIFT VALLEY / 5

Scaleups are some of the most important job creators across the world. They have great potential to help reduce unemployment and grow the economy in Nairobi and across Kenya.

A significant body of research demonstrates that scaleup firms are the drivers of job creation, showing that a small percentage of fast-growing firms account for a disproportionate percentage of job growth. Analysis of data from the World Bank shows that firms that grow at an average of 20 percent or more during a three-year period typically represent 5-10 percent of the businesses in a country, but create more than half of the nation’s new jobs. In this way, scaleups have a direct and measureable impact on the economy. Nurturing these growing firms is an excellent way to reduce unemployment, create high- quality jobs, and catalyze lasting economic growth.6

Impact of Scaleup Companies in Kenya (2013).

100% 90% 80%

70% 60%

50% Scaleups 40% Other firms 30% 20% 10% 0% Total number of firms Total number of jobs created surveyed in previous 3 years

Scaleups have great potential to create jobs in Nairobi. Although much attention has been paid to startups and microenterprises, supporting existing entrepreneurs who can scale their businesses is crucial to meeting Kenya’s job needs because scaleups create more jobs than other types of firms. The World Bank Enterprise Survey, last conducted in Kenya in 2013, demonstrates the significant impact that scaleups have on job creation: only 5 percent of Kenyan companies were scaleup firms growing at 20 percent or more each year, but these scaleups created 72 percent of the total new jobs generated during the previous three years. This data serves to highlight the central importance of scaleup firms to the Kenyan economy. That such a small slice of Kenyan businesses can have such an outsized impact on employment is encouraging: it means that by cultivating scaleups, it is possible to spur truly impressive growth.7

Scaleups are also durable. A 2008 study from the U.S. Small Business Administration found that only 3 percent of fast-growing startup firms failed in the four years after they experienced high-growth. A separate study in the journal of Small Business Economics likewise found that scaleups create long-term jobs.8 The authors examined Canadian firms with the fastest employment growth from 1985 to 1999 and found these firms to be resistant to job losses during periods of recession.9

Finally, scaleups promote their employees’ professional development. As these companies grow and add new employees, workers who started in entry-level positions move into middle management, developing project management and governance skills along the way. These skills add value to the company and allow workers to improve their compensation.10 6 / SCALING UP ON THE EDGE OF THE RIFT VALLEY

Leaders in Nairobi can look to other successful ecosystems to understand how networks of successful companies develop and grow over time.

Cities that wish to spur an increase in scaleup firms and become hubs of entrepreneurship must foster the development of the local entrepreneurship ecosystem that supports high-growth companies. The term “entrepreneurship ecosystem” describes the way individuals, companies, organizations, and governments interact to influence the development of entrepreneurs and their firms in a single metropolitan area or region. Participants in the ecosystem include entrepreneurs, investors, customers, suppliers, employees, and many other individuals and institutions.

Healthy ecosystems for high-growth companies enable entrepreneurs to access the resources they need to grow their companies and create jobs and value for their communities. Research suggests that the best ecosystems follow a specific cycle of growth, in which local entrepreneurs who succeed in building scalable firms go on to reinvest their financial, intellectual, and social capital into the next generation of local entrepreneurs and companies.

The Creation of Silicon Valley – Growth of the Local Computer Chip Industry. Fairchild generated 31 spinoff firms in just 12 years.

Legend:

Size of circle reflects the influence of SPINOFFS the entrepreneurs at each company based on the number of spinoff firms. Source: Endeavor Insight analysis. SCALING UP ON THE EDGE OF THE RIFT VALLEY / 7

One of the most famous examples of this cycle can be found in Silicon Valley, where Endeavor Insight recently conducted a study into the creation of the local tech industry. While the San Francisco Bay Area is now a thriving tech hub, it was a very different place in the mid-1950s. At that time, the region lacked what are now considered essential components of a successful ecosystem: customers, talent, and growth financing. In fact, before the area south of San Francisco became famous for its computer chip companies, it was known for being the largest producer of prunes in the United States.11

However, in 1957, eight entrepreneurs decided to do something that seemed crazy. They launched a new computer chip company called Fairchild Semiconductor in a small farming town in the region. The entrepreneurs leveraged their professional networks in cities outside the Bay Area to find two key supporters who helped them raise capital and sign contracts with their first customer. These connections set them on the path to success. After just three years, Fairchild’s annual revenues were over $20 million. By the mid-1960s, the group was generating $90 million in annual sales. Yet this was only the beginning of the co-founders’ accomplishments.12

As Fairchild started to grow, employees began to leave the firm to launch new spin-off businesses. The eight co-founders supported a number of these new businesses, and it wasn’t long before the entrepreneurs at Fairchild began to invest in local startups and create their own spin-off firms. In just 12 years, the co-founders and former employees of Fairchild generated more than 30 spin-off companies and funded many more. In 1971, a local journalist, describing the silicon used to manufacture computer chips at many of these companies, coined a new name for the region: Silicon Valley.13

These new companies and investment firms dramatically multiplied the impact of Fairchild and its founders. Intel and AMD continue to be two of the largest companies in the industry. Two venture capital firms started by former Fairchild employees, Kleiner Perkins and Sequoia, were early investors in AOL, Apple, Cisco, Compaq, Electronic Arts, Google, Netscape, LinkedIn, Oracle, PayPal, Sun, Yahoo!, and YouTube. Many entrepreneurs they supported also became active mentors and investors, including Steve Jobs of Apple, who mentored Facebook’s Mark Zuckerberg, and Marc Andreessen of Netscape, who has invested in Skype, Twitter, and Zynga.14

Today, nearly 70 percent of the publicly listed Bay Area tech companies can be traced directly back to the founders and employees of Fairchild. The total impact of these businesses is staggering. Today, the 92 publicly traded companies that descend from Fairchild employ over 800,000 people and have a market capitalization of more than $2 trillion. These 92 businesses are more valuable than the annual GDP of Australia, South Korea, or Spain. If we look beyond companies traded on the NASDAQ and NYSE, Fairchild’s impact is even greater. In total, we can trace over 2,000 companies back to the firm’s eight co- founders.15 8 / SCALING UP ON THE EDGE OF THE RIFT VALLEY

The Entrepreneurship Acceleration Cycle highlights how Nairobi can foster the development of more scaleup companies by improving the local high-growth ecosystem.

The story of Silicon Valley illustrates what Endeavor Insight has termed the “Entrepreneurship Acceleration Cycle” that enables successful entrepreneurship ecosystems to develop. Additional examples of this cycle can be found in a variety of successful ecosystems, including those of fashion companies in Paris, healthcare businesses in Nashville, and sports apparel firms in Portland.

The cycle has four stages, as illustrated on the opposite page.

1. AMBITION: The process begins with ambitious, new entrepreneurs who seek to build large, scalable businesses in the local area due to their desire to grow and their appreciation for the local quality of life.

2. GROWTH: Next, these founders grow their firms by acquiring the resources their companies need to expand—access to talent, finance and customers—and possessing the ability to put them to use.

3. COMMITMENT: Once they succeed, the founders make a commitment to support the next generation of entrepreneurs. This requires that they wish to continue living in the local area and have the desire to reinvest their capital, knowledge, and connections with others.

4. REINVESTMENT: Successful founders can best support new entrepreneurs by reinvesting their resources by working as mentors and investors, supporting spinoff businesses, and acting as an inspiration to others. These actions help new generations of ambitious entrepreneurs grow companies and repeat the cycle, which accelerates the development of local industries.

We have illustrated this framework on the opposite page. It is important to note that even though entrepreneurs are at the center of this process, other stakeholders can still play critical roles.

In order to maximize the benefits of the cycle, supporters of local entrepreneurs should focus their efforts on firms that fit the framework – the high-potential companies that can create large numbers of jobs and go on to provide resources to others. These types of companies are often a small minority of local businesses. In fact, studies have shown that in most countries, the largest share of new jobs comes from around 5 percent of companies that have the ambition and ability to expand. SCALING UP ON THE EDGE OF THE RIFT VALLEY / 9

The Growth Cycle of Successful Entrepreneurship Ecosystems.

OW GR TH 2.

1. AMBITION 3. COMMITMENT

Go Big & Support the Next Scale... Generation...

New Entrepreneurs Successful Entrepreneurs

4 T . R N EINVESTME

The Four Steps & Sub-Components of the Cycle:

1. AMBITION 2. GROWTH 3. COMMITMENT 4. REINVESTMENT

New entrepreneurs seek to Entrepreneurs are able to Successful entrepreneurs stay Successful entrepreneurs build scalable companies in grow their companies in the local area & engage reinvest in the next the local area due to: and reach scale based on: with new companies due to: generation through:

Access to customers Angel & VC investing Local quality of life Local quality of life Access to financing Inspiration

Access to talent Mentorship Desire to grow Desire to reinvest Entrepreneurial ability Spinoff businesses

Examples of Ways Local Leaders Can Support Each Step of the Cycle:

• Provide security and ame- • Eliminate protectionist • Provide security and ameni- • Create channels that con- nities that make your local regulations and subsidies ties that make your local area nect successful entrepre- area a great place to live for that make it difficult for new a great place to live for older, neurs with high-potential, early-stage founders. companies to win customers successful founders. early-stage founders who • Recognize fast-growing, from established firms. • Recognize successful entre- can benefit from mentorship. early-stage firms in your area • Offer loan and contract preneurs who reinvest in the • Offer tax incentives to suc- to inspire new founders. guarantees to qualified, next generation of found- cessful founders who make • Fund programs and organi- fast-growing firms. ers by acting as mentors or angel investments. zations that specifically target • Create job fairs and job investors. • Reduce enforcement of fast-growing companies boards specifically for local • Recruit successful founders non-compete agreements and evaluate these initiatives startups and entrepreneurs. to help lead and guide entre- for employees who leave based on participating com- • Establish public-private preneurship programs and entrepreneurial companies. panies’ growth. partnerships and events to initiatives in your area. • Promote successful en- attract outside investors to trepreneurs as local role your area. models.

Source: Endeavor Insight analysis. 10 / SCALING UP ON THE EDGE OF THE RIFT VALLEY

Scaleup entrepreneurs in Nairobi report that the local entrepreneurship ecosystem has four major strengths.

Endeavor conducted interviews with over 30 founders whose companies had either achieved high- growth rates consistent with scaleup firms or were designated as high-potential by a local investor or entrepreneurship support organization. Data from these interviews suggests that local founders believe that Nairobi’s entrepreneurship ecosystem for high-growth companies possesses four major strengths that support the first, second, and third steps of the Entrepreneurship Acceleration Cycle.

Strengths within Nairobi’s Entrepreneurship Ecosystem (areas with strengths highlighted in green).

1. AMBITION 2. GROWTH 3. COMMITMENT 4. REINVESTMENT

Access to customers Angel & VC investing Local quality of life Local quality of life Access to financing Inspiration

Access to talent Mentorship Desire to grow Desire to reinvest Entrepreneurial ability Spinoff businesses

Source: Endeavor Insight analysis.

DESIRE TO GROW: Regional entrepreneurs are very ambitious.

At the core of fast-growing scaleup companies are entrepreneurs. Nairobi’s technology boom and commerce revolution has come about on the backs of these entrepreneurs. Entrepreneurs are the main drivers of the entrepreneurship acceleration cycle. The ecosystem in Nairobi is a healthy one, 80 percent of entrepreneurs reported that entrepreneurs in Nairobi are very ambitious. The entrepreneurial scene is well connected and ambitious in Nairobi as a result of the recent business boom.

Nairobi is the best place I want to build Africa’s for the introduction of new Entrepreneurs in Nairobi can next great company here products in the market and compete with businesses in Nairobi. fulfilling the needs of a from all across the world. growing customer base. SCALING UP ON THE EDGE OF THE RIFT VALLEY / 11

ACCESS TO CUSTOMERS: Regional entrepreneurs report excellent access to customers in Nairobi and beyond.

Fast-growing companies need excellent access to potential customers in order to generate revenue and expand. Before a company’s product has sufficient visibility, proximity to existing industries and consumers, along with pre-existing relationships, can help facilitate the first sales. Nairobi is home to 3.2 million people. It has attracted numerous companies to locate their regional headquarters in its metropolitan area, including SAP, Google, Cisco, Nokia Seimens, and Airtel. For these reasons, Nairobi’s entrepreneurs across industries have great access to potential customers. Almost 90 percent of the entrepreneurs we surveyed agreed that the region had excellent access to customers, including both other businesses and consumers.

Nairobi continues to be the most Nairobi is where you meet Nairobi is the best developed city in East Africa, with all prospective customers. place on earth to start better access to the internet, Almost all companies in a business right now. access to tech hubs, mentors and Kenya have an office here entrepreneurs as well as a huge which makes our work customer base. much easier.

ACCESS TO TALENT: Nairobi offers fast-growing entrepreneurs excellent access to a large pool of potential employees.

Excellent employees are the foundation of a scaleup business. As one of the key inputs to the Entrepreneurship Acceleration Cycle, human capital, or the lack thereof, can be an important determinant of the success or failure of an enterprise. In Nairobi, however, 67 percent of entrepreneurs agree that they have excellent access to talented employees. Nairobi is the regional hub of East Africa, the most developed city in East Africa, and was named “Africa’s most intelligent city” by CNN in 2014 and 2015.

Nairobi is the hub The quality of human resources Nairobi is a vibrant metropolis in Nairobi is a great incentive to of East Africa and that’s poised for sustained capital of Kenya. It’s keep a regional hub here for our economic growth. People are business, even though we are where all the talent open and excited to try all kinds wants to be. opening more and more local of new things. offices in other countries.

DESIRE TO REINVEST: Many entrepreneurs report investing their money in the companies of other entrepreneurs.

A major part of the entrepreneurship acceleration cycle is the reinvestment of capital by successful entrepreneurs in the growing businesses of younger entrepreneurs. Most scaleup businesses require outside funding at some stage of their growth. It is necessary for entrepreneurs to have a strong desire to reinvest in each other.

Local Nairobi entrepreneurs report that 75 percent have invested their money in the companies of other Nairobi entrepreneurs to help them grow their businesses. Similarly, 72 percent of founders reported that other Nairobi entrepreneurs have invested in their businesses. This type of reinvestment is critical for the sustained growth of Nairobi’s entrepreneurship ecosystem and explains its rapid growth so far.

I would like to help Nairobi has a great ecosystem Nairobi has a pool of support the next that we all contribute to. generation of startups. resources for entrepreneurs. 12 / SCALING UP ON THE EDGE OF THE RIFT VALLEY

Entrepreneurs in Nairobi report that the local entrepreneurship ecosystem for high-growth companies has three major weaknesses.

Endeavor conducted interviews with over 30 founders of companies that had either achieved high- growth rates consistent with scaleup firms or were designated as high-potential by a local investor or entrepreneurship support organization. Data from these interviews suggests that local founders believe that Nairobi’s entrepreneurship ecosystem for high-growth companies possesses three major weaknesses that affect the final step of the Entrepreneurship Acceleration Cycle and slow the expansion of high- growth entrepreneurship in the area.

Weaknesses within Nairobi’s Entrepreneurship Ecosystem (areas with weaknesses highlighted in orange).

1. AMBITION 2. GROWTH 3. COMMITMENT 4. REINVESTMENT

Access to customers Angel & VC investing Local quality of life Local quality of life Access to financing Inspiration

Access to talent Mentorship Desire to grow Desire to reinvest Entrepreneurial ability Spinoff businesses

Source: Endeavor Insight analysis.

MENTORSHIP: Few growth-oriented entrepreneurs have local mentors, and even fewer of these entrepreneurs are mentoring other firms themselves.

Mentorship is the way that successful, later stage entrepreneurs can ensure that their know-how finds its way into subsequent generations of companies. A vast majority, 88 percent, of Nairobi entrepreneurs who we spoke with, however, reported being mentored rarely or infrequently.

Despite low levels of mentorship, the vast majority of entrepreneurs, 74 percent, report a desire to act as mentors for younger entrepreneurs. The challenge is to correct this market failure and creating a platform to connect later and earlier stage entrepreneurs.

I don’t have any mentors here There is no one I can go to for in the community. advice that is actually useful. SCALING UP ON THE EDGE OF THE RIFT VALLEY / 13

SPINOFF BUSINESSES: Few employees are leaving successful local firms to launch their own spinoffs in Nairobi.

Running parallel to the challenge of mentorship is the lack of employees of local businesses who go on to found their own firms. Like the Paypal Mafia in Silicon Valley, groups of former employees who have experience growing a business oftentimes make the best entrepreneurs. In Nairobi, however, former employee spinouts are rare, with 63 percent of local entrepreneurs noting that their former employees infrequently or never found new companies.

Entrepreneurs and investors cite several challenges. Even entrepreneurial firms may not have an internally entrepreneurial culture. People may enjoy being part of the entrepreneurial culture but are not entrepreneurs themselves. Another issue is the lack of local examples of successful spinouts at this time in Nairobi. Without a role model to look towards, it is less likely that employees will strike out on their own.

Maybe it will happen one It is hard to stand out in None of my employees day, but right now our the crowd with so many have ever left to start their staff don’t want to become companies which makes own companies. entrepreneurs. starting a new one difficult.

INSPIRATION: A critical part of the fourth step of the Entrepreneurship Acceleration Cycle features successful entrepreneurs not just investing in, but also inspiring other entrepreneurs.

The development of new entrepreneurs is critical for a growing entrepreneurship ecosystem. In fact, the stories of successful entrepreneurs are often a primary reason young entrepreneurs choose to start their own business. In Nairobi, 62 percent of local entrepreneurs report that they rarely or never give media interviews or make speeches to promote entrepreneurship as a desirable career option for young people. Successful entrepreneurs must promote entrepreneurship among younger generations if the ecosystem in Nairobi is to continue to grow.

The challenge is that the most Talented young people need young people aspire to work at large to see examples of people like corporates. them who are now successful entrepreneurs. 14 / SCALING UP ON THE EDGE OF THE RIFT VALLEY

Analysis of stakeholder interviews from the project identified a number of promising ideas to address specific needs of Nairobi.

The researchers leading this project identified a number of recommendations for improving specific aspects of the ecosystem for high-growth firms in the city. We draw these recommendations from an analysis of over 1,000 policies and programs from 100 cities, as well as from discussions with leading stakeholders in government and the private sector.

1. Promote and Facilitate Scaleup Mentorship (Endeavor) Mentorship for founders of scaleup companies is one of the most effective ways to support their growth. Endeavor provides high-potential founders with expert mentors, typically structured as formal advisory boards of three individuals who have expertise in the areas of the business’ needs. These mentors meet monthly with each entrepreneur and come together each quarter for a full advisory board meeting. Its partners also connect entrepreneurs to unique opportunities, such as customized training programs at Harvard Business School and consulting from firms, including Bain & Company.

2. Provide Early-Stage Startup Mentorship (ENLACE E+E) Early-stage mentorship can help entrepreneurs take ideas and turn them into scalable business models. ENLACE E+E is a program designed by Mexican entrepreneurs and the leading technical university institute in the country, the Monterrey Institute of Technology and Higher Education (TEC). Entrepreneurs who join the program are matched with three mentors who guide and support their development. The mentor network of ENLACE E+E includes many successful entrepreneurs as well as experienced business leaders, and the program focuses on businesses that can scale rapidly.

3. Offer Early-Stage Investment Training (Angel Resources Institute) Angel Resource Institute (ARI) offers expedited two to three day workshops to aspiring angel investors and entrepreneurs seeking angel investments around the world. ARI promotes a peer-led education model, urging experts and local entrepreneurs to share business skills and practical knowledge with each other. It has conducted more than 300 courses in 15 countries. A review that Endeavor Insight made of an ARI program in Istanbul found that it helped to lead to the formation of a number of new local angel groups and that many of the event’s attendees later became active angel investors.

4. Celebrate Scaleup Mentors (Monosson Prize) Entrepreneurs don’t just need early-stage mentors; they need them at all stages of their lifecycles. By raising the visibility of local mentors, Nairobi can encourage more high-quality mentorship. MIT’s Adolf F. Monosson Prize for Entrepreneurial Mentoring has done just this in Boston. There, a committee comprised of leaders of local entrepreneurship organizations accept nominations for great mentors, and honor the recipients at an annual ceremony. Mentors tend to mention the award prominently in their bios, encouraging other local business leaders and successful entrepreneurs to give back to the entrepreneurship ecosystem. SCALING UP ON THE EDGE OF THE RIFT VALLEY / 15 16 / SCALING UP ON THE EDGE OF THE RIFT VALLEY

Methodology

These findings are based on interviews with more than 30 high-growth and high-potential companies, conducted in 2015. This report was created by Max Cook and Rhett Morris. They wish to thank their colleagues Maryann Chu, Matt Lerner, and Lili Torok, as well as all of the local entrepreneurs who participated.

This report was made possible by generous support from SAP. For additional information, please contact Endeavor Insight at [email protected].

Endnotes

1. ILO, Economically Active Population, Estimates and Projections (6th edition, October 2011). http://laborsta.ilo.org/applv8/data/EAPEP/eapep_E.html.

2. United Nations Development Program, Discussion Paper: Kenya’s Youth Employment Challenge, January 2013, http://www.undp.org/content/dam/undp/library/Poverty%20Reduction/Inclusive%20 development/Kenya_YEC_web(jan13).pdf.

3. ILO, Economically Active Population, Estimates and Projections (6th edition, October 2011). http://laborsta.ilo.org/applv8/data/EAPEP/eapep_E.html.

4. Ibid.

5. Endeavor Insight analysis.

6. Ibid.

7. Endeavor Insight Analysis. Enterprise Surveys (http://www.enterprisesurveys.org), The World Bank.

8. Zoltan J. Acs, William Parsons, and Spencer Tracy, “High-Impact Firms: Gazelles Revisited”, (Washington: Small Business Administration Office of Advocacy, 2008) 2.

9. Magnus Henrekson and Dan Johansson, “Gazelles as job creators: a survey and interpretation of the evidence.” (Washington: Small Business Economics, 2010) 35: 227-244.

10. Ernst and Young, “Managing today’s Global Workforce: Elevating Talent Management to Improve Business” (New York: 2010) 2-19.

11. Rhett Morris, How Did Silicon Valley Become Silicon Valley?, (New York: Endeavor Insight, 2014) 3-14.

12. Ibid.

13. Ibid.

14. Ibid.

15. Ibid SCALING UP ON THE EDGE OF THE RIFT VALLEY / 17

About Endeavor

Endeavor is leading the global high-impact entrepreneurship movement to catalyze long-term economic growth. Over the past fifteen years, Endeavor has selected, mentored, and accelerated the best high- impact entrepreneurs around the world. To date, Endeavor has screened more than 30,000 entrepreneurs and selected 900+ individuals leading 700+ high-impact companies. These entrepreneurs represent over 500,000 jobs and over $7 billion in revenues in 2014 and inspired future generations to innovate and become entrepreneurs too.

About Endeavor Insight

Endeavor Insight, Endeavor’s research arm, studies high-impact entrepreneurs and their contribution to job creation and economic growth. Its research educates policy makers and practitioners on how to accelerate entrepreneurs’ success and support the development of strong entrepreneurship ecosystems. In 2013, Endeavor Insight joined with the Kauffman Foundation and the World Bank to co-found the Global Entrepreneurship Research Network.

About SAP

As market leader in enterprise application software, SAP (NYSE: SAP) helps companies of all sizes and industries run better. From back office to boardroom, warehouse to storefront, desktop to mobile device – SAP empowers people and organizations to work together more efficiently and use business insight more effectively to stay ahead of the competition. SAP applications and services enable more than 263,000 customers to operate profitably, adapt continuously, and grow sustainably. For more information, visit www.sap.com. Endeavor Insight November 2015 Copyright © Endeavor Global www.endeavor.org/insight

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