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Kopo Kopo helping Kenyans Pay by Mobile Phone

Imagine walking into a 7-11 to pick up some chips. You go up to the counter, pull out your debit card, but the store has no device that will read it. Perhaps you think you’d simply take your business elsewhere. Imagine further that your encounter with every business was the same. You have funds in your account. But you cannot use them in the marketplace.

This is much like the situation many Kenyans face regularly, explains Benjamin Lyon, VP of Business Development with Kopo Kopo, a 2011 SBIO finalist. But instead of a magnetic swipe card, would-be Kenyan consumers pay via their mobile phones, using – as the parlance goes – mobile money. What Kopo Kopo does is provide a web-based application (accessible by PC and Android) that enables small- and medium-sized businesses to accept and track purchases made with mobile money.

‘Kopo Kopo’ comes from the Krio word kobboh koppoh, meaning “money.” Krio is the language of Sierra Leone, where in the city of Freetown Kopo Kopo got its inspiriation and its start. Nowadays they are incorporated in Delaware, but 100% of their operations take place in Nairobi, whence they hope to launchpad in the future and offer services to Tansania, Uganda,and Rwanda. East Africa is currently a hot destination for incubators, where there is fast internet, affordable smart phones, and M-Pesa, “one of the most successful mobile money programs on Earth,” said Benjamin. “This is the epicenter of mobile money innovation and we wanted to be there in the thick of it and be part of making the inclusion of the business end successful.”

M-Pesa sign

Benjamin estimates that 70% of the adult population in Kenya uses M-Pesa, one of several mobile money services available. It’s not a bank, but rather a system that provides users a way to virtually direct their money. Via SMS and USSD one may transfer money to other people, pay bills, and buy airtime for their phones. This is a significant avenue for economic motion, as roughly 20% of Kenya’s GDP is transacted through M-Pesa alone.

Kopo Kopo’s application improves the purchasing power of mobile money uses by providing businesses the tools to accept mobile money and seamlessly incorporate those transactions into their own accounting software (e.g., Quickbooks). It also enables businesses to analyze buying trends, and employ SMS to communicate with their customers (for instance, about upcoming sales) (see “Mobile Money: Integration vs. Interoperability”).

It’s been an exciting time for Kopo Kopo since their SBIO presentation. In December last year they closed a Series A investment, so that they are now able to operate with a full team and be a bona fide professional presence in their area. They are actively selling their service in the Kenyan market, and their basic service – which is free – is tremendously popular. Benjamin reports that they have been received far in excess of their expectations, and he looks forward to their potential of becoming a more global service.

But it hasn’t all been wine and roses. After a major insight that shifted their business approach from interfacing between individuals and microfinance services to enabling millions of businesses to connect with consumers, they’ve struggled through the pain many start ups know: finding the right investors. Benjamin recalls their approaching as many as 50 potential supporters, and while that was necessary, it meant time not spent talking to customers or developing their product.

founders of Kopo Kopo

“It’s not an easy path,” he said. By the time they closed their first major investment, they were down to $109 in the bank, sleeping on the floor, eating ramen noodles, and living with the dread that despite all their hard work and sacrifice, their business might fold.

Attending events like the SBIO can help. Benjamin points out that attending increases your company’s exposure, and opens your organization to validation and credibility through interacting with the other participants. Kopo Kopo’s representative at the SBIO, Laura Spiekerman, reported being humbled by the high caliber of attendants and presenters there.

For new startups, Benjamin recommends being business-savvy. With Kopo Kopo, for instance, they do what they do because they think it will make a positive difference in people’s lives. That sort of focus is necessary, but not sufficient, to motivate potential investors. “You need to adopt the language of business and hold yourself to a high level of business accountability – you need to understand and think like a venture capitalist before you’ll be able to raise money.” If you succeed there, then the feel-good effect of making a positive difference will come on its own down the line. Secondly, he also recommends the approach of the lean startup. “Be willing to be proven wrong repeatedly, keep listening, and keep adjusting.”

Learn more about this year's SB Innovation Open or read more of our interviews with past finalists. We will be adding a new interview each week.

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