The fact that you are learning only from success is a deeper problem than you imagine…
By default, most stories of startup failure remain mostly untold. Much like the story of bullet holes in British World War II planes, the typical story of startups in Kenya is told from the perspective of the winners, the survivors, making it quite a task to get the full picture about the startup scene and the stories behind the failures. Once in a while, though, you get a glimpse of what it means to run a startup and the pains of folding.
But because of this singular perspective, most people wanting to learn about silicon Savannah end up learning only from successes. However there is a deeper story told by the numbers that illumine the challenges in Silicon Savannah.
80 startups fold every day
There is no singular source of data and statistics for startup failure rates in Kenya. So I used a proxy for failure; domain name de-registration. For any outside observer, the most visible sign that the founders have given up on their startup is when they fail to renew the domain name. It is not a perfect metric because there could be a variety of reasons for not renewing a domain, but in most cases, it signals the end of a a dream/idea.
KENIC, the TLD registrar in Kenya, was previously publishing the list of deleted domains (some one called this list the database of broken dreams). They stopped publishing this list in December of 2015. However, by then I had downloaded most of the list that was available then on the website. I used this, together with the new numbers that they publish on their web portal to establish the numbers of domains registered daily and those that are deleted.
One obvious assumption that I have made is that most Kenyan startup will have a .Ke domain. This is not entirely true but I find that a great many startups operating in Kenya have a .Ke domain
Over the period that I tracked the data (every hour for 4 months ), domain registrations and de-registration had the distribution charted below.
The data show that the mean number of domain registration and de-registration peak around Wednesday of every week and is lowest in the weekends.
The data further showed that between July 11, 2016 and October 20, 2016 a total of 8103 startups had their domain deleted. An average of 80 domains every day.
Over 60% of Startups fail before their second year
Because KENIC does not share the dates when the deleted domains were created, I computed the age by getting the earliest instance the website/domain was captured in the wayback machine ( an archive of website snapshots over time). By calculating the time difference from earliest snapshot of the website to the deletion date and rounding to a year (having accounted for the 2 month notification grace period), I arrived at the actual registration date for the domains. I also filtered for domain names that were renewed after being deleted (mostly domain with common names or meaning e.g flowers.co.ke would be renewed by different people).
The database of broken dreams has some 16800 domains deleted from KENIC database between July 2014 and November 2015. After filtering for domains that had snapshots in the wayback machine, I had 4288 domains. The table below summarizes the age of the percentage of domains at deletion.
Over 60% of startups do not get to see their second year of operations. However, once you get to the second year, the chances of getting to the fourth year on wards jump to about 33%.
What kind of startups succeed then