Fred Walti is an entrepreneur who works to help others incubate and expand their businesses. Traveling all the way from Los Angeles, he was in town and spent ten days meeting with government officials and business leaders to see if there are ways of creating an ecosystem in Ethiopia for a clean technology incubation program. Walti and his team of experienced entrepreneurs have been able to attract businesses to countries that are clean technology-oriented so that they can rip the benefits in a very short period of time. According to Walti, in a matter of less than five years of Los Angeles Clean-tech Incubator’s operations, 15 young and small companies have become more efficient, productive, and profitable and networked to international markets. Running the Los Angeles Clean-tech Incubator (LACI) successfully as CEO for five years, Walti currently plans to expand to countries. Focusing on Ethiopia, Walti and his colleagues are trying to look at the opportunities to set up an ecosystem of experts with all its physical facilities aiming at assisting entrepreneurs in the country. Birhanu Fikade of The Reporter sat down with Walti at the newly-established American Center, which is stationed inside the National Archives and Library Agency (NALA), to talk about the opportunities and benefits and what clean-tech can provide to Ethiopia’s agriculture and energy sectors. Excerpts:
The Reporter: Tell us about the Los Angeles Clean-tech Incubator (LACI) and its role in nurturing businesses.
Fred Walti: LACI is a non profit organization which focuses mainly on businesses that are able to work with clean technology. We provide coaching and other services to young companies to be successful in their goals. We do that for economic development reasons. We have been in the business for about five years.
You have been in town for a ten-day visit and have met with some officials. What prompted you to come to Ethiopia?
A couple of things. First of all, Addis and the city of Los Angeles have very close relationships between their city ministrations. Our mayor studied about Ethiopia and graduated from graduate school writing his thesis on the country. We have had reversed trade missions between Los Angeles and Ethiopia and Ethiopia to Los Angeles. In addition, Ethiopian Airlines has started a new direct flight to Los Angeles. So, all these things have spurred for closer relationships. We all believe that Ethiopia is poised to take advantage of this opportunity because the government realizes that it is very important. The strategies and objectives are in line with what we think can be done. In the ten days I’ve spent here I have seen nothing to challenge that. I have received really great responses to the clean-tech idea.
You said in your briefing that you have gone through the Growth and Transformation Plan (GTP-II). One of the things the plan considers to achieve in ten years’ time is making the country a manufacturing hub of Africa. Now you have brought an idea that focuses on green-tech and incubation of companies towards that end. How does that relate?
Actually that does relate very well because clean-tech companies are manufacturing dents. Clean-tech companies unlike internet or software companies, actually produce tangible products. In the US one out of four jobs in clean-tech are coming from manufacturing. That is against the one out of ten in the non-clean tech companies. Hence, clean-tech is a very manufacturing sector. If we create clean-tech companies they will manufacture products and that is very much in line with the GTP-II goals and objectives of the country.
You have shown us how companies in the US and others have benefited out of the incubation or the business coaching/training approach. If you have met some officials here to talk about clean-tech incubation, what can you tell us about that? And is there any chance to incubate companies here?
Our purpose is to develop an ecosystem that supports the creation of clean-tech companies here in Addis. That would include the incubator and also include many other things, i.e. very strong connections with universities, the right kind of funding for companies, the involvement of leaders and stakeholders and the like. We need to put together the entire support system to accelerate the development of clean-tech. We got very good response from the government. There is a long way to go but I think we will be able to do that and we are determined.
Talking about the ecosystem, does it mean you will set up some sort of facilities here? What exactly is a clean-tech ecosystem?
The important thing is that we will have the right kinds of people, experienced entrepreneurs, and experts from various disciplines to creating the companies. We continually work with the entrepreneurs very closely. We will provide those entrepreneurs with that kind of support; very in-depth support. They will be able to get help on the questions they have. We will also have physical presence. We will have an innovation center or an incubator or a center of excellence they can have co-working space. Most importantly, that kind of space can enable them to have research labs, electronics labs, pyrotechnic space, assembly space, training space or others. I think it will be terrific to have a physical presence as well. Hence, we will work towards that as well.
Do you have any time frame for that? When will it be commencing?
I do not know exactly when that happens. But tomorrow, yes.
Have you met any people who might want to be part of the ecosystem that you wish to create here?
Yes, we have met with people from the American Chamber of Commerce here. We have met with fifteen members of the chamber. We received very positive responses from General Electric (GE), Dow Chemical and Deloitte people and we have really seen their desire to be part of this. We will form a leadership council, which is a kind of a stakeholders’ leadership council. They will be part of this. But we will also need senior members from the government’s side to be part of that. Senior members from universities and the like will be on board and that group will act as a steering committee to go forward.
Let’s get back to the business incubation or the clean-tech approach. Countries like Ethiopia may not be able to tap into a technology from a grassroots level. In that case, what will your move or role be in nurturing the companies? What will LACI do in such cases?
Think of LACI as trainer of trainers. We will put together the programs, methodologies and operations required for the business to grow. We are going to find people in Addis and train them. We will incubate the incubators here. That is our role and we have done this before. Therefore, hopefully we will get it done very quickly.
Let’s assume an individual has an idea but doesn’t know where to go. Funding is one issue that hinders him not to translate ideas into reality.
This is what an incubator does. The incubator works to help that person and get his ideas get into the marketplace. He will receive advice and counseling. We help companies at all different stages of development from ideation all the way to growth and expansion into new markets and so forth. Therefore, it is not just people who have an idea that we want to help but also young entrepreneurs and young couples who want to do and think better and expand. We help them have access to the kinds of experience and expertise that are very difficult to access anywhere.
Is LACI actively present outside of the US? And do you have presence in Africa so far?
Well, the Los Angeles clean-tech incubator is building a series of networks. We have a network within Los Angeles. We have set up all the clean-techs in LA. We have partners and networks up and in California. It is a very big state obviously. We are part of the department of energy and national incubation network that is part of the US Department of Energy incubator for California. We have formed our own network for global innovation, partnership among other incubators in both the east and west coast of the US and we have Canada, Mexico, Germany, Finland, India, China and Japan. Hence, we are gradually expanding our footprint and we are that because we believe that it is a problem for the global community and we will have the opportunity if we can connect incubation centers around the world. Then we will share best practices, technologies and opportunities that companies are desperate to have.
You said you are in Ethiopia to create opportunities that can enable the country to become the tech hub of sub-Saharan Africa. In what ways can that be achieved?
Well, doing it makes it possible. If you build an incubator or ecosystem that we talked about and if that starts to work, people from around Sub-Saharan Africa will try to learn about it. They will come and work with you to do that. That is how it will be done. Over time companies that we have created with this incubator will do business not only in Ethiopia but in other sub-Saharan African countries with those opportunities. We will make it easier to do business in other countries because we will build over networks. They will have contacts in different markets.
Other than providing support for entrepreneurs through incubation system, what are the fertile grounds countries like Ethiopia should focus with regard to creating more jobs? For instance, tight rules or requirements against startups might be considered as a difficult environment to nurture, right?
I think there is socialization, education that needs to take place among Ethiopians and government leaders. The importance of doing this is in the strategic best interest. On the other hand, the question, how to do it, includes policies that support and eliminate roadblocks. In addition to that funding and supporting that to the right requirement over the long period of time is very necessary. This is not the same thing as constructing a building. Doing that in six months might be enough. But nurturing entrepreneurs might take years. It will start producing benefits almost immediately but if you do, do it right. It is all there to do it right. This is such a new growing market and I think people all around sub-Saharan Africa and perhaps the world will hear about what is happening here and will want to participate.
Are energy and agriculture sectors your prime targets or are there other sectors that you might consider?
I think those are two good places to start. I think that there are lots of clean technologies that increase the output of agriculture which are being done in a clean manner. What we need to do is refine and improve those and this country definitely needs that, right? Your country has a great deal of plans for sustainable energy. I think that is an important sector to work on as well. But there are others we might support. For instance, water, waste treatment, transportation and others where the entrepreneurs determine what to do.
How many companies has LACI incubated so far?
We have 15 companies on our program through the four-and-a-half years of our operation.
Access to network is one of the issues most companies in Africa are facing as a challenge in their international exposure. Most are local because of lack of proper orientation of the international standards. Are all such kind of issues dealt with in your incubation program?
It is a very important process to provide connections. It is very difficult for smaller companies to go to the international markets. Since they don’t have the contacts, they don’t have the money and they do know the markets very well. Big companies like GE, Dow Chemical or others can go international because they have the means. Hence, our goal and what we will do is to reduce the friction for smaller and younger companies that want to go international. We will have landing par agreements with all those countries where a company wants to expand.
Let’s assume that you have set up the foundation and initiated the establishment of the incubation and the ecosystem for clean-tech here. Then what will be the requirements that companies are needed to fulfill? Are they required to pay for the services you provide?
We need to set those requirements up but for here we don’t have those specific requirements. We will create a set of requirements just that will vet companies. That will include questions like how good technology products are, about their management team and so on and so forth. Once we have accepted the companies, then we will get them into our programs. Yes, they pay to get the services but they pay much lesser than the costs of the services. These companies cannot possibly afford the expenses of the people who work with them. That is why the incubators get support from the governments, the private sector and others to provide those services to companies.