Very warm welcome once again to the ask the investor Webinar from the African the cuff Fintech Summit that you we have two impact investors with us this morning.
We we’re going to introduce them to the panelists first and then we’ll move on with the question.
Our panelists, feel free to put your questions in the question and answer part and we’ll address to the panelists.
So and Isaac, everybody will wake up.
I will ask you first to introduce yourselves.
I know you both came from a Wall Street bank.
You’re both vice presidents at Goldman Sachs.
That’s now you are, in fact, named angel investors in Africa and African tech.
So maybe if you can give us a background and then address why you decided to do impact investing in Africa.
Maybe you kind of start saying that.
Thank you, Zacharias, for the invite.
And I’m very happy to be here with everyone.
Hopefully through Isaac a sharing our journey I think.
What I think I’d like folks to walk away with is they feel motivated but but also be find their own ways and their own path towards contributing to whatever it is that drives their passion.
And you’re going to know from Isaac and I talking that Africa is definitely a passion of ours and has been for quite a while.
A little background on me.
My current role right now I Capricorn Investment Group is really to lead the institutional growth of Capricorn as a as a mission aligned, impact focused outsource chief investment office.
Not a lot of big words.
Essentially what that means is, is for asset owners, foundations, family offices, pension plans that that are looking to integrate sustainability and their overall mission into their portfolio rather than do it and building themselves, they can outsource it to a firm like ours.
Who would help do that because we specialize in doing that.
Why do we specialize in doing that?
We’ve created and built the portfolio for both the Skoll Foundation and Jeff School, who was the first president of eBay and made his wealth in 1999 when eBay IPO’d.
We’ve, in partnership with Jeff Skoll, created Capricorn to manage his assets as well as the school foundation’s assets.
So where the CIO is, the chief investment officer is for those entities and over two decades we’ve been able to build a diversified, balanced portfolio for for these entities.
But it has sustainability integrated into every single aspect and every single asset class of the portfolio, both on the public side and the private side as well.
And what we’re hoping to do with me joining Capricorn is created an other institutional scale to go to other asset owners and do the same thing that we’ve done with the School Foundation and Jeff School for the last 20 years.
And prior to that I came from from Goldman Sachs, which is where I met Isaac.
And we’ve been brothers in the trenches for for quite a very long time, across regions, across multiple locations, across different strategies and efforts.
And I consider him a very dear brother, just, you know, professionally, personally and in all walks of life.
I have a degree in chemical engineering, and I think Isaac and I share that and I’ll leave that thunder for Isaac to sort of to sort of deliver.
But but very passionate about taking all that I have learned in my professional career and applying it to my personal passions, of which Africa is one of them.
I will go more into the why later.
So passing on to Isaac for for his own introduction.
And so I.
We can’t hear you.
Can you hear me?
Yeah, we can hear you.
Thanks you for the introduction and the invitation to talk about this and obviously said that now for well over a decade.
I was introduced a few months after I joined Goldman Sachs.
And when I was invited, just call me some some guy.
And he had sent by ground zero.
We did get comments from India and I’m like, no brainer.
And yeah, I mean, this conversation in my personal capacity.
So hopefully a lot of you that you know on here and thinking like you have these jobs like does this make sense what really my own stories and say hey I can resume this mission as I’d like you know my former employer for well over a decade did a number of different roles across regions and then more.
Currently, I’m in an investment performance role with a private equity firm that has various strategies, including like venture know, like real estate and, you know, traditional creative asset classes.
And you know, from a NASCAR perspective, I grew up in India entirely.
I actually went to college in India at Kent Collins and west of Lagos and came out to the US for grad school.
And so there’s always a part of me that was back home.
I just see my siblings and stuff and back home, but there’s only a part of me that wanted to contribute.
And yes, well, okay.
And I can use initially Nutsack, I always did a good job like I did in community wherever I was to get a sense of belonging.
But more recently, in the past couple of years, I would lean towards like angel investing as a way to mentor amazing founders of African descent around the continent and some some not on the continent, maybe in the diaspora.
And then use that as a way to, you know, not just support them with words, but also like put in that like tiny check and see outsized returns.
And in some cases, like even if it doesn’t work, like at least like I would love meant something on that journey and you know, hoping that through this webinar we can share some of that experience and take questions from people.
Thank you so much.
So let me circle back to we talk about impact.
So if I’m a founder of a tech company, I say we’re like great employment.
I empower the youth.
Maybe I can also do women empowerment.
I pay taxes.
So everything I do in the continent is impactful.
So I should be deserving to get impact.
And so how do you define impact and how can founders actually can articulate?
Yes, my start to quantify spotting impact investment and then follow up by itself.
Maybe you can touch angel investment.
You know, it depends on the stage of the startup and investments.
Seed Pre-Seed Aid At what point do founders should seek out foreign investment?
So what is the landscape of Angel investments in Africa?
So maybe a throw away same investing place.
So it’s a.
The word impact is very subjective and a lot of people know that it is.
Which is also why it gets a lot of scrutiny in the news is because it’s based on people’s definition.
And there’s yet to be a standardization from an industry perspective to really define it in a very clear, unique, concise way which a lot of people look at as a problem.
But I actually look at it as an opportunity for anyone that is a thought leader in this space to really emerge with their ideas and the way they think it should be.
To give you a little bit of background, and I know it’s a bit of a tangent while I was at Goldman, I worked within the sort of derivatives market and I saw what is which is the International Swaps and Derivatives Association did for the derivatives market when investors lacked confidence or they had questions or there was complexity in the market.
Is that was there to answer those questions and really guide the way things were going right now within impact investing in ESG investing, there is not one body that really guides the conversation and so it really opens it up to multiple different interpretations and conflicts in terms of how they really define things.
But why would someone call themselves an impact investor from just a traditional investor?
It’s really the measurement piece of impact, right?
I can tell you right now, oh, the business I think every business has an impact period.
And it depends on what intensity your skill, your impact is.
The the real key here is can you actually measure it the same way to stakeholders?
You basically say, here’s my AR or my MR and here’s how I am measuring my financial performance.
Can you use the same methodology and framework for impact to say, here’s how many X, Y, and Z metrics that I measuring for this month, for this year, for over this quarter.
And so an impact investor versus a traditional investor really thinks of what we call the double bottom line, right?
Not just looking at the financial return on the bottom line, but what is actually the impact measured as a bottom line as well.
And when I say impact measured, there’s a slew of metrics that you can use.
And depending on the theme that you’re looking at, whether that be education, health care, clean energy, sustainable transportation, each of these have their own unique set of metrics that you use to measure impact, you know, for simplicity purposes.
I think education, that could be number of students reached, that could be access to educational tools that weren’t they before.
But what are those very tangible, measurable, quantitative things that you can measure that are a direct output of your business model and you can track over time?
My favorite quote, now that I use all the time is you can’t improve what, you know, measuring.
And I think in the past people do claim that their businesses have impact, but they never really measured it.
For anyone to quantitatively say that it is true and the true impact investor actually takes the time to understand what are those metrics that he needs to measure and how to quantitatively measure it, but not just measure it .
How can it dynamically be used to educate and share the purpose of why your business exists?
And those are the types of businesses that I look for in the continent to frame it a little bit narrower on the continent.
The example I’m using now too as well is think of Cuba.
Ten years ago, Cuba was not a part of your logistical planning when you wanted to walk out of your house.
Now, I can’t think of not factoring that into my transportation logistics overall, whether I take it or not.
How do we build tools in Africa today that are very organic and second nature to the population and the youth ten years from now, where if they’re ordering food, if they’re going to school, if they are getting health care, these are those types of apps from a technology based standpoint that they would naturally gravitate to because it is efficient and it gets the job done.
And so I’ve really not narrowed a lot of the work that I’ve done on the continent to find founders that are building those tools that become very organic to the way the youth right now, when they do get into a position of power or authority or position of influence, I just used to using AI and because it provides efficiency for how just life gets done in general.
And I say thank you.
So my daughters are very white, so advice for startups.
Make sure you measure, report and also make that available to investors if you have an impact in the content.
I think that’s right.
Isaac, over to you.
Like it’s a girl on top of, like, what can they say?
Like, from an injury?
This is basically like, you know, just generally everyone on this course is not like an angel investor.
Literally, anybody that puts money like in a business for exchange equity, either now in future or dex like or even participation in the profit of that company.
So, you know, potentially, like everyone on this call at some point in time has done that.
So congratulations on this.
But, you know, more more recently and more popularly, this has been ascribed to tech startup investing.
And it’s probably because of, you know, like just the boys in that space.
So we’re excited to actually have obviously we’ve seen, you know, like the exits like send weaves in acquisition bye bye worldremit like yeah we back then and then subsequently stocks acquisition by stripe and people getting outsize returns from these acquisitions.
So like double digit multiples on the invested cash and everyone saying like, well, how can we participate in that?
So I actually like the attention to that because ultimately when you think of like, well, inequalities, like, you know, like a huge component of wealth is like when I write and when I see what I mean is like real estate or business and equity, you know, the other areas of when I see far more common, right?
But in terms of like business, most people historically are just sort of like, well, I would invest with a mutual fund, all of this on a stock on the exchange.
But in recent times, most companies have taken longer to Groupon.
And so the importance of like education around like what angel investment is and the fact that you can actually tap into that at an early stage of an individual’s journey to create is the example of Uber.
My honest and genuine view is that, you know, like.
Talent is everywhere globally.
So even if there’s an innovation in one corner of the world, there’s no reason why that can’t be replicated and even done better on the African continent and with local knowledge.
And people are doing that.
So people should spotlight that.
So my view is know there should be an opportunity to fundraise.
And then way in general, invest in education is necessary and where angel investors are necessary.
With five people on the continent, people in diaspora, we should be included in groups like we shouldn’t miss out on the next Amazons and the next after the next Googles.
Because, well, we just didn’t fund our own, you know, videos and opinions.
And so that’s a huge part of my push to not only invest in the upcoming innovators in the continent, but also, like share that information with people right after webinars like this are just like advocates in general.
Thank you so much, Ben.
As we discussing, we’ll also invite the audience to participate in this call about angel investing.
So make your choice where Africa is right now, what is the most needed investment type?
So let’s move on to the second part of the question.
So in 2022, we we made the we wrote an editorial and we said that Africa comes to the investors, founders, somebody, investors saying for openness, we with deep local expertize will continue to lead the pack, indeed sourcing seed investment and grow the A story.
And we’ve seen that in 2020.
So founders, investors, operators and finance professionals like you too have tended to angel investing in Africa.
So my question for you is how do you how do you source deals both in Africa and also in the diaspora community?
How do you select your potential investee portfolios and what kind of criteria do how do you have any leaning preference?
So six out of geography.
Look, I think.
A big part of what Isaac and I have been doing is evolutionary nature.
I don’t think where we started is where we are right now, but part of part of learning is just doing it and starting.
And I think that’s one of the biggest lessons that I’ve learned throughout this whole process is just just get started somewhere and through that experience it’ll inform you.
Or there were there will be things that you would learn about yourself or what you want to get to that get refined.
But you can’t reach that stage if you don’t if you don’t start.
I think we’ve been doing this now together for five years, more seriously in terms of combining our intellectual, intellectual capacity and resources and backing founders.
I’ve eventually evolved to to a three pronged approach investing on the continent.
One is backing female founders and co-founders either on on a on the business standpoint or on the fund manager standpoint.
For gender parity on it should be what normally should happen.
But at least from a risk management standpoint, my my mindset has evolved in that when you have a woman who’s a true owner, not just someone that you put on your pitch deck and say they’re part of our team, but like true ownership has equal equity.
The decision making process changes on the continent when you have a woman involved there.
It removes a little bit of the element of bro culture, which oftentimes can lead to just very hasty decisions that more long term don’t help with the growth of the business.
And just through observation, I’ve just found that having a female or a woman as part of the decision making process can change that dynamic and changes the way business decisions are made overall.
So I’m really focused on on ramping up sort of my, you know, involvement and deployment of capital into businesses that that have that element specifically .
Right now, my portfolio is roughly 67% women led or co-led.
And my real goal is to get to 75% plus.
And and again, really backing women founders in terms of guidance as well as support.
Oftentimes with the founders that I work with that are women, they’ve never really been in a structure where they know how to make sound business decisions or they know what next steps to be made in in situations they’ve never been in.
They’ve not been in the boardroom to do that.
They’ve not had that training policy.
And so having me as an advisor or having Isaac as an advisor really gives them guidance and I’ll give an example.
One of them didn’t get into a particular program, and she told me, I’m just going to send them a note saying thank you and move on.
And I was like, okay, send them a note and also ask them who else at their institution does this type of work that they can connect with?
And when next?
What next should they think about for next year?
That is what an aggressive male founder would do, somebody who’s looking for money and giving her that perspective.
I could see sort of the label was like, well, I didn’t want to be too aggressive, but getting someone in your corner to say, Yeah, you should do it, it doesn’t come off as aggressive.
Just go ahead and send that.
And you know, as you would have it, the other side was happy that they reached out because they said usually we say reach out to us anytime, but people don’t take them up on that offer.
But they were really glad that that female founder did take them up on that offer.
And now the relationship is a lot stronger and they’re poised to possibly get that sort of position next year or this year, particularly.
The second approach is investing in businesses that have measurable, tangible environmental and social impact.
So I kind of define the metrics.
Don’t just tell me my business helps X, Y and Z.
People in this region like how many people you meet before your opportunity existed, what were they using before?
What are the alternatives?
Why is your business different from that?
How are you measuring the effect of what your business is doing overall?
Now we’re getting into a very qualitative space, but trying to quantify it into numbers.
It gets hard on the social side in health care and education and financial inclusion, it’s very hard to measure.
More on the climate side is very direct.
Like you can think of carbon, you can think of regenerative agriculture, you can think of emissions.
Those are more mathematical and methodological in nature.
But on the social side, you can start to get very subjective.
So if as a business you can tell me how you’re measuring your impact, then it’s something that I definitely want to listen to.
And then the third thing is what I call value based tech enabled businesses.
So there’s a lot of push on funding into fintech on financial inclusion.
I try to look outside of that and try to find other sectors of of the market that have been underinvested and where digitization can help usher them into sort of a new era of how we do things.
So think about education.
Everybody goes to school, you have a teacher, you come back home, right?
How can we to redefine that in the African context where you can now have more access to educational content?
For example, in Kenya, a lot of the edtech that people use is YouTube.
They just go on YouTube and that’s how they learn, right?
Can we build tools and businesses that really channel and define what?
Educational content look like within a specific box outside of a big, broad platform like YouTube, right?
And so we’re looking at those types of businesses that add value that are tech enabled.
Also, I have zero trust in the African government, so anything that they can touch their hands on, infrastructure, asset, land, I want nothing to do with it.
I want something that a little more within the Internet framework.
And I truly believe that this is the way we can usher ourselves out of out of sort of the mess that we’re in as an economy is really plug into more into the digital economy and ushering into this new era.
And then last thing I’ll leave with is someone told me this, and I think it’s actually true.
You can go to the most rural areas of Africa.
You’ll find Facebook there before you find the toilet.
And that really struck out to me as like people want to be connected to the Internet, right?
People want to be plugged into what is happening more an awareness on that global scale.
So how can we channel a lot of that energy to the continent and help find sort of economic and opportunity, prosperity for a lot of the people who live on the continent, to be able to find other sources of being able to find wealth generation and opportunities to grow in general.
So I’ll live with that.
But those are my three, three pronged approach to investing on the continent and how I look.
And it’s broad across Nigeria, South Africa, Egypt, Senegal.
I’ve been able to look at the entire continent and see where we can find opportunities.
Thank you so much for that.
Isaac, what is your investment thesis?
Make my face.
And I tell you this point and it’s been evolutionary.
This is very key.
Like I just started, may not necessarily have one, and that’s okay.
I spent two years chasing deals all over the place, like 2017, 2019, and it was like, no, no, no.
Like minimum takes either.
All of like those like many reasons for the no. Right.
And I was like, just get me one, this one. But, but fortunately now, you know, like, there’s just calm, like, yeah, like mostly referrals by existing founders that like someone to support that, you know, friends like, like yourself can be just like bringing up like, amazing folks to chat with.
But my, my, my question is, along the lines of currently kind of like you do is I invest in, you know, you have to be like black founded so you know, co-founder or like, you know, like to see you see Black Widow on the continent.
The diaspora does not act like black people just don’t get funding.
So, you know, like if I went to, like, prove my capital to work, then you can call me just acceptance.
Like it was black founders and they can take a neighborhood because again, I don’t have to fight like I could listen to it like and I had projects or like if I structure like stuff, it’s something that I’m close out to be kind to like being here and I can give money to online I can actually support.
But my, my, my thesis has evolved to like basically walk well and where with all work from a perspective of like does the solution actually work ?
Like, do I see myself using like can I use it online of people that can use it and I can refer to it and if it works and is it better than solutions, right?
Like there’s like pricing.
So if not, not, you know, discount like just by itself, right.
Is a practical and the world part is like, you know, like, is this something that kind of skill right to generate?
Well, it’s not just for the founder before the employees for me myself.
So because if something what’s right and I’m going to use it, then yeah, I’m also going to invest in it because then, you know , we’re talking about shared prosperity and just being included in the growth and then that’s key.
And then where we know is like that fast and affinity and it’s like does the founder of people within the, you know, finding their network or are they investors or me myself?
Like do we have a network exactly like, you know, influence the outcome and they make a change.
And I did an investment, you know, like a couple of months ago to like had no clue what that industry is.
A media release like marketing media related this, but I’m like, I’m not close to like you’re not technically like a tech neighborhood associates but I could see that in speaking with the founder of several things, like I could see how my existing portfolio companies had this need, right in terms of like sounds right press releases for them , like the investor updates or even get true applications of stuff.
And I’m like, okay, if this person can sell my existing finance system, well then maybe it is an opportunity here.
You know, like, okay, let’s, let’s have you introduce, introduce to this couple of founders that need this stuff the most and the referral and the reference for like just this two conversations where awesome, okay, this is a no brainer.
I have to invest in this.
Even they don’t really get what they’re doing like initially.
And so that’s how my investing philosophy has evolved to now, you know, any, any company that can be complementary to my existing portfolio for me, profile, construction perspective, I’m like , this is going to enhance the entire basket.
So yes, this is something to consider.
And even if I don’t invest in this, like I would bring them into the content of like introduction and referrals and that relationship is naturally going to lead to an opportunity to invest when next year there isn’t so.
Thank you so much, both of you.
And this is quite interesting.
When we talk about African investment.
It doesn’t have to be audible within the continent because we know that there are tech enabled businesses founded by the diaspora based here.
Is that in U.S., Europe or Canada, but impacting and operating in Africa as well?
I know you’re investing on those businesses as well, maybe.
Can you tell us a little bit about your portfolio?
So I’m not going to ask you which one is your favorite great product?
That’s maybe what drove what what what was that role for you to invest in those companies?
I think someone asked this question and some of the life questions that I was trying to answer some of it as I was waiting.
But, but, you know, someone asked what are the under-invested sectors in Africa that I see?
And I mentioned education, healthcare, food and ag and transportation.
Obviously, there’s a lot more problems than what I’ve mentioned, but but those are the ones that I think that I’ve been able to identify, found us who are being thoughtful about innovative solutions to usher us into sort of a new era of how to think about things in this sector.
I’ve spent time with founders, with the sectors that I’ve mentioned, and particularly I’ve been very passionate about education, more so because as I think through what is the long term fix to a lot of the problems we have and part of the solution is educating the next future leaders. Now, I think COVID exposed a lot of gaps that we have on the continent where you had kids who were out like period out of school for a year.
They missed a whole year compared to their global peers of learning.
And quite frankly, that’s just shameful.
That’s just something that shouldn’t happen.
That’s time these kids would never be able to get back again.
That that’s a delay in their learning process, that they have to probably overcompensate for it to just catch up.
And this is not any of their fault.
They’re relying on their parents or their parents equivalent to build infrastructure and to build systems that can help them grow because they don’t know yet.
You know, they’re still in the development stage of life.
And so I’ve been really thinking about education and how to sort of invest digitally in education to help reach skill on a broader level.
Right now, if you live in a metro city and you know, you have some amount of wealth, most likely you’ll go to private schools.
But but again, there’s exclusivity added to these types of opportunities that not everybody can have access to.
And that’s where digitization helps reduce those barriers to entry. Right.
If you can find in some remote village a possibility, an area similar to how we set up what we call cyber cafes, right, where you just have a computer, you pay money, like can we create something similar to that where it’s and I’m making this up an iPad with an EdTech content and kids can just come in and sort of learn on that basis or have an opportunity to learn in a library style format.
I think that starts to improve skill.
Now, you don’t need one teacher, they’re teaching them.
You can use educational content with animations, with more interactive tools to be able to engage students, to be able to learn.
And we can do it.
We can find a way to indigenously adapted for the African content, and that’s really key.
It’s not a copy and paste approach.
I’m not thinking about how it works in the U.S.
and it works in U.K.
so it’s easy transferable.
And I mentioned this, I’m sort of doubling down the way you mention.
Can we find funders who understand how to translate those opportunities into the African context?
And so one of the companies that I’ve backed is really thinking about indigenously translating educational content.
You want to learn math, English, all these other stuff, not necessarily English, math, physics, chemistry, the rest of that in your bar, in Igbo, in house.
And that’s different, right?
Nobody teaches those subjects in indigenous languages right now on the continent, except you have a private tutor that does that.
And so having some app to be able to help you learn more things and even for folks in the diaspora, right.
That they want their kids to learn the native language but don’t have folks. Right.
Education technology can help provide a solution there where similar for kids being on their iPad and watching sort of, you know, cocoa of melanin and all this stuff.
Like there is an African app that gives them that same interactive component, but they are learning and they’re growing at the same time.
So that’s just one example.
You know, health care is another, insurance is another, food and ag is another.
And I have investments sort of across that spectrum.
And I’m constantly thinking of founders that are that are thinking about this in an innovative way.
And last thing I’ll leave is I come with my own thesis, right?
So I’m not talking to founders and having them influence my own thought process.
I have my own thought process, I have my own conviction.
And then I’m now looking for founders that align with how I’m thinking about it and I know can execute on those strategies excellently.
Thank you so much for me, Isaac.
Can you tell us a little bit about your portfolios and maybe select one or two and then why you were drawn to the.
I have like I have a broad portfolio now and I think of them as like the ones that are on the table directly.
And that’s just the way I take the ones that I invest into a syndicate or being part of a syndicate in the US called Tactical Coalition.
Phenomenal group of like professionals, diverse professionals.
Improving domestic growth is also fortunate to be part of African NGO Group on the continent.
Like amazing, amazing group of angels flew all over the continent.
And then the third bucket and that that has almost every now and then they thought buckets is like increasingly becoming my favorite.
So my I call my my crowd response where do they get equity and and that has about 20 names also.
But yeah, like it’s called me.
So, you know, like, yeah, anyone can participate through like a bare minimum.
But I used to like to engage with like very early stage companies and like monitor their growth and then increase my stake in them over time.
That is secondary or, you know, like just follow up with them if they’re doing like following with my all time favorites, it means to be an easy question.
Seems like it’s my very first take and it really goes right towards my very first.
And second reason is because well, the founders have gone on to execute phenomenon and target them is because well they’ve now received at least like five views to me that I invested in.
So I would be eternally grateful to them.
But in terms of like speaking about it, do in particular, I’ve actually touched on it deal with that.
And I think we we all need to get out there myself and clearly involved in and it’s very central because you know like this idea of if you were like we’ve seen like getting us and like the Microsoft deal which then it started, you know, like get acquired by Biontech.
You know, we had this idea a couple of months ago, black founder of an Indian descent based in Canada.
During this conversation, our e-commerce platform and getting a couple of like restaurants on board in Canada and like, you know, like integrating it into the stuff and you know, when conversation between about like how to take it to the next level and you know, fortunately got into Amazon Black Founders program and then next thing you know are like like the Alexa API and open same and then they’re making introduction and now the the Siri API will consume season the afterwards and then integrate so Yelp and you know finally got an opportunity to actually like back in with phone because you know we’ve been engaging in conversation and so there’s an interest there before.
And so, you know, it’s people talk of like I this year I’m like it’s not like I haven’t the I was like, you know, like it’s it’s like picking the time to write out.
It’s like opportunities and like ensuring your portfolio has exposure to whatever.
I like the latest and greener and I bet you there’s always like some black phone somewhere, like working on every single set or spectrum that you can imagine.
Like if it’s space technology, I’m sure there’s like a black Honda on it.
It’s, it’s finding those people back in them and ensuring that, you know, like our own talent on our own because we like get the spotlight and get opportunities and they’re able to like, like seize the moments.
Because, again, like this this is the market is always evolving.
Well, I feel like 2020 was the e-commerce boom, right?
Like, yeah, check out and the rest of it like growing.
Then there’s going to be deliveries of all the stuff and in this year shaping up to be yeah right so from Chelsea.
Thank you very much.
Follow up question.
So I’m a founder of a startup.
I’m looking for external investment and investment in impact investment.
Someone who can not only just write a check but also support me.
So what kind of both soft and have qualities you looking for from an investor, a founder?
So what kind of qualities do you see in addition to saying about the company itself, the idea that technology.
What qualities do you want to see from the founder?
And what kind of due diligence do you follow for you to be able to say, Yes, I want to support this business.
So I’m a founder.
I reach out to you.
What would be your due diligence list and what kind of qualities do you want to see from a founder?
I think that’s also why I defined the three pronged approach for myself is because I needed some way as an entry point to define the strategies that I’m looking for.
And just creating that thesis for myself helps me with approaching the conversation.
You know, if they could pick two out of three of the boxes, I would listen and try to understand other ways to help them grow so that all three can be picked.
You know, if it’s an all male team and they never really thought of it the way I thought of it in terms of, you know, inclusion from a gender standpoint, are they open to sort of exploring, not finding a co-founder to help balance that?
There’s there’s money on the table.
And I feel like there’s a lot of folks that leave money on the table because they’re not able to package what they’re doing well enough to the audience that needs to hear it.
And when I think about impact investing, Africa just screams Impact Square to me.
I mean, everything we do because of our community nature is impactful.
You know, when you help the head of the household, you’re helping like ten, 12 other people who rely on the head of the household for everything, right?
So you get a multiplier, a natural multiplier effect, you know, with innovation that happens on the continent.
I think from a diligence standpoint, for me, to Isaac’s point that you mentioned, I look for portfolio companies that complement my entire sort of build out.
I invested in a company called Air Initiative, and they started off as a sustainability consulting firm, helping UK based Africa companies or UK domiciled African companies with their ESG disclosures.
Given the new FDR rules on ESG and then as we were sort of building this, I kept thinking, Yes, I love what you’re doing, and I needed to do it for my portfolio companies.
But how do we take all of this back end work and move it upfront into the diligence in the beginning so that if I invest in something, the natural outflow of the of the company is stuff that we would already measure when you do the stuff on the back end.
And so we sort of redefined and now I’m using them as a due diligence tool to be able to sort of vet opportunities that can authentically say that they are impactful either environmentally or socially as well.
And so having on building metrics, having them building what to expect on the down end and bringing it upfront has been very helpful for me in teasing out the types of opportunities I would want in my portfolio and the ones that I wouldn’t.
And so that’s how I’ve been able to sort of evolve over time.
Like again, none of this stuff that I didn’t plan it, it wasn’t a strategy that I had in my head.
But as I was going along, I was starting to identify pockets and spots of opportunities to find synergies across the portfolio that that that provided value overall.
So that’s the methodology that I’ve been using to sort of due diligence and identify founders.
And I would just say lastly, I love to time founders, especially the ones that have institutional backgrounds of working in a corporation and having been trained in, in, in a, in an organization and now spun out to do it when you have both.
I’ve seen that those guys are perfect execute us.
I mean, obviously you have your oddballs in there, but they’ve been really great in being able to take their industry experience as as employees and workers, translating it to their second founding opportunity.
If they’re a second time founder and they usually have a very clear vision on path of how they want to be able to execute their strategy.
I thought that I couldn’t agree more.
What could have said?
And I’d say not every startup or startup founder is investable.
In fact, many.
I went into the investment ready, but I like I could still do it.
If the person is willing to let it get to that situation where this is like literally a diamond in the rough, and I’m like, well, but I could use a service right now.
So I would do it and will work with the person to get it to where it needs to be and then get them like into them to give them exposure to all people that would train them because they have to continue on with them.
I do. I do.
I do. I do.
Founder of startups invest in would be one that I don’t have to pretty much work like you know the person gets it.
The person is responsive you know, passed on and a couple of investments in the past where they say what’s your last investor?
And midway in the conversation like would you say invest on this and yeah we send some of your last this subject and that it takes like two weeks to send it on my lucky day.
You never actually sent it.
They were just lying to me all, you know, like, if it’s like taking you that long to get back to me, then, and maybe you’re not, like, the right person to back.
And so I do fund those, you know, so on that potentially is willing to learn and can turn around request pretty fast or already has claymation like, you know, founded a startup before and has been truly experience and so know that if you’re doing it to like like it’s good solid you’re doing can be as easy as like like a Google share drive and and they dock you know what’s in the room like essentially the of incorporation and like some information about find out media link to the page you know the piece but most times that everybody just tore down on the pitch deck and I’m like, forget the pitch deck forget trying to pitch.
Tell me what you guys do.
I’ll probably look you guys up and get so on.
I mean, I, I did diligence on the South African side, of course.
And then it was it was pretty I took about to South Africa when I called someone else and invested in an area of wealth.
And I said like, Hey, can you help me like use this platform?
Like, oh, actually, just use them and like, I love them.
Give friends and this is like going to actually win this sort of program for me.
You send me like all the information that I needed, right, to, like get confirmed to proceed.
The other one was, you could do it.
Anyone I’ve ever considered investing in a startup is in the UK.
Like that is the best.
Best. Best country domiciled.
Any startup you can imagine.
Because they have an amazing public resource code company, right?
Like literally in great company.
Alison It’s like all like they have to like file stuff like every year companies out.
So you go in there and they you see like if people talk about like what’s on the top, the wall, like people in their company, you can see like who’s the best, any sort of like obviously that invested.
And so you can you try to go to like your favorite UK domiciled company.
That’s your information there.
So for me that that is like that was an easy one for me because I got that company, looked it up on companies else.
I saw the folks that well in their company, people that invested and they looked up the school’s website and I looked at these guys.
I venture back, they’re also an angel group.
And then that opened up like all the information I need by time I ended up talking with you found, they’re like, How did you find out information about them?
I mean, you’re UK companies or companies offices like this is my starting point like and to find those resources either online that they’re readily available or using local angel networks or your own connections, right?
Like, you know, LinkedIn, Twitter, find people that are already investing in their markets and then help them figure validation because sadly, you know, this is about money.
And a lot of times like people are trying out false information out there to get you.
So to be very careful, diligence is important.
Doing all sorts of diligence to just sit in that sort of.
Thank you very much.
So let’s talk about on location here.
So we have an early stage start top most probably has already family and friends in the table and they are going to expand, even fly people very soon.
So very soon they are going to start seed round the gates.
Institutional investors, those who would be very much careful about the number of investors in the capital, but they may be interested in five six impact in terms of investors, but they are not keen necessarily towards three page or four page of Intel investors in their cocktail .
So for investor phone focus who are interested about that, a lot of investors in the top table may be giving out equity, but also in contrast and getting advice from investors that will help them to expand to scale what alternative something and so you spoke about syndicated fund what would you advice to start off founder was keen to get into investment is afraid of getting so many investors in their company but what would you advise them.
And I can take on because look, on the continent, we now have solutions that do this right.
So I guess I could just get a quick one and you know, almost for the start of some level them and actually leveraging them now.
But you also have Davos, which is more geared towards folks in the diaspora investing in continent.
But Davos does the same thing, and they’ve done that successfully for a number of start ups and several other ones that are on there and boom and Ontario doing a great job with that platform.
And you have policies, too, right?
I think, out of Eastern Africa and doing exactly the same thing.
And I think you increasingly see more of those now outside the continent.
Obviously, you now have things like injuries that founders domiciled in the US can do and do, like a real uptick in AngelList and the fact that in a couple of those and then obviously we probably can we fund and most importantly fund us should be cautious to ensure like like be aware of like the fees and probably have like someone, you know, sponsoring as a lead investor in any of this stuff.
And ideally you should organize like a Q&A to get people to ask you question because not just enough to feel like, oh, I’m going to go to the public or we fund and try to raise.
There is will probably not happen. Right.
And so this platform does even have minimums they have to meet.
So imagine trying to one find out way to me about something they try to raise 50 or 100 their on one of these platforms they only go to 30 in three months and the articulatory is there, but it couldn’t withdraw their funds from this platform as well.
It has to be you have to be 50 minimum and then you have investors that are putting this much money and we’re hoping it’s our representation, but they’re like, well, we probably have to return all the funds.
Investors is like, can be heartbreaking to the investors too.
And that’s our mistakes.
It could just go like syndicates because they’re like, well, the syndicate would of like protect you.
But again, most syndicates would have the concept of carry, which is like an incentive or performance fee on your outcomes.
And some of them leave us in doing network or do you have annual membership fee?
So again, look, look into the fine print, get the details of the fees, make sure you’re comfortable with the fees before you proceed.
But, you know, there’s many alternatives now on the continent and outside of the continent.
Thank you much.
The question that you asked is actually a personal goal of mine.
Eventually, you know, Isaac and I are not founders.
We’re not big fund managers where, you know, we understand our place in the ecosystem as a bridge or a connector or translator, either for foreign capital looking to deploy in the continent or opportunities on the continent looking for capital in that regard.
I my personal goal and where I’m trying to reach to ultimately is if they found out, came to me and said, I have 1.5 million pre-seed on the business if I liked it.
What I’m working on, on the other end is building a community of allocators fund managers, and if they say this is a waste recycling business, I can turn around and see.
I know four or five strategic investors that this is what they do.
And if I like it and I’m committing my small angel check, most likely they can help you clear out your 1.5 a it adds value to the founder.
Now your fundraising cycle has gone from 1 to 2 years to possibly 6 to 8 months, aligning your strategy with allocators that really understand what you’re doing.
And that’s why eventually I want to get you right, being that middle person that a founder can come to and say, Here’s my pre-seed it’s small enough that I know that I can find five or six people who can write the checks to be able to field that that ticket size.
And so I’m constantly working on this.
I’m not there yet.
You know, I still need to build more relationships with fund managers that I’d be able to understand their strategies.
But again, part of it, too, is if I can identify what a founder needs for your cap table, it’s making your cap tables small in the beginning and finding very strategic allocators who understand your business so that it’s not just the check that they give you.
It’s also sort of intellectual advice that they do on a daily basis, either from other opportunities that they invested in to be able to provide you with that context as you continue to build as a founder.
So Isaac, you touched about II this year, but last year, for example, 2020, 2021, African startups raised $4.8 billion.
This year is about 5.4 as per our friends writer.
What is your expectation as I’ll see you do that.
I would also ask our audience to participate in this code.
So what is your expectation for the Africa tech ecosystem this year?
I think I think this year we raised more than that really last year.
So yeah, I’ll go with like the 6 billion number and potentially more.
And the reason why I say that is like in the in the scheme of things like what was raised by Africa is still like very marginal, like 1% or less of the global raise.
So we’re still so nothing, we’re still like early stages and and the trailers left the station.
So the opportunities like the opportunities will continue to be out of the global.
It’s not the investors now have like Africa like Africa in the mind. Right.
It’s now about like what are the best opportunities to deploy.
So even though we’re in a challenging fundraising environment and more challenging existing environment, i.e.
the few markets is through shots .
Many African startups are still in the early stages and the ones that are much more sort of good because they are decent enough cash flow to to keep growing.
So I think we’ll continue to see more do activities, whether it’s from $80, you know, like new forms allocating more to Africa as well as like startups, accelerators, not our programs or foundations and like allocating more funds to the continent.
So I expect there to be an uptick despite the environment, but not much of an uptick because even even with my portfolio companies, we’ve seen the folks that don’t really want to raise where they get an imbalance gene like, hey, we still want to meet with you, want to learn what you’re doing and get allocation in your future around whenever that is.
What is your expectation?
I think I’m very much in line with Isaac, you know, but I also I know that we’re not in isolation of sort of the global ecosystem as well.
And, you know, I’m yet to see how 2023 sort of evolves.
You know, obviously, I think the end of Q1 I’ll probably have a better sense.
But I think in terms of funding and allocating to the continent, I don’t think that momentum will stop.
You know, the needs of Africa is a little bit nuanced and different from sort of the global needs and where funding is being used in some of these countries.
And I think on a fundamental level, the capital that’s flowing to Africa is really for very core foundational type of businesses.
And I don’t think that that will change.
Right, because of the economic landscape.
It doesn’t mean that people don’t need to eat or people don’t need better way to transport or people don’t need better way to bank on banks.
So I still feel funding will flow and I’m really excited about sort of the increased awareness in investing on the continent because that’s what we need more, especially with the diaspora.
Can you imagine if we just mobilize all the diaspora money that goes to the continent on a yearly basis?
And that was in a fund and we deployed it into strategies that sort of made sense in terms of our growth.
That could be its own GDP or in its own in its own right.
So I think there’s a lot of power and a lot of the capital that we have in the diaspora sector.
And we should be a lot more thoughtful about how we deploy that capital into solutions that sort of bring us out of issues that we’ve been facing for a very long time.
Thank you so much.
I was looking into the audience question.
Thank you so much.
I see that to your audience and some of them let me just pick one.
So obviously, politics can be turbulence anywhere in the world, but how do angel investors sway the politics of local African governments?
Is it position making?
Do you want to kick start us?
Obviously you have.
You’re interested one so Citibank investors say that’s the kind of stuff tops off a big company credit because of their ingenuity.
But also there is a discount because of where they are politically, so to speak.
So how did you go about political risks of investment of startups wherever they are operating in Africa?
Does it even be you take that into account in your decision making?
And if so, how does it impact your investment decision?
I’ll answer this very quickly.
And this is my own personal.
I stay away from it.
Anything that involves the remotely the government being able to get in there.
I’m trying to think of a world where we can find an alternative to government’s role as a whole.
And I actually feel that sort of the Internet and more broadly, the ability to plug into the digital economy allows folks to answer to sort of a higher level of governance and a higher level of sort of audit requirements.
And I’m making this up, assuming you have a startup on the continent that services people across and around the world.
You’re not going to be limited by what’s happening on the African continent.
You’re going to be a lot more thoughtful about the global landscape and how to sort of plug into that ecosystem broadly.
And if we’re going to get to a stage where, you know, I don’t know that this is the answer, but this is something that I definitely think about where a lot of our population is plugged into that ecosystem, where you can find a job working for Google on the continent and you don’t have to leave, right?
Like you can get a job.
And Google is domiciled in California, but you can get a job on the continent working for Google, sort of.
It then starts to redirect the way resources are flow into the continent, because now you get paid from someone else in another continent.
You have better ways of of of your cost of living addressing that.
That is not answering to the government holistically.
But again, these these are things that are evolving for me. Right.
I don’t think I have the right approach or answer yet, but something that I constantly seek for is how can we find ways to light a fire under African governments, but to make them realize, like people don’t really rely on them as much as they think anymore.
And we need to be able to understand that that that the governments need to actually get their act together.
The way I’ve been describing assume the pain levels of ten and we need to bring it out governments just to bring it down to zero.
There’s a space for private markets and NGO investing to bring that down to at least eight or six.
While we still need to figure out with the government how to bring that down all the way to zero, but taking the level from 10 to 6 is pretty significant for a lot of people who are still struggling to eat, are struggling to find work, are struggling to find other things.
And in the interim, how can we just add as a stopgap private market solutions to be able to get there as we continue to work with them more holistically?
But I think someone wrote in here, lack of trust.
I think that’s just the biggest thing.
Governments on the continent have broken the trust of a lot of people, so it’s just not there.
And for any economy to grow, trust needs to be very front and center of how you grow the economy more broadly.
Thank you very much for that.
Yeah, I I’d look, I consider that contrast and I try to show like too much concentration in one place.
And that’s a huge part of why at some point the UK like normally has this way meets and possibly last year I’m like no more than you had to deal for a bit , not just because of like the politics but also like pricing devaluation.
But if we really got a deal late last year, I’m like, No, no, any time soon.
So again, I can’t move towards now.
Did you mention the to do in Canada done to now in the UK later.
There was one in South Africa so like push it across the country essentially like there’s not a huge concentration in one country because I mean, quality salaries can be anywhere like in the US or like persist change in indecisive governments and affecting the markets broadly.
So it’s always nice to see it diversified.
And so I factor in country, yes, class location as well as like sector and the rest of the other diversification factors when I when I look at like deployment.
Thank you so much, gentlemen.
I want to be respectful of the time.
So maybe before we wrap up, we have so many early stage startups, some of them I’m unsuccessful at the Africa FinTech Summit.
Any last word of advice wisdom you want to share with early stage founders as they scale up, as they look out for external investment and gen impact investments ?
What will be your last word of advice?
Some of the icicle.
It appeared like the rising tide was released or seaworthy.
So if you’re not ready, you’ve your act.
My I think mine is just be very clear on what your business model is.
Oftentimes, I talk to Fonda and I don’t think they have a true understanding of the problem that they’re trying to address.
They have the passion and they have the desire.
But I think it also ties to Isaac’s sort of be prepared. Right.
Get get your business into a stage where, like, you know, every single part of it because you will face investors who will test you on it.
And most times, first impressions last very long.
And the ecosystem is so small that, you know, Isaac called me.
What do you think about this person?
And maybe my opinion matches the way he thinks about it and it’s a done deal for him.
So make sure your first impressions definitely hit the nail on the head.
And people have a very clear perspective on where you’re building on the problems you’re trying to solve.
So, Isaac, thank you so much for your time and for your wisdom that you’ve shared.
Very much appreciated.
And we are very much grateful for all of you who joined this webinar will come up with another asking based on whether or not makes months and would share the details.
Thank you so much.
And we have a lovely incident, but thank you. Bye bye.