What makes African startups investable? By Alysia Silberg
Alysia Silberg, Founder and General Partner at Street Global Venture Capital, started by acknowledging the presences of the following people.
The esteemed ministers, ambassadors and members of government, friends, colleagues and Mr. Willy Mutenza.
Alysia described what she saw on global and regional levels as a technology investor which shared insights regarding startups, venture capital and economic development.
Alysia is a mathematician, statistician, data scientist, investor and she is trained in law. She is an African, having spent the majority of her life in Africa. She is also European and North American. A self-made entrepreneur, experienced technology entrepreneur, global business person Alysia continually engages with governments, corporate leaders and global asset managers.
Like many people in the world, she became an entrepreneur by necessity at a young age. Therefore, she knows the importance and power of entrepreneurship as well as its challenges. She loves entrepreneurship live alone investing and it’s her greatest interests.
Entrepreneurship and Investment, the two essential parts of Alysia’s life, came together in founding of a venture firm that invests globally in startups. The strategy has these components which reflect what is happening in the world.
They believe many of the future defining startups and unicorn investing opportunities will originate outside Silicon Valley.
They invest in companies addressing global challenges: in health, financial access, business productivity, access to goods & services and infrastructure.
They serve as a bridge between Silicon Valley and the world: the bridge is composed of knowhow, capital and powerful relationships.
They foster an ecosystem to help bring startups to their full potential: our relationships include governments, media and corporations.
They are performance focused. It is the pillar of there strength.
Diversity drives investment performance. Diversity allows them see opportunities others cannot see, embrace or act on. Such as those in the emerging markets.
Diversity helps them attract the world’s best entrepreneurs. Diversity helps them engage
with the many stakeholders necessary to help a startup succeed. Diversity helps them think creatively about how to help a startup realize its full potential.
Investment performance drives social impact. Investment performance comes from investing in strong, self-sustaining, highly scalable companies that can grow to be worth a billion dollars or more.
Performance also delivers social impact because these strong companies can then achieve the scale and longevity sufficient to make an ongoing difference — in improving health, finance, productivity and infrastructure — via continuous innovation and service.
They amplify their effectiveness because investing relatively modest sums in startups can lead to world changing companies. In this way, venture investments can contribute in a greatly magnified way to positive social impact.
Diversity, bridge building, investing, performance, impact. That’s their core. And it’s an idea offered to everyone.
Alysia further said that with the African economic development and startup development, they often get asked questions such as: what does it take to build a startup ecosystem, should they do a startup ecosystem, what have you learned from Silicon Valley, what are you seeing in terms of trends and opportunities. Below are some of the answers.
Governments have a responsibility for fostering economic development in a way that is best for their people. So, the first advice is to ask— what is the context you’re working in, what is needed, what are you trying to achieve and what are your specific goals.
The type of entrepreneurship you support, the types of startups you support, how you do it, etc., all of that hinges on the context and goals you’re working with. In one region, you might be supporting financial technology entrepreneurs and, in another region, it might be agricultural entrepreneurs. In one region it might include supporting high growth startups that expect aim to grow into large, pan-African companies, and in another it might be supporting many small businesses and farmers.
On the topic of startup hubs.
It’s hard to engineer startup hubs. Often the best startup hubs emerge naturally, and governments take the role of helping them thrive.
Startup hubs usually emerge in areas where there are educational institutions, experienced entrepreneurs, larger tech companies, skilled workers, strong infrastructures, supportive financial institutions, favorable laws and regulations, local cultures that promote innovation, government R&D efforts, cool cultural scenes, etc.
Governments can help startup hubs come alive. Great things for governments to do include ensuring there is:
- Sufficient housing
- Strong communications infrastructure
- Supportive financial services institutions
- Safety, especially for women and diverse people
- Access to financing
- Strong mandates for officials to work collaboratively with startups on regulatory issues
- Supportive financial systems
- Supportive laws and regulations
- Legal support for startups
- Government R&D
- Access to materials and services for design, prototyping and testing
- The participation of successful entrepreneurs
- Support of successful business people who reinvest their personal capital
- Ease of doing business
These are the things that have historically made Silicon Valley successful. It takes time. But, with the right investment, right strategy and right policy, a lot can be accomplished. San Francisco had very little technology inside the city itself until salesforce.com became the anchor success and other technology companies were encouraged to locate there. Now the city is transformed.
On the question of ease of doing business, in California or Delaware, you can incorporate a business via a web form. In Silicon Valley, attorneys will work on promising startup’s corporate documents for free until the startups receive funding. Leading banks give startups free banking services. One might even encounter government officials at the airport who are familiar with Y Combinator’s global startup demo day. Everything is oriented towards being standardized and to support business.
<African Startup Investing Trends> Venture capital and African investing trends.
It’s important to note that growing a company with venture capital is a highly specific way of growing a company. The vast majority of businesses that contribute to our societies and economies grow via other forms of financing.
Venture funds require companies to reach billion-dollar valuations in 10-12 years, the typical fund lifetime. And so, a company needs to be able to grow unnaturally fast using capital. To grow fast and reach the required size, the company needs to operate in a very large market. Within African, there is the potential to grow such companies in Africa in sectors such as fin tech, health care, infrastructure, On demand delivery of resources and other areas.
Within the productivity, fin tech and health sectors, Helium Health is a good example of a venture-backed startup that can grow to be a large pan-African company. Helium Health noticed that African hospitals and clinics needed a software platform for improving operations in patient records, billing, workflow and other areas. They also saw that African hospitals and clinics needed software tailored specifically for their needs. This customer centric approach paid off and the Helium Health team is on its way to becoming the gold standard in Africa. They can help millions of people too.
Building enterprise software and productivity tools for Africa’s specific needs is a large opportunity.
Africa will often use traditional infrastructure and newer infrastructure solutions. Many infrastructure needs will be solved or augmented with distributed and networked systems. This is happening in areas such as food, transportation, payments and energy.
In developed markets on demand delivery of goods and services is generally a luxury. In the emerging markets, people want the same quality of service and goods, and delivery networks are required to address these needs.
<Agriculture and Investing>
Agriculture is such an important part of Africa’s economy, stability and contribution to all of our lives. my work.
The future of agriculture is closely tied to technology, information, automation, integrated supply chains and integrated markets.
She said that they had recently invested in a company building a food distribution network for all of Indonesia. The company, Eden Farm, is using technology to inform and connect all of the market participants — from farmers to restaurants. It will increase quality and reliability. It will help support stable pricing. Their goal is to substantially increase the financial well-being of a million farmers and serve the many other businesses that rely on a food supply network. What will help Indonesia is a further integrated food supply chain and market.
In the US, they’ve invested in an autonomous tractor company because farmers in places like California and throughout developed countries face labor shortages. The company is called Bear Flag Robotics. We also invested in a company, Cloosiv, helping regional coffee chains compete with Starbucks with mobile ordering, stock management and other point of sale and financial software tools.
Alysia said that with the examples given above it clearly shows, two different regions have very different needs for the agricultural and food economies. But technology can support both types of needs.
So, the question will be, where is the biggest return on investment and technology as applied within Uganda and various regions inside Uganda. What does the ideal portfolio of investments look like?
We know that a portfolio approach helps.
There are big trends in agriculture — moving from raw commodities to value add products, premium prices for goods that are sustainable and fair trade, premium prices for goods that have reporting and data, new consumer economies in Asia, global competition, the application of data to crop selection and management, the use of data for price stability, farm financing innovations, soil and resource management techniques and much much more.
Capitalizing on these trends and using technology to capitalize on these trends in a way that is adopted, sustainable and readily works for the people on the ground is the key.
All of this is also an important opportunity for the UK and Europe. The UK and Europe can build even stronger bridges composed of technology, capital, information and relationships with Uganda.
Many countries and many investors are interested in investing and doing business with Africa. It will be increasingly important for all of us to continue to differentiate and add value to maintain our competitive advantage. I can speak from my own experience. A few years ago, Silicon Valley investors tended to overlook African tech startups. This is no longer the case. These are now some of the most sought-after investing opportunities, especially in fin tech, logistics and on demand services.
She further said that they maintain a strong position because they added value within Africa through the educational programs on entrepreneurship. And they also maintain strong networks with various communities, while participating in African media and important forums like this one.
They also maintain a strong position with the best founders and in the most sought after investing opportunities by working very hard to listen to them (regarding the context they’re working in, their strategy, their goals), to help them and to develop real and lasting relationships where there is added value even before working with them formally.
Alysia concluded by appreciating all those who helped in one way or another. “I would not be here without the kindness and help of others. A rainbow of people. In Africa, we come from community-oriented societies. In Africa we look after the person next to us, the person next in line. We find what we need inside ourselves and with the help of our families, friends and communities. There is often a lot of chaos around us and sometimes in our lives. We depend on the kindness and strength of others. It’s about building and working for something bigger. Let us all come together in the strength of kindness and caring for others, caring for the world, caring for community and building a good future together for everyone. Thank you very much.” She said.
She also specifically acknowledged Kofi Kufor and John Kufor, and other people who contributed thoughts to this talk.
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