Speaking at the event, African Business Angels Network president Tomi Davies highlighted the importance of promoting co-operative efforts across Africa’s investment scene. Davies underlined the fact that home-grown syndicated angel investment efforts ought to be the bedrock of the continent’s start-up ecosystem. He also celebrated the growing appetite for early-stage investment deals he’s observed in the business community.
While much can and must be done to address Africa’s relative disinterest in funding early-stage tech start-ups, I must acknowledge the proactive efforts of home-grown, seed-focused angel investors and venture capital firms that have emerged in the past few years.
Case in point is CRE Venture Capital, a firm headquartered in Joburg, South Africa, registered in the US, and managing a fund of about $10 million, sourced mostly from the US, Europe and Asia. I believe there are lessons to be learned by observing CRE VC’s hustle about how Africa might start to participate more meaningfully in the early-stage funding arena.
CRE VC is a four-year-old fund which invests in technology-enabled start-up companies in sub-Saharan Africa. Pule Taukobong co-founded the venture with Pardon Makumbe.
In a recent interview with AfricanTechRoundup.com, Taukobong told me the company started out as an angel network focused on the sub-Saharan region. They called themselves the Africa Angels Network before later reorganising the business to become a full-on venture capital firm. They are now arguably one of the most active venture capital firms in the region and some of the better-known businesses in their portfolio include tech start-ups like Andela, Esaja, Angani, Flutterwave and, most recently, Yoco.
Taukobong is responsible for the group’s deal flow and performs industry and financial due diligence on both incoming business plans and targeted companies. In the course of executing his mandate, he took a shine to the founders of the Cape Town-based mobile payments start-up, Yoco, long before they gained a reputation for over-delivering on a business plan.
This led to CRE VC being one of a handful of investors which backed Yoco with the seed funding needed to take the fin-tech start-up from an untested concept to the successful close of a Series-A investment round last week.
In speaking to Taukobong, I was struck by the importance of being willing to get one’s hands dirty, the value of syndicating investment activities with like-minded individuals and the importance of developing strong ties with established funding partners who are actively invested in more established tech ecosystems around the world.
It’s clear Taukobong and Makumbe haven’t shied away from the difficult task of getting down in the trenches with Africans who are diligently producing innovative products and services.
Aside from dedicating a great deal of professional time to sharing their knowledge on various mentorship forums hosted by the ecosystem, and engaging with a handful of the continent’s most exceptional individuals on a one-on-one basis, they also sit on the advisory boards of several of their portfolio companies to ensure the founders make the best strategic and operational decisions as they grow their businesses.
The founders of CRE VC have long discovered the power of leveraging networks. There’s little doubt Makumbe’s Ivy League pedigree and Taukobong’s Kauffman fellowship have helped to open a few doors, but they certainly deserve credit for building their venture capital business on the back of bringing together business angels with a shared interest in fuelling African innovation and effectively syndicating investment cash flows. That is no mean feat.
CRE VC’s partner profile demonstrates the valuable role non-African investors can, and should, play in terms of participating in funding activities on the continent – both in terms of bringing cash to the table and in terms of sharing experience and global market access. However, after slow economic growth last year, most major African markets are under immense pressure and it’s not difficult to see why selling the continent as a serious tech investment destination might be a tricky proposition.
The moral of the story is Africans need to gather their own firewood and light the fire before asking the world for petrol to help spread the blaze.