The Flip

As we continue to weather the unprecedented COVID-19 pandemic, and its second order effects on the economy, hat lessons can we learn from those who have lived, survived or even thrived through somewhat similar circumstances in the past? In this episode, we hear stories from three entrepreneurs whose past experiences may be useful for the entrepreneurs of today.

2:07 - 'Tokunboh Ishmael, Co-founder and Managing Partner of Alitheia Capital, shares her experience attempting to fundraise during the 2008 Global Financial Crisis. Her firm wound up pivoting to a partnership-centric approach - a strategy which has endured for the past 13 years.
8:38 - We hear Appfrica's origin story from its founder, Jon Gosier. Through Tech for Good and other client-based work around the continent, Jon was able to bootstrap Appfrica and ultimately make investments out of the company's balance sheet.
14:25 - Much like Jon funded his business and investment activity through cashflow, Craig McLeod, the CEO of BoxCommerce, has bootstrapped his business through service-based revenue. Craig shares how he's built his business to service his clients, while leveraging that revenue to build their main business. The Business Insider article referenced is here: https://www.businessinsider.com/how-long-companies-can-survive-without-bringing-in-money-2020-3?IR=T
17:34 - We hear again from 'Tokunboh Ishmael on the resiliency and diversification of one of her firm's portfolio companies, MAX.NG, and the advice she is presently giving her entrepreneurs.
20:38 - My b-mic, Sayo Folawiyo, and I discuss this episode, and the way in which Sayo is approaching the situation caused by the COVID-19 pandemic.

MicroEnsure’s origins date back in 2002 when its founder, Richard Leftley, started asking a simple question of traditional insurance companies – why is it that insurers only create products and services for the wealthy? He never got a good answer. Richard had seen the data on the impact that natural disasters had on human lives in emerging markets – there was clearly a mismatch between risk and access to insurance.

Years later, as mobile penetration in these markets increased, MicroEnsure stopped asking its clients three standard questions during the signup process (name, age, and next of kin) – and they signed up 20 million customers in 140 days! They now serve over 60 million customers, 80% of whom had never had insurance prior to MicroEnsure.

2:47 – On MicroEnsure’s distribution model.
5:48 – How can MicroEnsure not ask any questions of their customers? It comes down to the difference in traditional insurance products versus microinsurance.
7:23 – How MicroEnsure leverages its distribution partners to achieve requisite scale.
8:17 – Why MicroEnsure went straight to the partnership model as opposed to going direct to the consumer.
10:34 – How MicroEnsure leverages their partners’ brands and data to sell their products.
13:13 – Richard and Justin discuss misconceptions around customer education and the importance of very simple products.
14:54 – The changes to MicroEnsure’s business model and how they fit into the insurance value chain.
17:11 – Richard background and the origin story of MicroEnsure.
19:52 – MicroEnsure’s business in Africa and key considerations for expansion.
23:39 – Market size as a consideration and stories of their business in Malawi and Nigeria.
25:00 – The story of MicroEnsure moving from a non-profit, funded by a large grant from the Bill & Melinda Gates foundation to a for-profit, venture-backed company.
27:25 – After 20 years as an entrepreneur, Richard shares his general advice for entrepreneurs.

Rebecca Enonchong (@africatechie) is widely known for her evangelism of the African tech ecosystem. But she's much more than merely an evangelist. Rebecca started the US-based enterprise software company in 1999, growing it into a global business, and along the way has co-founded the Africa Business Angels Network, AfriLabs, I/O Spaces, ActivSpaces and more. 

I was so fortunate to be paid a visit by Rebecca in Johannesburg, where we sat down for a conversation on how to best help entrepreneurs in the ecosystem, her views on doing business in Francophone Africa, her journey as an entrepreneur as the founder and CEO of AppsTech, and about how one particular telecom owes them a lot of money and caused her to miss out on a multi-million dollar exit opportunity.

To solve problems on the continent, entrepreneurs are building sustainable, impact-driven, infrastructure-building, tech-enabled, for-profit companies - how should these companies be funded?

In this episode - our third and final episode of our three-part series on venture investing in Africa, and the final episode of Season One, as well, we take a first principles approach to fundraising in Africa, and dive deeper into the opportunities for entrepreneurs to leverage different types of capital and funders to achieve their business' objectives.

1:45- We define Venture Capital in the Silicon Valley sense, from Stratechery's What Is a Tech Company?
2:48 - A discussion with LifeBank's Temie Giwa-Tubosun, on building a solution in the healthcare space - as a proxy for our exploration into impact-driven, for-profit startups in Africa
6:24 - A discussion with MDaaS Global's Genevieve Barnard Oni and Oluwasoga Oni on building tech-enabled, brick and mortar diagnostic centers in Nigeria, and being told by one investor that they weren't "tech enough"
10:31 - If the businesses being build to solve problems across Africa are not "tech enough", and if venture capitalists fund tech companies, then what fundraising models should we use? We hear from LaunchLab's Josh Romisher on the variety of investment vehicles used to fund off-grid solar home system ventures. 
14:01 - Exploring innovative finance models with the Bertha Centre for Social Innovation and Entrepreneurship's Tine Fisker Henriksen.
18:41 - If we're re-thinking investment models, should we also be re-thinking the very nature of finance for emerging markets? With Founders Factory's Lwazi Wali.
22:12 - How might we imagine new, yet-to-be -determined models for Africa? Perhaps with the help of a history lesson from Alex Lazarow, global venture capitalist and author of Out-Innovate: How Global Entrepreneurs - from Delhi to Detroit - Are Rewriting the Rules of Silicon Valley.
25:17 - As always, Sayo and I share our thoughts.

Venture Capitalists, generally speaking, are looking to fund high-growth ventures that have the potential to scale and achieve virtually infinite returns. But achieving that scale is hard, even more so in Africa, where there are market size questions, fragmented markets, and regulatory considerations. As a result, venture investors are looking for a specific type of founder and entrepreneur - one who has demonstrated the potential to pull it off and achieve the growth and scale investors are seeking.

In the African early-stage ecosystem, with its funding scarcity, limited track record, talent shortage, and expansion challenges, how do venture investors reconcile their quest for funding high-growth ventures in this environment?

2:24 - defining venture capital, courtesy of Stratechery's Ben Thompson and his blog post What is a Tech Company: https://stratechery.com/2019/what-is-a-tech-company/
3:59 - VCs are looking for scale, and talent capable of achieving the desired scale, with Microtraction's Chidinma Iwueke & Dayo Koleowo + TLCom Capital's Ido Sum
8:14 - a discussion on scarce deal flow and a lack of investable startups, with Dayo & Digest Africa's Peter Kisadha 
10:46 - 4Di Capital's Justin Stanford + Ido talk about the need to balance their portfolios to account for the realities of the African market...
11:46 - ...but a balanced portfolio doesn't mean lesser return expectations
13:35 - how venture builders like Founders Factory Africa & Lwazi Wali are supporting entrepreneurs through their journey to scale
16:14 - GreenTec Capital Partner & Maxime Bayen on their results for equity initiative
17:58 - Lwazi + Startupbootcamp Africa's Zachariah George & global venture capitalist Alex Lazarow on achieving incentive alignment through initiatives like corporate VC and evergreen funds
23:32 - a discussion with Justin & Sayo on venture investing in Africa

We talk so often of venture capital that it's more or less assumed that raising VC funding is an inextricable part of the entrepreneur's journey. But should it be? What are the purposes for taking in VC money, and what are the considerations? 

1:24 - Keith Davies, ex-CFO and Partner at Zoona on the implications of taking VC money
3:19 - Integrateme Founder Luke Dominique Warner on their strategic decision to not do a traditional round of VC fundraising 
5:24 - EAVCA's Eva Warigia and VC4A's Ben White on attracting local businesses leaders and high net worth individuals to participate in early-stage investment as strategic investors, and connecting foreign investors with different skillsets to local opportunities 
8:27 - Startups experience raising money for a strategic and specific purpose, with Farmcrowdy Founder Onyeka Akumah, as well as Keith and Luke
10:31 - Riby Founder & CEO Abolore Salami + Keith on strategically and selectively soliciting investors 
12:47 - Keith, Onyeka and Yoco's Marcello Schermer on considerations around timelines of raising money, from both foreign and local investors
15:11 - Justin and Sayo breakdown the conversation around seeking VC funding, including Sayo's experience fundraising locally for his startup Kandua, and their view on the question of if a startup should be raising money in the first place 
 

One of the most exciting aspects of opportunities in Africa is a function of market size - over 1.2 billion people on the youngest and fastest-growing continent. But the conversation around total addressable market, and true market size opportunity is a lot more nuanced than Africa's topline population number.

2:25 - GreenTec Capital Partner's Maxime Bayen discusses GSMA research on mobile adoption and digital literacy
4:39 - The Subtext's Osarumen Osamuyi on how he thinks about market size and the exercises he uses to better quantify market opportunity
9:41 - NALA's Benjamin Fernandes on their product's impact on addressable market and digital literacy 
12:10 - Yoco's Katlego Maphai on how Yoco is targeting non-consumption
14:27 - A discussion with Jehiel Oliver on market-creating innovations
17:48 - Justin and Sayo discuss digital literacy
21:21 - Justin and Sayo look further into expansion as a corollary to the market size conversation

In nuanced and fragmented environments, how are startups in African markets getting their products and services in the hands of their customers at the last mile?

1:55 Maxime Bayen, of GreenTec Capital partners and formerly of GSMA, on mobile technology
4:00 Keith Davies, formerly of Zoona, on agent networks
5:24 Katlego Maphai, CEO of Yoco, on building trust offline
6:36 Abolore Salami, CEO of Riby, on B2B2C business models
8:11 Antonio Bruni, CEO of Picup, on last mile delivery
13:50 Justin and Sayo discuss market size

Leapfrogging - what is it? What is it not? What is it good for and what are its limitations? We speak to Yoco's Head of Expansion, Marcello Schermer. 

They say that the difference between the US and Africa is that the US has competition while Africa has complexity. And a big reason for its complexity is a lack of infrastructure.

It compels many startups to build infrastructure, invest in other market-making activities and/or to diversify earlier in their journey to make their businesses work. How are startups across the continent building sustainable businesses in this environment?

2:57 - Kasha's Joanna Bichsel

10:56 - MAX.ng's Tayo Bamiduro & Chinedu Azodoh

18:17 - BRCK's Erik Hersman

23:06 - Hello Tractor's Jehiel Oliver

32:07 - a conversation between Justin and The Flip's b-mic, Sayo Folawiyo.