In 2020, Kauffman Fellows (KF), a prominent venture education program renowned for its extensive and well-established network of VCs, made a concerted effort to enhance the diversity within its board. The program, a well-established resource for startup founders and the venture capital sector, expressed the importance of using this strategy to sustain diversity growth within its fellowship cohort, where a group of fellows actively participate in the nomination and evaluation process for prospective trainees.
The fellowship also seeks to cultivate a more inclusive venture capital sector through yearly summits. This exclusive regional trip aims to facilitate cross-border investments in burgeoning technology markets by bringing together its investor network across various innovation ecosystems worldwide.
Following summits in emerging cities across Mexico, Dubai, Japan and Brazil, KF made its first stop in Africa this year as 300+ investors from more than 45 countries convened in Nairobi, Kenya this September. They joined several Africa-based Fellows, representing VC firms like Norrsken22, Helios Digital Ventures, CRE Ventures, Ingressive Capital and Atlantica Ventures.
Several factors contribute to the enthusiasm of both local and global investors about Africa. Firstly, the region’s digital economy has experienced significant expansion in recent years and is anticipated to surpass $700 billion by 2050. There’s also been a considerable surge in venture funding, reaching the $5 billion mark in the last two years, subsequently facilitating five unicorns’ emergence. Noteworthy companies are emerging in the prominent markets known as the Big Four, namely Nigeria, Egypt, South Africa and Kenya, as well as in budding startup markets such as Ghana, Senegal, Rwanda, Ivory Coast and Morocco, among other countries.
conducted interviews with seven international investors from the summit which had Kenya’s president William Ruto and Meg Whitman, ex-president/CEO of eBay and now U.S. ambassador to Kenya, in attendance. Read on to learn more about their perspectives on African tech, what sectors interest them and investment activities in the region so far.
We spoke with:
- Phoebe Wang, investment partner, Climate Pledge Fund, AWS
- Jenny Fielding, co-founder and managing partner, Everywhere Ventures
- Adrianna Samaniego, partner, Female Founders Fund
- Alex Lazarow, managing partner, Fluent Ventures
- Ebony Pope, partner, Rethink Education
- Miriam Rivera, partner, Ulu Ventures
- Sherman Williams, managing partner, AIN Ventures
The responses have been edited for length and clarity.
Phoebe Wang, investment partner, Climate Pledge Fund, AWS
How would you describe your perception of Africa’s startup and venture capital scene before the summit?
Attending the Kauffman Global Summit in Nairobi, Kenya, was the first opportunity for me to experience Africa’s startup and venture capital scene firsthand. My original perception was that the availability of capital is somewhat limited in this area and that the startup and venture capital industries are in an early stage of development. This belief was shaped by the region’s historical challenges around attracting significant investment and the perception that African markets have political, regulatory and currency risks.
Did this perception change upon discussions with founders and investors? What surprised you the most?
My perception changed significantly after great discussions with founders and investors. I recognized the immense talent and entrepreneurial spirit that permeated the continent, which suggested a wealth of untapped opportunities waiting to be explored.
The African startup ecosystem presented some astonishing and promising facts that have reshaped my perception. Firstly, the continent’s youth demographic is astonishing, with an average age of 19. This demographic dynamism is further underscored by the projection that by 2050, a quarter of the world’s population will be from Africa. This youth-driven population offers an immense talent pool and consumer base for startups to tap into.
Secondly, the rapid ascent of African startups to unicorn status in as little as 3-4 years with relatively modest initial capital requirements has been nothing short of remarkable. This highlights the agility and innovation within the ecosystem, where startups can scale and compete globally faster than previously anticipated.
Lastly, the impressive statistic that 40% of African entrepreneurs are women is a testament to the region’s commitment to gender equality in entrepreneurship. Equally noteworthy is that most venture capital funds and financial institutions operating within this ecosystem boast female executives and partners, demonstrating a concerted effort to foster diversity and inclusivity. These revelations not only challenge stereotypes but also underscore the immense potential and resilience of Africa’s startup landscape.
As an active investor in your region, what were the similarities and differences between your region’s startup and VC scene compared to Africa?
With the caveat that my understanding of Africa is still quite rudimentary, I’d like to share several similarities and differences between the startup and VC scenes in North America compared to Africa.
Firstly, the sheer diversity of Africa, encompassing 54 countries, presents both unique challenges and opportunities. Each African nation has its pathway for scalability, often influenced by distinct regulatory environments, infrastructure and market dynamics, which makes scaling a startup in Africa different from the more uniform landscape in the United States.
Secondly, there is a striking difference in the valuation and capital required for startup development. In Africa, startups often need significantly lower capital injections to kickstart their operations and achieve growth milestones, compared to the high-capital environment in the U.S. This dynamic can be attributed to the region’s frugal innovation and resourcefulness.
Thirdly, it’s noteworthy that many startups in Africa, even at an early stage, tend to have positive profit margins. This contrasts with the U.S., where many startups prioritize rapid growth over profitability. This financial prudence can be attributed to the necessity of self-sustainability in some African markets.
Lastly, the exit paths for startups in Africa are primarily through mergers and acquisitions (M&A), which may indicate lingering liquidity challenges. In contrast, the U.S. startup ecosystem often sees more diverse exit options, including initial public offerings (IPOs). The prevalence of M&A in Africa can reflect the need for strategic partnerships and consolidation to achieve scale.
In summary, while there are apparent similarities in entrepreneurial drive and innovation between my region and Africa, the differences in regional diversity, capital requirements, profitability focus and exit strategies make each ecosystem distinct. Understanding these nuances is crucial for investors seeking to engage in Africa effectively.
What sectors are you most excited about in Africa? Also, what might be overhyped?
I’m excited about the climate tech innovation in Africa. The Kenya climate week that happened right before the Kauffman Global Summit has demonstrated the level of interest and activities in Africa.
Should we expect more investments from your firm into African VC funds or startups or some African strategy in the future?
Amazon’s Climate Pledge Fund maintains a global mandate that extends to Africa, and we are eager to embrace this opportunity. We recognize the dynamism and potential of Africa’s burgeoning startup ecosystem. As we engage with this region, we remain eager to gain fresh insights that may challenge existing perceptions and reveal new possibilities. Africa’s unique blend of challenges and opportunities presents a fertile ground for innovation and entrepreneurship, and we are poised to actively explore ways to participate and contribute to the evolving dynamics of this thriving ecosystem.
Jenny Fielding, co-founder and managing partner, Everywhere Ventures
How would you describe your perception of Africa’s startup and venture capital scene before the event?
We have invested in Africa for the last few years, although it’s a small portion of our overall portfolio. Each time I come to the continent, I discover founders thinking bigger and even more globally-minded than the last time I visited. The first few times I came here, I heard a lot about scaling across the country, then the continent, and now founders talk about dominating the globe. That mindset is really exciting for a fund called Everywhere.
As an active investor in your region, what are the similarities and differences between your region’s startup and VC scene compared to Africa?
There are so many founders in Kenya (and across Africa) that I’d describe as ‘empaths,’ entrepreneurs solving problems that they experienced firsthand. Of course, you can also find these types of founders in the U.S., but there’s been a noticeable shift towards founders looking for white spaces and what I call ‘opportunistic entrepreneurship.’ The empath founder can go the distance, is super resilient and can get through hard times because the mission is often so personal. We look for these characteristics in founders and Africa has a deep bench of empath founders.
What sectors are you most excited about in Africa? Also, what might be overhyped?
I’m a fintech investor and the sector got very hot during the tech boom and many would say, overinflated. The global reset (and crash in the public market) has started to shift the profile of fintechs and many investors have retreated. We see this as an incredible opportunity to lean in and actively deploy across the sector.
Should we expect more investments from your firm into African VC funds or startups or some African strategy in the future?
Yes, we recently led a fintech deal in South Africa and are excited to deepen our presence in the ecosystem.
Adrianna Samaniego, partner, Female Founders Fund
How would you describe your perception of Africa’s startup and venture capital scene before the event?
Before attending the summit, I must admit that I may have had some biases. While I recognized Africa as an emerging market with significant potential, I perhaps underestimated the maturity and diversity of its startup and venture capital ecosystem.
Did this perception change upon discussions with founders and investors? What surprised you the most?
Yes, my perception changed significantly. I was pleasantly surprised by the depth and maturity of the ecosystem. The diversity within the startup scene, particularly the efforts centered around climate and sustainability, was noteworthy.
Also, hearing from Meg Whitman, the U.S. ambassador, about Kenya’s important trade relationship between apparel and agriculture was very interesting. It’s evident that Africa is poised to leapfrog in many sectors, harnessing innovative solutions to its unique challenges.
Additionally, attending the “Women Who Build Africa” event provided a compelling glimpse into the impact female-led startups are making, especially in women’s health, such as addressing maternal mortality in sub-Saharan Africa, which genuinely captivated my interest. The digital transformation across sectors and the incredible scale of opportunities was very evident.
As an active investor in your region, what were the similarities and differences between your region’s startup and VC scene compared to Africa?
The similarities that stood out pertain to the challenges faced by female founders in both regions, especially in terms of securing funding. It was heartening, yet surprising, to learn that Africa has a higher proportion of female general gartners and check writers than the U.S. However, the dynamism of Africa’s market, characterized by its youthful population and significant GDP movement through mobile platforms, offers a distinctive flavor to its startup and VC scene.
What sectors are you most excited about in Africa? Also, what might be overhyped?
The health sector, particularly women’s health, holds immense potential. Addressing challenges like maternal mortality and tapping into the growing market, as evidenced by countries like Nigeria (which has 2x more births than the U.S.), presents significant opportunities. The digital transformation that’s permeating every sector also excites me. While it’s hard to pinpoint what might be overhyped at the moment, I saw many fintech microfinancing plays.
Should we expect more investments from your firm into African VC funds or startups or some African strategy in the future?
Absolutely. Given the insights I gained from the summit and the interactions with Kauffman Fellows who have invested in Africa, I’m convinced about the continent’s potential. I’m keen on deepening our understanding and expanding our regional network. As we continue to evaluate the opportunities, you can expect a more proactive African strategy from us in the near future.
R: Kenya’s president William Ruto
Alex Lazarow, managing partner, Fluent Ventures
How would you describe your perception of Africa’s startup and venture capital scene before the event?
I have invested in emerging markets, including Africa, for over a decade. At Fluent Ventures, we believe the best ideas come from anywhere and scale everywhere. The Kauffman Fellows Africa VC Summit highlighted this deeply. For example, Kenya pioneered mobile money via M-Pesa. While this story is well told, what is often less appreciated is the movement it helped catalyze with hundreds of mobile banking apps scaling today worldwide and a range of services built on top of this infrastructure. I continue to believe we’ll see exciting innovations emerging from across the continent.
Did this perception change upon discussions with founders and investors? What surprised you the most?
When I started investing, few (no) mainstream funds had ever seriously contemplated an investment in Africa. Today, with 10+ unicorns, undeniable demographics and strong macro opportunity, for many, it is no longer possible to ignore. This was the sentiment I felt. While not everyone will be deploying in Africa tomorrow, from my discussions with founders and Fellows, there seemed to be consensus about the opportunity and the strength of the emerging ecosystem.
As an active investor in your region, what are the similarities and differences between your region’s startup and VC scene compared to Africa?
Many challenges in the 50+ African countries are not unique to their local ecosystems. The high cost of serving customers has made financial inclusion an ongoing challenge. Supply chains remain fraught with inefficiencies. Quality healthcare and education access must be increased affordably. The world is awash with experiments. Ideas in different geographies are relevant here and vice versa. Super app models from China, B2B Marketplaces from India and neobank ideas from LatAM are influencing ideas here, much like M-Pesa inspired others.
What sectors are you most excited about in Africa? Also, what might be overhyped?
The biggest opportunities often follow the biggest challenges. For me, they are in fintech, health and commerce.
Should we expect more investments from your firm into African VC funds or startups or some African strategy in the future?
Absolutely. We’ve already made investments in the region and will continue.
Ebony Pope, partner, Rethink Education
How would you describe your perception of Africa’s startup and venture capital scene before the event?
This has been a region that Rethink Education has been excited to explore for investment opportunities. Market trends, including the growing population on the continent, global talent shortages and a rise in remote work opportunities, make this a target market for educational and workforce training solutions. We have already invested in Decagon and Meaningful Gigs, which are talent marketplaces for African software developers and product designers, respectively. Going into this trip, questions I had included the strength of venture quality deals in this region, buy-in from investors on the ground regarding sector investability and exit opportunities.
Did this perception change upon discussions with founders and investors? What surprised you the most?
I have been so impressed with how active and close-knit the tech ecosystem is in Nairobi. I planned an edtech happy hour with the local ecosystem and 15 companies and investors showed up with only three days’ notice of the event. They expressed their gratitude for an in-person gathering of edtech founders, noting that it doesn’t often happen, which surprised me. There was varying interest from local investors in investing in edtech. They stressed that education is a public good and hard to scale with challenges selling to the government and limited scalability B2C. The overall market size of the continent is massive, but it is not copy-and-paste selling into different African countries. There seems to be general curiosity from investors I’ve met here, but the market opportunity for VC-backable edtech companies is still developing.
As an active investor in your region, what are the similarities and differences between your region’s startup and VC scene compared to Africa?
Investing in edtech is already niche in the U.S. and there is an even smaller number of edtech investors in Nairobi. Valuations are much more reasonable in Africa; founders seem efficient with capital, focusing on building sustainable, profitable businesses because outside capital is more scarce.
What sectors are you most excited about in Africa? Also, what might be overhyped?
During the summit, President William Samoei Ruto mentioned that with a population of 60 million and a GDP of around $2,000 per capita, they are heavily investing in human capital. Nearly one-third of the country’s budget is dedicated to education — primary, secondary and workforce training, which is very exciting to hear as an investor in an untapped market.
Should we expect more investments from your firm into African VC funds or startups or some African strategy in the future?
Yes, Rethink Education is excited to invest in more African startups and partner with local investors to find and get companies.
Miriam Rivera, partner, Ulu Ventures
How would you describe your perception of Africa’s startup and venture capital scene before the event?
Thanks to the KFP and Black KFP community, I had a limited understanding of the African startup and venture capital ecosystem. It’s been so inspiring to see it firsthand and feel the energy of a continent poised to leapfrog on many fronts of technology and business in the next 20 years. I also learned much more about the macroeconomic forces that will make the continent an incredible market or partner for American startups.
Did this perception change upon discussions with founders and investors? What surprised you the most?
What surprised me the most is that African-focused or Africa-based funds have so many female investors: 40% and 49% compared to 9% in the U.S. It’s impressive that in such a young ecosystem, 10% of African startups have women CEOs, 15% have women founders and companies with at least one woman founder receive 7% of VC dollars.
In comparison, the U.S. has 14% of startups with a woman CEO and 28% with at least one woman founder, according to Statista. While the U.S. VC industry is much larger, only 2% of dollars go to companies with women CEOs, and 11% of VC dollars go to startups with women founders. Only about 2% of dollars go to U.S. Black, Latino or indigenous founders.
As an active investor in your region, what are the similarities and differences between your region’s startup and VC scene compared to Africa?
As an early-stage investor with a diversity lens in the U.S. who has participated in 10 of 13 Kauffman Summits around the world, I believe that entrepreneurs and investors essentially have the same challenges but experience differences of degree as ecosystems mature and scale: lack of connectivity to other entrepreneurs or investors (and their hard-earned wisdom and networks), lack of familiarity with venture capital compared to control-oriented investing, lack of access to capital at all stages for entrepreneurs and funders in their ecosystems who aren’t connected to local and global sources of wealth, and in some cases, lack of limited partner familiarity with venture capital as an asset class.
The most significant differences nationally may be a lack of infrastructure or systemic barriers of various kinds (such as access to essential resources like clean water/electricity, accessible or affordable education, healthcare, access to technology and training, not just the consumption of technology but its production; and more efficient systems of law or transportation).
What sectors are you most excited about in Africa? Also, what might be overhyped?
I’m only beginning to learn about various technology sectors, so it would be premature to comment.
Should we expect more investments from your firm into African VC funds or startups or some African strategy in the future?
Focus is imperative for any successful business and Ulu Ventures is no different. The U.S. has an emerging economy and is not doing as well regarding diverse entrepreneurs as some emerging economies like Africa. If the U.S. VC seed-stage ecosystem had not grown more diverse since Ulu was founded 15 years ago, the share of dollars invested in women and people of color would almost certainly have decreased despite increased assets under management in VC on the whole.
The diversity of Ulu’s founder population will enable entrepreneurs to partner in important, leapfrogging economies like Africa. But typically, local VC investors have been more successful in a geographic region than those outside the ecosystem. I’m mindful of that as an investor, personally and professionally.
Sherman Williams, managing partner, AIN Ventures
How would you describe your perception of Africa’s startup and venture capital scene before the event?
My perception was that the ecosystem was mainly centered in Nigeria. I thought that Nigeria was the epicenter of this entire ecosystem.
Did this perception change upon discussions with founders and investors? What surprised you the most?
Yes, it did. I had no idea that Nairobi was such a strong ecosystem. As a matter of fact, it’s actually the strongest ecosystem per capita. I did not truly appreciate the talent in the ecosystem and, more specifically, the sheer abundance of talent. There are many people on the continent, and just the sheer size of talent will have an effect in the future.
As an active investor in your region, what were the similarities and differences between your region’s startup and VC scene compared to Africa?
For similarities, I think the hunger and the desire to change the human condition. And differences: in the U.S., most venture ecosystems are centered around strong academic ecosystems. That does not seem to be the case here.
What sectors are you most excited about in Africa? Also, what might be overhyped?
I’m excited about fintech, primary healthcare, sustainability and climate, and lastly, distinct from healthcare, digital health.
Should we expect more investments from your firm into African VC funds or startups or some African strategy in the future?
We will certainly consider Africa in the future. This visit, the in-person effect, has made a significant difference. We are excited about what is to come here.
