Venture Capital looks at the technology sector in East Africa
We read about entrepreneurs and their projects every day. Only last week we had a list of inspiring winners from the Apps4Africa competition. See iCow takes first place at the ‘Apps 4 Africa’ contest. But only a lucky few walked away with a cash prize. What happens to the rest of these entrepreneurs and their ideas? Without some financial support, mentorship and guidence we risk wasting this potential.
One example of a project I would like to see take shape is Fogs Funeral Announcements developed by Alex Gitonga. This is an application for generating death and funeral announcements via text message. Radio and newspaper are costly in the region. Fog will allow users to cheaply and easily draft, edit and send these types of messages to ensure they reach friends, family, former schoolmates and colleagues – an important Kenyan custom. Funerals can be a heavy financial burden on a small family and using a tool like this frees up disposable income for school fees or other costs. To me this is a powerful application that potentially serves millions of customers. And I can imagine there are some regional expansion opportunities too.
It’s only a matter of time before investors recognize the opportunities and step forward to show their support. In this interview, Richard Bell, CEO at East Africa Capital Partners, takes a look at the rise of Venture Capital in the East African ICT sector. Early days in a process that will hopefully see many individuals like Alex Gitonga realize their ideas.
See an overview of some of the VC firms now active in this space:
1. Fanisi Venture Capital Fund
Fanisi Venture Capital Fund is a venture capital fund established in Luxembourg to work with competitive and sustainable East African businesses, whose ambitions are to grow and run their operations to global best practice standards. They invest in high growth businesses, including start ups and early stage companies, and are committed to working with East African entrepreneurs to build world class businesses with significant development impact on the economies in the region.
Investment range: USD 0.5 million – USD 3 million
Investor stake : equity
Fee : n/a
Web : http://www.fanisi.com
2. Africa Media Venture Fund
Africa Media Ventures Fund mobilizes capital and experience in the Netherlands to invest in entrepreneurs in the media sector and small and medium sized African media companies. They offer a combination of venture capital and business development support, involving knowledge, experience, access to proven business concepts/applications and network.
Investment range: EUR 15,000 – EUR 100,000
Investor stake: minor equity, seat on board
Web : http://www.amvf.nl
3. eVA Fund
eVA Fund is dedicated to mobilize capital and experience in the Netherlands/Europe to invest in small and medium sized African internet related companies. eVA Fund focuses on development in terms of capital and business development support, i.e. knowledge, experience, access to proven business concepts/applications, and network.
Investment range: EUR 25,000 – EUR 250,000
Investor stake :
Fee : n/a
Web : http://www.eva-fund.com
4. Open Capital Fund
Open Capital Advisors is a financial intermediary focused on increasing investment in small and medium enterprises (SMEs) in East Africa. They provide advisory and brokerage services required by SMEs and investors, thereby enabling SMEs to access capital and achieve growth, innovation and social impact
Investment range: USD 200,000 – USD 2,000,000
Investor stake : equity, quasi-equity (i.e. straight debt with revenue participation), or debt financing from a non-bank investor(s)
Fee : generally based on success and charged as a percentage of capital raised and only payable when clients receive financing
Web : http://www.opencapitaladvisors.com
5. Aureos Capital
Aureos is a specialist emerging market private equity firm, providing growth capital and expertise to help build the next generation of sustainable businesses. Returns are maximized and risk mitigated by focusing on earnings growth and operational efficiency..
Investor stake: equity
Web : http://www.aureos.com
GroFin is a multi-national specialist SME finance and development company offering an innovative combination of risk capital and business development assistance to viable enterprises. GroFin is committed to assisting small and medium enterprises (SMEs) achieve sustainable profitability, believing that growth in this sector is vital for socio-economic development in emerging markets. They invest in viable businesses across Africa with a unique combination of money and mentoring assisting entrepreneurs maximise profitability and encourages sustainability and success.
Investment range: USD 50,000 – USD 1,000,000
Investor stake: equity