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25 Things I've Learned Investing in 25 African Start-Ups

Updated: Jun 8, 2023

A few things I’ve learned while traveling this path.

  1. Sometimes you find the “right” entrepreneur working on the “wrong” venture. Stay in touch, add value always, and back her next venture.

  2. Business model clarity is important. It’s almost as important as the motivation and character of the entrepreneur. Especially for early stages, business models evolve, but the motivation & character of the entrepreneur don’t. Focus due diligence accordingly.

  3. Motivation for starting a company is crucial. It determines the quality of the path when times get tough. And times will get tough at least five times per year.

  4. Venture Capital is like a race car. It’s a specific vehicle for a specific circumstance. Point A to Point B in record time! But don’t step into a race car unless you have a pit crew, a fueling station, and great roads.

  5. African start-ups are less risky than most people think. In the US, there’s a lot of competition, and your idea or tech has to be so good that you win. In Africa, in some ways, the ideas are easier, there’s wide open room to take a lot of market share. Execution is hard as is navigating the environment. Would you rather deal with competition risk or execution risk? Which one is riskier?

  6. Entrepreneurship (and maybe life?) is about mastering the both/and tension. It’s knowing when to persevere when things are tough, but also knowing when to pivot when things aren’t working. It’s about extreme confidence and ambition towards the goal as much as it is about curiosity and humility in learning for a lifetime.

  7. Entrepreneurs who have lived and interacted in at least 2 different cultures ask great questions and have deep curiosity. Could be UK and Kenya. Honestly, could be Nairobi and Kisumu.

  8. There are a lot of fintech start-ups running around that are good at tech, but bad at fin. If the tech just accelerates/amplifies/automates the fin, better make sure the fin is solid before you tech it.

  9. Some models from the US will work really well in Africa. Some models will fail miserably because the culture / realities / assumptions on the ground are too different. Knowing which is which is crucial.

  10. I see both vertical and horizontal companies succeeding. Vertical — find a particular segment and solve a lot of their needs well, and then start attacking adjacent verticals. Horizontal — find a particular product that solves one or two big problems for a lot of verticals, and then start attacking adjacent products/horizontals. Most companies are a mix of both, but tend to lean one way. I have a slight bias towards vertical companies — there are a lot of hidden niches out there that no one is addressing.

  11. If I’m meeting an entrepreneur for the first time for coffee, it matters to me how they treat the waiter.

  12. “Relational” due diligence is the most important due diligence I do as an early-stage investor. I want to find someone who went to high school with the entrepreneur, or is in the same club or church as you.

  13. Is it more important to have a few strong connections or a lot of loose connections? Yes. Even better if most the loose connections come from the strong ones.

  14. Pivoting ability is one of the least appreciated killer traits of great entrepreneurs. Entrepreneurs who master the art of pivoting are willing to challenge their own assumptions (humility) and willing to factor in new information (curiosity). The market is always teaching us something, are we listening?

  15. Vintage season matters. The external factors — the maturity and trending of other competitors, funders, ecosystem nurturers, and the ecosystem itself — are mostly out of our control. If you’re a fish, it’s hard to see the water you’re swimming in. Best to talk to other fish that have swam different waters in different seasons to understand your water now. Starting a company in Kenya today is 2x less risky today than 5 years ago because the ecosystem has a lot more nutrients. (I think 2023 will be great for African fintech)

  16. All money comes with strings. Some strings are helpful, a lot are tolerable / acceptable, some are very detrimental, and some are a stew of all of the above. And sometimes when different money with different strings get thrown into the same pot, chaos and destruction are inevitable.

  17. Similarly, every investment is an impact investment — and there are good, bad, and mixed — direct, indirect, and unintended — “impact” for every investment we make. Are we willing to be honest about all aspects of impact?

  18. Trust is built slowly through consistency, but can be sped up dramatically when trust is transferred from a trusted mutual connection.

  19. In terms of culture, tech, and innovation, I wonder if Kenya is to Nigeria as Taiwan is to South Korea.

  20. In the next 10 years, there will be dozens of global tech companies that span the continents that started in East Africa. Some of our portfolio companies are already entering SE Asia and LATAM.

  21. For entrepreneurs raising a round, think about it less as getting to a number, and more as who you want around the table. You’re not just crowdsourcing funds, you’re crowdsourcing wisdom and networks.

  22. Many companies are really also fin companies in disguise (look at everything from Apple Pay to car dealerships to retailers pushing credit cards). All fin companies are tech companies (JP Morgan Chase had a $14B tech budget last year — half went to growth/innovation).

  23. Track record is important, but it’s not everything. One successful company I’ve been a part of (nine-figure valuation) was scaled by a CEO who had 2 failed start-ups.

  24. Active angel groups can be awesome. I’m part of the Nairobi Business Angel Network. So fun to invest with others with a diversity of networks, expertise, and worldview. The collective wisdom around these circles can be more powerful than a big VC firm.

  25. So excited to announce when portfolio companies are crushing it! I appreciate all the LinkedIn congrats; just note that I really didn’t do much at all for those successes to happen!

  26. (Bonus) The most important insights and developments in the ecosystem don't make the news and never appear in blog posts like this ;)

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3 commentaires

Mark Hutchinson
Mark Hutchinson
01 mai

think foreign exchange and currency movements if you are an external investor, get to know the entrepreneurs you are backing extremely well, and be very, very, very patient....


Kyle Schutter
Kyle Schutter
08 juil. 2023

#27 (that you mention elsewhere): Africa is like China 20 years ago. But probably even more investable (easier to get your money in and out, less language barrier, more diversified, growing rather than shrinking population, etc)

Also, FYI, commenting doesn't work on mobile. When I open the keyboard it closes the keyboard every time I try to type (Chrome on Google Pixel phone)



Hugh Roberts IV
Hugh Roberts IV
08 juin 2023

Like the insights here, thanks for sharing!

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