When we started this journey back in 2011, it sounded crazy to everyone we spoke to.
"Why would you want to invest in African tech startups?"
"What kind of strategy is this?"
"Sounds like a triple bogey to me: seed, technology and Africa."
Yet, we persevered.
Our view was that Africa was significantly underserved in digital and that it was clear that traditional sectors such as agriculture, media, print, hospitality, transportation, education, financial services and commerce would be reimagined and reinvented by technology and the Internet. More importantly, solutions for the 99% could be deployed at scale.
The refactoring of Africa would be led by high-octane entrepreneurs that shrugged off the daily constraints that their peers in better developed markets could never imagine, and executed with a goal to serve the local micro-economies being underwritten by consumers and SMEs alike.
The entrepreneurs came with energy, a high-hustle quotient and a high-fidelity understanding of the markets they sought to serve. What they lacked was mentorship, finance and that bit of external validation that maybe, just maybe, they were onto something great.
'The funding gap' almost became a trite phrase, used at conferences to highlight the problem but with very little being done in real life to bridge the disconnect. We also recognized that the funding gap looked more like a chasm once anyone took a closer look.
So our strategy was to build a platform that would focus on serving the elite Africa-based technology entrepreneurs whose pleas for funding had mostly gone unheard. We identified three key segments that needed a valuable source of funding, mentorship and company-building assistance: 1) pre-seed opportunities ($50K) - super interesting founding teams that could be just short of product-market fit but for whom a small financing round would accelerate their quest for fit. 2) seed opportunities ($250-500K) - early but crystal clear product-market fit and small teams led by elite founders. 3) seed+ opportunities ($750K-$1M) - rapidly growing revenues and meaningful financing support needed to fund mini-scaling.
Curiously, as we built out our brand and expanded our network of elite founders, we were surprised to discover how often we got approached by tech companies that fell outside of our initial target segments. These Africa-focused companies were well on their way to real scale, led by superstar founders and teams, and very wary of the local PE and PE-lite firms that are more prevalent on the continent. It was clear that our domain expertise in technology was uncommon and our prior multi-continent experience in investing in companies across various life-cycle stages from seed through growth meant that technology entrepreneurs repeatedly asked us to journey with them as they built 20-50 year companies.
So as part of our initial strategy, we identified the need for a vehicle that would support post-seed+ companies. This vehicle would offer financing of up to $10-15m per company and we would lead or participate in rounds as required. Not unlike our first vehicle, it took us a while to convince the market that there was a pressing and unmet need for it.
As the managing partner of TPG Africa very eloquently put it in an op-ed for CNBC Africa:
"By 2050, our continent will be home to nearly half a billion people who have either just entered or are about to enter the labour force. Their talent and enthusiasm can be the motor to accelerate Africa’s development...[but]...good ideas are being wasted because the money is not there to back them while successful start-ups are being starved of the resources they need to grow. The good news is that there is a widespread recognition in Africa of just how important it is to do more to harness the entrepreneurial spirit in our continent. African governments along with international institutions such as the African Development Bank and World Bank and NGOs all have initiatives in place. There is also a big role for private equity to help fill the gap in funding. But if it is to have the impact needed the approach must be flexible, ready to back businesses of all sizes and across their entire life cycles. It has to think small as well as big and be focused on the long-term."
The sentiments echoed in the op-ed reflect our founding vision. While it is increasingly clear that it takes at least ten years to become an overnight entrepreneurial success in Africa, we are even more excited about the opportunities still ahead to find and invest in high-growth technology companies focused on building the next rev of Africa.
To enable us to continue executing on our vision, and in partnership with TPG/Satya, we are pleased to introduce EchoVC+ I, our first vehicle to support blitzscaling tech companies in Africa. We are also announcing our first EchoVC+ investment, in Frontier Car Group, which builds and runs used car marketplaces in emerging markets.
In support of our expansion, we are also thrilled to welcome some amazing folks to our team. They represent some of the very best talent available and bring a shared love for technology entrepreneurship and community building. We are incredibly grateful to everyone that has supported us so far as we execute on our mission to seed and syndicate entrepreneurial inspiration across Africa.