On Friday 21st April, we gathered Africa-focused investors in London for an in-depth discussion around driving impact investment into the African tech sector. The high-level breakfast event attracted speakers and delegates from leading private equity, impact investment and venture capital funds.
Speakers included: Karima Ola – Partner, LeapFrog Investments, Nimit Shah - Principal, Helios Investment, Matias Wibowo- Investment Associate, Clearly So, Ido Sum- Investment Director, TLcom Capital and Suzanne Biegel - Investment Director, Spring Accelerator and founding angel, Clearly Social Angels
Here are three things we learnt -
1. There are opposing views on Impact Investment
One of our key goals for organising the roundtable was to bring together different perspectives from the Africa technology and impact investment ecosystem. In doing so we discovered that Impact Investment was quite a polarising term and there were many different interpretations of it.
On one hand, some viewed it as a kind of white-washing to make Aid money more acceptable given the recent negative perceptions attached to Aid. One participant argued that some development funds were using the Impact Investment label to saddle entrepreneurs with unrealistic impact goals and reporting requirements that risked stifling innovation rather than supporting it.
One the other hand, it was argued that impact investment had an important role to play particularly in catalysing innovation around big world, complex problems which other forms of funding might not be suited to address. In addition, it serves a growing pool of socially conscious investors who want to make a good return as well as create sustainable impact.
2. Technology is the future
The one thing that participants did agree on was that technology is key to the future of economic growth on the continent. With recent challenges such as the drop in oil prices and currency losses doing much to dampen the Africa growth story, investors are very much still optimistic about technology. The reason, one investor argued was that technology is able to drive market penetration and open massive untapped opportunities within under-served markets. And because of the sheer size of the under-served populations in Africa in need of basic services across the board, their view was that technology would continue to offer a return that is very attractive to investors despite the existing challenges.
It was however stressed that technology solutions would need to be localised to meet the demands of this under-served consumer. One of our speakers shared a challenge they had launching a life insurance tech solution in Nigeria. After months of failing to crack the market, they spent time on the ground and discovered that the main obstacle had been the different attitude consumers in this market had towards buying life insurance, viewing it as equivalent to signing one’s death certificate. A change of messaging to align with consumer needs resulted in rapid growth and adoption of their offering.
3. A need for transparency in the ecosystem
One of the key points raised was the need for greater transparency within the investment ecosystem. One passionate entrepreneur expressed the challenges she faced trying to raise investment for her Africa impact technology venture. She described a cat and mouse game in which investors were not upfront about their funding requirements and entrepreneurs also held their cards close to their chest trying to figure out what they thought investors would like to hear. This results in a tough and arduous fundraising process which is not beneficial for either entrepreneurs or investors particularly when this effort could be better utilised actually solving world-changing problems.
Join us on Wednesday 21st of June at the Africa Technology Business Forum, as we continue this important discussion around driving growth and impact in the African technology ecosystem. REGISTER TODAY