In Search of the Zebracorn: Why I am moving to Arusha, Kilimanjaro in Tanzania
Over 3 years ago, I left Silicon Valley for Nairobi to pursue an opportunity to fund tech startups in Africa after founding Savannah Fund.
I did this after spending my entire adult life in UK, USA for close to 18 years and it was time to go home and put my skills to use. Timing was ideal and beyond the obvious market signs, I also credit my move to the encouragement of important mentors around me from Stanford GSB classmate Tristen Langley (formerly DFJ) and serial tech entrepreneur Paul Bragiel (i/o ventures) who was one of the most aggressive valley investors along with Dave McClure (500Startups) to examine tech seed investing in emerging markets from Brazil, East Africa to South East Asia.
Around 2011, the buzz around the Africa rising narrative and tech scene was starting to emerge with Nairobi at the epicenter. There was a real opportunity to:
- Be an early mover and pioneer in funding and supporting tech startups via an accelerator and seed fund that had meaningful impact on Africans in technology.
- Plug a gap that impact investors / donors were missing around the rise of the middle class African and real tech seed investment shortcomings of the ecosystems- through a “tough love” approach.
- Tap the huge need for on the ground local Fund Managers but also encourage other local investors to get involved in the ecosystem funding game (very few things professionally now make me happier than seeing more African tech investors emerge building from the work of 88mph, Knife Capital to new groups such as Africa Angels to Kernel Fund that I can work with).
Kenya was the natural place to run the Venture Capital Fund over my home country of Tanzania where I had some links and the private sector was more developed together with early tech community was forming around the iHub.
Along with Paul Bragiel and a close friend and entrepreneur, Natalino Mwenda, we had some productive talks with Tanzanian Government at the highest levels a few years prior to my start in Kenya in 2012. More recently, President Obama’s visit for the Global Entrepreneurship Summit (GES) shows how far the regional ecosystem has come in a few short years.
Scaling across Africa is not Straight Forward
Over the past 3 years, Savannah Fund has grown, now with over 20 investments in 6 countries, evolved from funding Kenyan and East Africa startups (half the portfolio) to pursuing a more pan Africa strategy in both West and Southern Africa for a number of reasons:
- The Savannah Fund brand has broad reach across Sub-Saharan Africa and we were able to attract good deal flow across the continent from our accelerator to seed deals. Many wanted the Silicon Valley link we brought to the table as well our ability to move quickly and provide on the ground value and credibility from Cape Town, Harare to Lagos.
- Nairobi in Kenya, whilst a great hub and an unbelievable talent magnet, was too small when you factor in the competitive forces and sheer amount of activity given its size, particularly in the B2C markets.
- Many markets were neglected inc. South Africa and Nigeria, are often bigger consumer markets, have nascent angel / seed investing scenes but have greater depth in talent.
I found myself spending less and less time in Kenya and more and more time understanding new markets from Angola to the Congo- these are large and under-served markets of over 100M. At the same time Kenya got more and more crowded with startups and investors both local and foreign often going after the same opportunities as big incumbents (local and international). There were a number of issues that also reduced my effectiveness and productivity in Nairobi over time.
The problem with Nairobi is that everyone is in Nairobi…
- Booming Africa cities (not just Nairobi, but Dar es Salaam, Kampala, Lagos and Accra) were not as pleasant to live in as I had hoped particularly around traffic and the amount of lost productivity- lack of hard infrastructure became more apparent. Some may interpret this as me being spoilt in San Francisco and Seattle prior to moving to Nairobi- I just would like to do more with my day than spend 4–5 hours of it in traffic…
- My work permit in Kenya took over 9 months to renew and this caused me a lot of uncertainty. This is not the first time I have faced work permit issues- I know them well from my time in USA- but realizing that it was easier for me to get a greencard than stay legit working in a neighboring African country was surprising. I also realized how far we were from the East Africa Community integration in terms of helping portfolio startups scale beyond Kenyan market to its neighboring countries. Perhaps we can learn from the Euro zone (or not)?
- Startups both inside and outside our portfolio were starting to have issues scaling to Tanzania and I even got asked to join the board of a Kenyan fintech startup that had spent years trying to operate in Tanzania. Other startups that I was advising, such as Ubongo Kids, an Edutainment company, showed that it was possible to build startups without being in Nairobi. Being able to navigate multiple African countries quickly started to feel like my most valuable skill.
So I recently applied and obtained an East Africa passport and decided to move to Arusha. A small city near the Kenyan border where I would be 4 hours away from Nairobi, stay in my home country with less of the effects of traffic and having to deal with work permits. I could also begin to focus more on helping startups scale beyond the Kenyan market and resume work to enable the Tanzanian tech community. There are few additional advantages to note around Tanzania:
- More competitive mobile money market and hence more scope for innovation on top of mobile operators who were more open in working with startups, particularly in the fintech sector.
- More competitive and cheaper 3G 4G/LTE services with reach beyond just the capital, Dar es Salaam.
- Easier to get to Southern Africa where Fastjet has established an airline hub that allows one to also reach South Africa, Malawi, Uganda, Zambia, Zimbabwe at lower cost and reliability than relying on Kenya Airways out of Nairobi. Kilimanjaro has an international airport one can also access for international destinations outside the continent yet I am still close to Nairobi should I need to get back to this important hub overland.
Is it really possible to create a Pan African Venture Capital Firm?
Trying to establish a Pan Africa Venture Capital Fund is and will continue to be very challenging. Whilst I feel I have a good handle covering East to Southern Africa from my new location in Arusha, I don’t think we have cracked yet how to link up Western Africa (although the performance of startups there has exceeded expectations). I have had many discussions with investors about the merits and cons of trying to cover such a vast area and I hope in good time all the African markets will mature enough to have locally focused venture funds that collaborate with each other across the continent more than relying on western investors who are even further away from the market. But until then, I believe that a single East African country is not large enough to support the creation of African Unicorns (a Zebracorn?)- at least without broader country support from market size, hiring to government relations.
I am a big believer in “reverse innovation”, that innovations from Africa can make their way to western markets- a case in point being mobile money, Tigo Pesa, Ecocash, MTN Money, Zoona, Paga, Airtel money, M-Pesa (listed last to emphasize other platforms across Africa that are working beyond Kenya). But also acting as an effective bridge between tech ecosystems within Africa and to Silicon Valley to the world. This is why I was keen to establish partnerships with 500Startups , Draper Associates, Apis Partners/Anthemis (London) around follow on funding, acceleration and how to scale VC across the region and developing a pipeline of globally competitive investment opportunities.
I have also watched many startups prove themselves in Kenya but very few have managed to scale across Africa- exceptions I admire are Cellulant and Africa One Media. These have potential to become the first African billion dollar tech startups, Zebracorns, that have taken 10+ years to build and overcome some of the scaling challenges to reach their markets beyond Kenya as a key milestone- so it can be done with patience. I think this will be done much faster as affordable android phones below $100 spread across the continent opening up markets (Yes- I am looking at some of you, who 5 years ago said Africans will only wield feature phones).
More than ever I am aware of the local advantage and connections have in creating scalable technology companies on the continent. As such Savannah Fund in Kenya will soon have its own dedicated fund manager and we are also seeking a Nigerian or Ghanaian Venture Partner (someone scrappy initially) to support our growing West Africa Portfolio.
I believe the work in Savannah Fund is a 20 year work in progress that is just 3–5 years in where we have learnt a lot of lessons and is beyond a single African country and my return to Tanzania after 18 years is not to diminish the role Kenya plays as an important Tech hub but highlight the work that needs to be done across the continent to realize its full potential.
