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About VC4A Questions:

VC4Africa seeks to connect entrepreneurs with the network, capital and knowledge they need to build promising businesses on the continent. We have members from 156 countries that network via our online platforms and offline via our VC4Africa Meetups. Our matchmaking site VC4Africa.biz is a tool for entrepreneurs to publish their venture and connect with possible business partners and investors. Our matchmaking program further supports entrepreneurs in their business planning and support entrepreneurs seeking venture finance. So how do we support the community with knowledge?

Building a business is hard and having access to the right knowledge and information is critical. Unfortunately, in the African space information is too often lacking. What do the changes in local tax code mean for the tech sector? What are the import duties for heavy machinery? What are the key points investors look for when reviewing a cash flow prognosis? What are the legal issues I need to consider when expanding across borders? VC4A Questions is a collection of questions and answers created, edited, and organized by the VC4A community. Together we are building a community generated database of knowledge. A few points that make VC4Africa Questions & Answers unique:

A Growing Knowledge Base

People use VC4A questions to document their African business adventures. Over time, the database of knowledge should grow and grow until almost everything that anyone wants to know about doing business in Africa is available in the system. The information is organized, the history of the questions is archived and the information is freely accessible for anyone with the same question today or tomorrow.

Community Managed

Each question makes use of tags that make them easier to find across multiple search queries. This also helps members link new questions with existing discussions and further centralizes the conversation. Members can find similar questions they can borrow from when outlining additional context. Each question and answer is also rated and sorted by the users. This ensures that only the most pertinent questions rise to the top of the landing page and search results. It helps push prominent issues into the forefront and crowds out any unwanted messages or noise.

Follow Discussions

Members can follow topics they are interested in. Any updates are automatically forwarded per e-mail and this helps maintain an active dialogue. Members, the VC4Africa team and officers can also ‘recommend experts’ with certain questions and encourage them to share their expertise and input. This further serves to mobilize an active network and adds to the growing knowledge base.

VC4A Reputations

VC4A Questions is linked directly to member profiles. The system tracks who posted a question, who responded, how many responses were recorded and whether or not the questions and answers were valued by the VC4A community. This feedback is part of a reputation the user builds via the system. This helps other users appreciate the quality and level of a user’s contributions and serves to recognize the members who contribute the most and are otherwise experts on certain subjects or specific fields of interest.

Moving forward,

Please visit the new section of the website http://vc4africa.biz/questions/. We encourage you to take a look and play around with this new tool. Please add your own questions or share feedback with the community. We look forward to building this resource together and for the benefit of the entrepreneurs and investors working to build promising businesses on the continent.

Regards and happy networking!
The VC4A Team

VC4Africa was started as a LinkedIn group in the spring of 2008 and has grown organically into what is now the largest online community dedicated to Venture Capital in Africa. The VC4Africa community and related platforms have always been free for anyone to join, and the entire network and its content remain open and accessible.

Currently the community can be found on social networking platforms like LinkedIn (+/- 3.900 members), LinkedIn Incubators (+/- 2.200), VC4Africa.com (+/- 3.300 members), VC4Africa.biz (+/- 3.400), Facebook Group (+/- 550 members) and Twitter (+/- 5.000). Members of the VC4Africa community use these social platforms to connect with other members and to exchange knowledge, information and contacts.

A core vision behind the project is that VC4Africa is only a platform within a larger social movement. Open communication and collaboration is encouraged and all members are invited to become active participants in both growing and developing the project. This means members are encouraged to invite new members, post content, start discussions, initiate networking events and join the VC4Africa management team in a more concerted effort to grow, develop and evolve the concept. Every member is expected to contribute in some meaningful way.

A few key points that make VC4Africa unique:

1. SME Pipeline:

We work to help entrepreneurs connect with the external partners or needed investment. Entrepreneurs crunch their venture by choosing icons that represent some of the standard answers that a business plan must provide. Members can vote for ventures and their input is used to rank the projects per country, stage of investment and sector. The output is a dynamic Digg.com style feed that sees the best projects rise to the top of their respective field so we can connect them with capital. See the VC4Africa Ventures section and registration.

2. Matchmaking:

Organizations and individuals interested in investing in African businesses are able to register their investment profile with VC4Africa. Once registered as an investor we can facilitate targeted e-mail updates with 'high potentials' that match their investment criteria. This is currently a manual process that we look to automate in the next phase of development. See the registration process.

3. Member initiated networking events:

Second to networking online, VC4Africa makes use of the Barcamp model for events and organizes its own VC4Africa Meetups. These are informal networking events initiated by any member in the network interested in bringing together members in their own area. These events are organized without a budget, agenda or speakers. It is exactly the community initiated format and informal structure that allows for effective networking. Meetups have already been hosted in Johannesburg, Kampala, Nairobi, Kigali, Abuja, Lagos, Tunis, San Francisco, Atlanta, New York, Washington D.C., Amsterdam, Leuven and London. See a video about a VC4Africa Meetup. Want to bring together members in your area?

4. Open Source Approach:

VC4Africa is an open source project built on open source software. Anyone can contribute or access code to the VC4Africa platform. We are also working on an open Application Programming Interface (API) that would allow anyone to access VC4Africa data and repurpose it for their own use. See the VC4Africa Developer’s Wiki for the community wish list and concept notes. VC4Africa content and network are also open to anyone who wants to join the community and we do not require any fee to participate. That said, interaction or direct engagement with the network requires registration and an obligation to abide by the community established rules. See the Terms of Reference.

5. Officers Program:

The VC4Africa community also initiated an Officers Program used to engage active members in running and building the network. Officers take on different tasks in managing the community and are responsible for specific functions i.e. someone that manages the blog, someone that invites new members on LinkedIn or is responsible for growing the network on Facebook. These individuals are instrumental to the vitality of the project and help spread the word virally through their own networks. Moreover, they bring in new ideas and make valuable contributions that help define the scope and focus of the project. To this extent VC4Africa only builds what members demand.

Given the current structure members are well empowered to interact, find and share information within a network dedicated to building innovative businesses in Africa. Moving forward we are looking to improve our matchmaking capabilities and took the first step with the November launch of the new VC4Africa.biz matchmaking platform. We are pleased to share some of our first testimonials:

1) “Hey guys, Market Fleas already has a potential investor, so big ups on the platform. We tried many different platforms and none of them even gave us a response, but after only three days we got a response here. Keep up the good work and i’ll be spreading the word.” Rick

2) “Being an entrepreneur, I've been around the block when it comes to sites of this nature. And I must say; awesome! If you are able to attract investors successfully, this will become the one-stop shop for African business development. The site is easy to use and best of all, unique. All the best and thank you!” Louis

3) “Your web site has been very helpful to me. I was able to connect to a company that wants to represent Next2.Us geosocial sms network throughout Africa. We have executed a Framework Agreement. We are finalizing a relationship with a SMS provider that will allow Next2.Us Africa to offer our geosocial network service in Kenya in the coming weeks.” Brian

4) "That sounds great, I believe that through this platform (with its business plan crunching) is going to help many entrepreneurs." Wikins

5) “Please let me know how to support your work with the "Start-up Tool Kit" for entrepreneurs in Africa, perhaps including intellectual property and creativity content, templates, etc. and also by providing feedback to investors about valuation, due diligence, strategic guidance and advising, etc. for innovation and IP-based companies started in Africa, whether they're planning on being a regional or international business.” JiNan.

6) "VC4A Team: Thank you for your kind welcome and above all for being one of the the founders of this medium. I believe it is going to be a very useful tool for entrepreneurs from everywhere who have the best interest of Africa and Africans. I will look forward for more interactions in the future.” Kebede

7) "Hi Team, thanks for the thumbs up. Great platform you have founded here! Looking forward to meeting up with those interested in getting involved in my business with either funding and/or mentoring." Nicolette

Want to get involved? Has VC4Africa been useful to you in any way? Do you have a venture you would like to promote/share with the community? Please reach out and share your ideas and experiences with us!

In April I am travelling to Cameroon to visit the African Center for Technology, Innovations and Ventures (ActivSpaces), otherwise the leading technology incubator in the country. ActivSpaces is actually a project that has been in development since January 2009. The founders Valery Colong, Bill Zimmerman and Fua Tse unknowingly built what is likely the first technology incubator in Sub-Sahara Africa. Appfrica Labs based in Kampala Uganda, founded by Jon Gosier in March of the same year, being the other.

Like Appfrica Labs, ActivSpaces is building a model organization that serves to facilitate socially-responsible investment and the incubation of African small and medium sized enterprises (SMEs). This is a response to the generally accepted idea that SMEs in African countries have greater difficulty in obtaining the necessary financial support and mentorship services they need to effectively scale up and grow their businesses. Access to traditional growth capital, including debt and equity, is not only limited in developing countries but often prohibitively costly due to various factors such as insufficient legal and regulatory policies, and inadequate financial markets. Labs like this serve as a platform for the local tech community, helping to pool resources and generally serve as a launchpad.

Recently business incubation in Africa has emerged as a means of accelerating the growth of technologies, industries and business skills in otherwise challenging conditions. Combined with an incubator, ActivSpaces is also a coworking space with professional office services and income generating opportunities. The running costs are covered with a 10% on the invoiced commercial projects, giving members a chance to upgrade their skills and generate an income they can use to further develop their own concepts. All activities serve to foster collaboration between members. By using a flexible model, a qualitative approach and on-the- ground experience, ActivSpaces seeks to fulfill a broad spectrum of financing, business development and socio-economic needs.

The ActivSpaces vision builds upon the following core objectives:

- Support for SMEs with high growth potential
- Assessing a company’s risk profile
- Promoting innovation
- Developing products & services for the local market
- Employment & wealth creation
- Technology & skills transfer
- Enhancing links between universities, research institutions & the business community
- Adherence to and advocacy of the highest standards of business ethics
- Reputation as a socially-responsible and innovative firm

I asked Bill (my business partner in Sanaga Ventures – a combined effort that supports initiatives such as ActivSpaces, Afrilabs and VC4Africa) why he believes so strongly in ActivSpaces and he responded, ‘Based on my current analysis, observations and personal relationships, I increasingly believe the preconditions exist for rapid growth in the Sub-Saharan African technology sector. ICTs have many of the same features (i.e., they may be produced, bought and exchanged) as traditional commodity-based industries, but have a far lower barrier to entry and carry lesser capital requirements for young companies.’

Asked how some of the challenges in Cameroon could be translated into strengths he says, ‘Africa is a continent renowned for technical innovations conceived and built from limited resources. Countless examples exist of indigenous technologies borne from constraints (lack of infrastructure, poor governance, poverty, etc.) that have created sustainable SMEs. Among them, mobile money (M-PESA, Safaricom) is a profitable service created in Kenya whose model has only recently been prototyped in the West. Likewise, research and development in fields such as physics, chemistry, GIS & mapping, electronics, security, embedded systems, alternative energy and so on have good potential to be productized and spawn sustainable SMEs.’

He goes on to say, ‘for these reasons, ActivSpaces seeks to foster the growth of physical spaces for innovation, creation, research, development and collaboration. Popularly known as ‘Hacker Spaces’ there are 96 known active hacker spaces worldwide, with 29 in the United States, according to Hackerspaces.org, with another 27 U.S. spaces in the planning or building stage. Local demand exists for a Cameroon- based hacker space. This is integral with our vision and will be financed with a combination of member dues and profits spun off from ActivSpaces.’

As in many African countries, the population in Cameroon is young: an estimated 40.9% are under 15, and 96.7% are under 65. Outlets such as ActivSpaces are critical in leveraging the emergence of technology and the opportunities it presents local entrepreneurs. I am excited to see the space, to take part in celebrating their 2 year milestone, host two VC4Africa meetups, and to spend time interviewing and getting to know the team. It’s exciting times when you see projects emerging from ActivSpaces that carry the mission to ‘disrupt the SMS industry’ as Fritz plans to do with iYam.mobi. I look forward to working with ActivSpaces and the entrepreneurs part of its network.

Ben White, founder of VC4Africa an online platform that connects entrepreneurs and investors dedicated to building innovative and sustainable ventures in Africa, shares his thoughts on crowdsourcing business opportunities in Africa.

1 )Africa Report, Africa interactive, Afrilabs, VC4Africa and others, it seems like you have been involved in several ventures in Africa. What inspired you to work in this continent? How do you see your different work experiences complimenting each other?

It’s not something I planned but more something that just happened. I was asked to join a starting organization in South Africa and from there I just never turned back. The more I travel across the continent the more opportunities I find. I think if I spend more than an hour anywhere in Africa I somehow manage to find an entrepreneur with a great idea:) For me, there is more potential in Africa than anywhere else in the world.

A few years ago this story wasn’t really getting out and it was through media we worked to bring different stories into the limelight. Africa Interactive for example now has 2000 reporters, photographers and filmmakers located across the continent. They bring a local perspective too often missing in the media. Now I am working more and more to support the starting entrepreneurs I feel have the potential to really change the game.

I feel there is still too little support for the entrepreneurs who have the potential to redefine the continent. Why do they still get so little attention? It’s time to change that and increasingly we have the tools needed to realize some potentially powerful ideas. VC4Africa is a fast growing social network dedicated to entrepreneurs and investors building businesses in Africa. As a community we bring together networks, expertise and capital.

2) What significant progress have you noticed in the African business environment since your first trip in Africa in 1991?

Investing anywhere in the world comes with its unique challenges. The same can be said of any African country. I think its dangerous to approach the continent as a single subject, when nothing comes close to its diversity. Where one country has made gains in tax legislation they might have lost ground in the space for independent media. Where one just successfully elected a new president the other will have had a tumultuous election. Where one country has made progress in putting forward IP legislation another will have just invested in the wrong fiber optic cables. Each country, each sector, each business needs to be approached on a case by case basis.

That aside, we do see that generally the political climate is improving and we see more stability in more countries. This stability combined with continued liberalization is being translated in the rise of a viable private sector. This is not an idea. We read about the changes daily. The Economist magazine recently reported that the rate of return on foreign investment is higher in Africa than in any other developing region.

Forget the BRICs :) (Brazil, Russia, India and China) Add rapid urbanization and a rising middle class and a growing list of African countries clearly presents an increasing number of opportunities. In their June report the McKinsey Global Institute explained that in 1980 only 28 percent of the African population lived in cities compared to 40 percent today. By 2030 this number will increase to 50 percent and Africa’s top 18 cities will have a combined spending power of $1.3 trillion!

This is not something new. This is not something that happened overnight. This is a structural reality that simply introduces an increasing number of opportunities for the continent’s entrepreneurs. Look at Celtel and what kind or returns that business generated early on in the telecom business. I think the potential has always been there but only recently did local government, development agencies, media, investors and the rest of the international community really start to take notice. The explosive growth in mobile, and continued innovations in the financial industry, have certainly helped to illustrate what is possible. It is stories like Mpesa that successfully capture people’s imagination and neatly package the story. There is momentum now.

What is really exciting is to see the new start-ups springing up every day and we are seeing an increasing level of activity in the African investment space. I believe the business case has been made and increasingly people are realizing now is the time to invest, whether it be from local angels, diaspora living abroad or foreign investors.

3) How is VC4A impacting the 84 registered ventures? Have any found funding yet? Reached their next milestone (be it funding, product launch, or business expansion)? Are there any you'd take a stake in if you could? How might a US investor or better yet, someone who wanted to move to Africa and work with one of these companies do so?

Our entrepreneurs are securing funding and finding partners needed to grow and scale their business. Just this weekend Rick, the founder of Market-fleas.com , an online craft market similar to the more renowned Etsy.com, closed his first round via VC4Africa.biz. He writes,

Hi Ben, We finally finished our investment round and once again, thank you for the great platform. It really is the best out there, as we found a lot of fraudulent sites on the web claiming to help angel investors and entrepreneurs connect.

As web entrepreneurs, we found the going tough as a startup and tried a lot of avenues to get initial investment including venture capital firms in South Africa, other online investment platforms and more with absolutely no luck.

The problem was that 1.) we we’re a startup so a venture capital company with a minimum mandate of R50million was never going to look at us and 2.) every investment platform that we found (paid) would send (the guaranteed) connection via a random yahoo or gmail account which gave us hope, only to crush it again later.

VC4Africa helped us connect (for free) to an investor we found within 3 days of being on the site, and created a platform where we could connect easily and without hidden agenda. Thank you VC4Africa, you are the only true investment platform.

Some members don’t require funding and are finding the strategic partners they need to expand their business instead.

Brian, the founder of Next2.Us writes,

“Your website has been very helpful to me. I was able to connect to a company that wants to represent Next2.Us geosocial sms network throughout Africa. We have executed a Framework Agreement and are finalizing a relationship with a SMS provider that will allow Next2.Us Africa to offer our geosocial network service in Kenya.”

I think we are just scratching the surface of what is possible and already we have 84 ventures online from more than 20 African countries. In Uganda I recommend looking at the Uganda Medicinal Plants Growers. UMPG is a commercial farming initiative based in Masindi, Uganda designed to assist farmers in the community to commercialize their medicinal crops internationally.

In Kenya I like the Recycling plastics and Empowering Youth Venture . Kenya has a great need for low-cost housing and productive waste management. This recycling company will operate in the interest of the local community employing collectors using bicycle with trailers to bring various grades of plastics to processing units for ecologically-sensitive, efficient sorting, granulating and moulding (under low heat) into panels to be used for cheap housing.

A Nigerian based venture I like is eHealth. This project supports the management of health facilities in Nigeria to influence health-related funding and policy decisions, and provides doctors with the patient information needed to improve decision-making before, during, and after care.

A fun venture in Cameroon is Hot Ice. Hot Ice is a fashion company that specializes in supplying affordable African-styled fashion accessories for trendy suburban women. Hot Ice really looks to differentiate its brand and actively builds a fashion culture which local consumers can identify with.

Finally Agro-Hub, Geofeed, Naijaborn,and Hizonotes offer a nice sample of the web and mobile related projects and entrepreneurs we have in our network.

We invite everyone to join the VC4Africa community and together we can offer even more support to the continent’s most promising entrepreneurs.

4) Do you see technology playing a large role in VC4A companies? Are many technology companies? Do they all focus on technology as a competitive advantage? If not, which ones don't and why?

Usually venture funding targets new technology or innovative business models in high technology industries such as IT, software, biotechnology or green energy. Especially ventures that are in an early stage and have the potential for fast growth. We certainly see a healthy percentage of ventures coming from these fields.

But I don’t think it makes sense for us to be exclusive. I think the sample of ventures from the previous question gives a good overview of the diversity of opportunities found across sectors. If there is an entrepreneur who wants to develop a leading coffee chain why wouldn’t we want to support them in that mission? There are many traditional sectors that have major potential for development and thankfully we see ventures from across the spectrum.

5) A lot of businesses today are challenged with the problems of intellectual property management, how do you tackle those issues with VC4Africa ?

VC4Africa builds on open source code and we take an open source approach to everything we do. This builds on our belief that we can actually achieve more by being open. See our wiki where we put all of our ideas online: http://wiki.vc4africa.biz/doku.php/start. Because people know what we are trying to achieve we see individuals stepping forward from around the world who want to get involved. We hope our open approach also rubs off on some of our entrepreneurs.

Valery, an entrepreneur in Cameroon and the founder of Agro-Hub, has put his idea online and now he is being connected with people around the world. I think he received about 30 e-mails from the interview we did about him and his business. I know one member has stepped forward with the offer to coach him 4 hours a week in business development.

They would never have connected if Valery never took the first step to reach out. It is a barrier for some entrepreneurs and I know this inhibits many to participate. But we believe our open approach will prove itself over time. After all, the power of the web is in its ability to connect people and ideas.

6) Who would be your dream participant in VC4A and how would they participate? A VC company investing? A wave of new MBA's forgoing McKinsey to work in African start-ups?

Dedicated entrepreneurs with powerful ideas and investors who not only offer capital but the support and coaching needed to succeed in a challenging business climate. And then everything in between. We are building on the idea that every person has something to bring to the table, whether it be ideas, knowledge, networks, experience or capital. It’s really our job to find ways we can unlock these resources on any level allowing anyone anywhere in the world to find a meaningful way to participate.

Some members are just looking to understand the space, explore the subject of investing in different African countries or are looking to connect with members who have more experience. Others are really looking for leads and actively connecting with entrepreneurs. On the other hand we have members who have started companies or want to start one soon. They are looking to connect with other entrepreneurs or possible business partners. Some members actually look to support VC4Africa as a community platform. Really it is all of these different people that make the network so valuable.

7) What do you think of efforts like eVentures Africa Fund? How might efforts like this change the business landscape in Africa?

The point at which investors engage varies and we need to focus on these ‘early adopters’ i.e. the investors with the foresight to see what is already possible in the African space. These early movers are the ones who pick up the best deals and have access to the best networks. I have a hard time just keeping track of the investors, networks and programs now coming online. Just the other day I got an e-mail from the leading Angels network in Mali! These lists are growing quickly.

The best part, we aren’t only talking about foreign investors. Investor groups are forming locally and amongst the Diaspora communities living abroad. Moving forward we need to see more success stories if we are going to maintain this momentum, but let’s be clear, the time is now.

VC4Africa.biz now has 91 ventures registered from more than 20 African countries and a surprising number of sectors. It is a nice representation of the sheer diversity in opportunities currently found across the continent.

Many of these projects are positioned for serious progress this coming year. For example I am interested to see what happens next with Uganda Medicinal Plants Growers, a venture posted by Teddy Ruge. UMPG is a commercial farming initiative based in Masindi and is designed to assist farmers commercialize their medicinal crops internationally. This is important work considering Uganda's economy is agriculture based, with agriculture employing over 80% of the population and generating 90% of its export earnings.

In Kenya its nice to see social ventures like the Recycling plastics and Empowering Youth. Kenya has a great need for low-cost housing and productive waste management. This recycling company will operate in the interest of the local community employing collectors using bicycle with trailers to bring various grades of plastics to processing units for ecologically-sensitive, efficient sorting, granulating and moulding (under low heat) into panels to be used for cheap housing. Not only is this an innovative approach that addresses a growing need, they are clearly taking the steps to embed the program and design it in a way that makes it socially sustainable and thereby economically viable.

A Nigerian based venture to watch is eHealth. This project supports the management of health facilities in Nigeria to influence health-related funding and policy decisions, and provides doctors with the patient information needed to improve decision-making before, during, and after care. This is not only a support service needed in Nigeria but I can imagine there are needs for their products in other African countries too. But given there are at least 85 listed hospitals in Nigeria there is plenty of work needed to get the company up and running.

A venture that caught my attention in Cameroon is Hot Ice. Hot Ice is a fashion company that specializes in supplying affordable African-styled fashion accessories for trendy suburban women. Hot Ice really looks to differentiate its brand and seeks to build a fashion culture that local consumers can identify with.

Finally Agro-Hub, Geofeed, Naijaborn and Hizonotes offer a nice sample of the web and mobile related projects we have in our network. More projects are signing up by the day and clearly 2011 is set to be the year of Entrepreneurship in Africa!