ICTworks

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.