Creating the right weather for Africa’s services and applications entrepreneurs – new money and opportunities open up
With huge amounts of international bandwidth becoming available on the continent, Africa will shortly have enough new economy petrol but it has not really yet got the cars. The wave of services and applications that the new bandwidth can support are currently not yet available in huge numbers. Mobile operators have innovated but they are not really seed-beds of innovation in this area. This week sees two key announcements that may help change the weather. Nigeria’s Adlevo Capital Africa has closed a US$52 million fund aimed at “technology-enabled business models across Africa. And Seedcamp is putting its toe in water, coming to Johannesburg with the aim of filling the gap at the bottom end of the financing chain.
Nigeria’s Adlevo Capital announced that it has raised US$52 million from finance institutions and private institutional investors based in Europe, South Africa and
the US. “We are very pleased to have attracted investments from several of the most
successful Africa fund investors who, like us, see the growing scope for compelling
technology-enabled company investments and believe that investments in this area will also provide positive social development outcomes,” said, Yemi Lalude, founder and Managing Partner of Adlevo Capital.
Adlevo Capital plans to hold additional closings for the Fund over the next nine months with a final closing in the first quarter of 2011. Adlevo Capital is a Mauritius-based fund manager, is the first private equity firm focused on investments into technology-enabled companies across multiple African countries. It is operating from offices in Lagos and Johannesburg.
The Fund will seek to invest in companies that possess the following characteristics: strong management team; large market opportunity; consumer driven growth and a positive impact on WIRED attributes. The latter includes: integration into the global economy; reduction of poverty; environmental stewardship; and the development of skills.
Seedcamp is a European micro seed fund that invests in early stage start-up companies and it will be attending the Tech4Africa conference in August this year to identify African startups for potential investment and an opportunity to attend the Seedcamp Week programme held in September in London, UK. This marks the first time that a Mini Seedcamp programme will be hosted in Africa in Johannesburg.
According to Gareth Knight of Technovated who is heading up the organisation of the African event:”There’s a gap in the investment market. Venture capital companies and institutional investors don’t do seed fund investment. But there are seed investors and some of them are the people who set up Seedcamp.”
“A typical seed investment is between 30-50,000 euros and it’s usually enough for 1-2 people for 3-4 months. Seedcamp has a two million euro fund which means they will do around 50 investments. The investment gap is particularly acute in Africa which is why we’re creating a places for a company to go to Seedcamp in London (from the Johannesburg meeting).”
So a few selected African entrepreneurs will have a rare opportunity to pitch their businesses at a group of people connected to powerful investors, mentors and startups throughout EMEA, with one team being chosen to take part in Seedcamp Week, where its founders will gain exposure to investors and world-class mentors.
Knight believes that the successful ideas will probably be mobile-based or if not directly connected to mobile will be a web app of the kind that can be accessed from fairly low-end phones:”There’s an extraordinary entrepreneurial energy in Africa and you can feel it in places like Nigeria, Kenya, Cameroon, Uganda and South Africa.” He named Ushahidi (http://www.ushahidi.com/) and m-Pesa as the kinds of projects that he thought were impressive. “It will be interesting to see whether people will know how to build a business as well as they can do technology.”
Seedcamp is a programme created to jumpstart the entrepreneurial community in Europe, Middle East and Africa by connecting next generation developers and entrepreneurs from a network of over 400 top-tier industry mentors. The initiative’s flagship event, Seedcamp Week, takes place in London in September every year, and it is here where beneficiaries for the post-3 month programme are chosen.
Following Seedcamp Week, the companies who receive investment stay in London for three months to grow and develop their company, building key and lasting business relationships along the way to help them sustain a viable business.
“In addition to a direct route to seed and venture capital, companies that participate in Seedcamp get enormous validation and access to a world-class network of advisors that help them with every aspect of their businesses,” says Gareth Knight, managing director at Technovated, the company that is organising Tech4Africa.
Says Reshma Sohoni, CEO at Seedcamp: “We want to provide a catalyst for the next generation of African entrepreneurs and help them take risks, think big, and succeed. Our programme provides entrepreneurs with access to seed funding but also more importantly, gives them exposure to the collective experience of people who can help them to build successful businesses.”
African entrepreneurs that want to apply for the Mini Seedcamp Africa programme can apply through the Tech4Africa event Web site (http://www.tech4africa.com/seedcamp/). It is anticipated that 10 teams will be selected to take part in the Mini Seedcamp event at Tech4Africa. A committee may choose one startup to attend Seedcamp Week in London. Tech4Africa runs from 12-13 August 2010 at The Forum in Bryanston. Workshops will be held on 10-11 August. The event is targeted at business professionals and technologists from businesses of all sizes, from entrepreneurs and start-up owners through to professionals working at large organisations.
The web has and continues to encourage innovation in the services and applications field because (Apple and iPhone notwithstanding) it remains an open ecology with relatively low entry costs. Africa’s mobile operators have the opportunity to open their doors in ways that will create the same flowering of new services and applications but will they see the potential prize as bigger than holding on to a much smaller piece of controlled services like MTN’s Yello? Any mobile data strategy will need constant watering with local content, services and applications. Now is the moment to begin to build the kind of innovation that Safaricom’s M-Pesa and Zain’s One Network show can be done.
To contact Adlevo Capital, e-mail: firstname.lastname@example.org