On April 7, Mfonobong Nsehe posted a very interesting post on Forbes’ blog; ‘Why Africa may never produce a Facebook, Groupon, Zynga or Google’. The essence of the post can be summarized in the following couple of lines:
“I have discovered that Africa equally has its own plethora of techies with earth-shaking ideas, rock-solid business plans and the commercial know-how required to transform a concept into a world-class business concern. There is no shortage of capacity. Africa has some extremely intelligent techpreneurs…. but their ideas might never see the light of day because of a lack of seed finance.”
I fully agree with Mfonobong, if we stick to a snapshot of today. If we on the other hand fast-forward a couple of years from now, my crystal ball shows a quite different and optimistic picture where start-ups in Africa mushroom and global successes are not determined by where you were born, but by the true potential of the venture.
It is predicted that capital over time will dry out, and especially in Africa, which does not particularly support my crystal ball statement, because seed finance investments statistically are connected with high risks and therefore would be the natural first element to remove from the investment agenda.
Mads and I stated from the beginning, sketching MYC4, that we would provide the kind of capital that Africa needs – and seed capital was definitely a sphere that MYC4 wanted to enter. Yes, we have to learn to crawl before we can walk, which is why we chose to start out with loans and then graduate from there, when the market was ready and MYC4 gained momentum, insights, connections, etc. In 2007 we chose to launch our loans in Uganda in a market where no formal structure for dealing with non-listed equity existed (to my knowledge at least). Just to put it in perspective, at that time Uganda Securities Exchange only had 5 companies listed and the Exchange was only open for some hours one day per week (today there are 16 companies listed).
Working with Africa has a paradoxical ‘approach’ – some things never develop no matter how much capital is injected whereas other areas develop at a blazing speed. Take mobile banking in Kenya (M-PESA) as an example of blazing development (I don’t think it is needed to state an example of development not taking place as this is often the story we hear from Africa); M-PESA was launched in Kenya March 2007 and today have a double digit number of users with several millions of transactions per day! If I was told before March 2007 that these would be the numbers, I would NOT have believed the person telling me about this… this works as high octane fuel on me working with MYC4 every day – also when things are not working out as planned!
As a small bonus, I encourage you to watch Neil Turok’s TED talk about potential in Africa. I was quite touched watching it and especially when he put forward his example about the little kid (after 2.37 minutes)…
Lets do it and have a great day all….