Key Takeaways: The Next Frontier San FranciscoMEST Presents: The Next Frontier kicked off in San Francisco May 3rd at Meltwater Headquarters. Hot off the heels of Facebook’s F8 conference, MEST MD Aaron Fu and Director of Marketing Thea Sokolowski were joined at TNF by some of the top Pan-African entrepreneurs as we discussed African scaleups, the investment climate and the Silicon Valley-Africa connection.
The evening began with a fireside chat between Thea and Xavier Helgesen, Co-Founder & CEO of solar company Off-Grid Electric. Off-Grid has been expanding rapidly throughout the continent, having raised a $55M Series D round in 2017. Headquartered in Tanzania, they operate in TZ, Rwanda, Ivory Coast and Ghana, with more to come.
Next up, Aaron moderated a panel featuring 5 founders of African companies: John Otu, CTO of MEST Africa’s Aidahbot; Mark Straub, Founder of Smile Identity; Trevor Kimenye, CEO of Ongair; Iyin Aboyeji, Co-Founder of Flutterwave; and Paul Bomani, GM of AIM Group.
Xavier Helgesen talks Pan-African expansion and the nuances of later stage funding
Off-Grid Electric is in the business of bringing renewable energy to the mass market in Africa. According to Helgesen, this is not so much a tech problem, but a risk problem. “The biggest barrier is that you’re asking people without a lot of disposable income to take a big risk.”
Stick to your mission and find a business model that works for your audience
In order to find a way around this in the beginning, Helgesen and his team looked at the end result they wanted and worked backwards. “We asked what it’s going to take for people to go solar, and then figured out business model from there.” Today their products provide electricity for individuals across Africa, while also serving as infrastructure for entrepreneurs who need energy to move their businesses forward. They’ve also moved into manufacturing in order to better meet demand: “Our mission is to bring down cost of solar, so if we have to get into manufacturing that’s what we do.”
Find out the most important factors impacting your business and choose to scale in areas where those factors work in your favor
Off-Grid launched originally in Tanzania before expanding into new markets. When asked what criteria Helgesen and the team looked for, he mentioned government policy as a major factor: “Tanzania had a policy regime that was favorable to solar. The market is important [TZ has a big market of 40+], but the policy environment really important.”
On fundraising from Series A-D
Helgesen discussed the benefit of having a footprint in the Bay Area when it came to fundraising. In the team’s latest funding round, they wanted to find a real partner that had an understanding of the market and challenges faced in Africa, as well as a strong network they could leverage. Their Series D was led by African-founded PE firm Helios.
According to Helgesen, a startup’s strategy and approach to fundraising needs to differ significantly when moving from seed and Series A to later stage rounds. “In series A, it was all about cherry-picking three great numbers to show off. Later stage it’s more about showing your weaknesses, which builds trust with investors.” From their side, they were looking for operational excellence - true partners who could add value greater than cash.
He discussed other challenges, as well as interest rates, marketing and the importance of market research. “The smartest thing we did was go sit in a bunch of living rooms and ask questions.”
Panel discusses funding gap, industry trends, challenges with talent and the future of the continent
Some large recent funding rounds from $3m-$8m + have Africa talking. While these numbers are relatively small for Silicon Valley, they’re a big deal on the continent.
Founders are going after real problems and devoting more time and experience to solving them
Flutterwave’s Iyin Aboyeji is excited about the startups we see receiving funding today. “They are solving real problems in logistics and telecoms. In the past, serious ideas could never get funded. It’s important that we have less of the fancy apps and more people solving real problems.”
We’re starting to see a lot better quality companies, and more discerning investors. According to Aboyeji, “There’s a specific type of person that can build a big company. They need to be steeped in an industry and devote time and experience to that problem. They are the kind of people that are now getting money - the more serious types that are doing the real work.”
Those founders who have had success are beginning to gain access to capital
According to Paul Bomani, 5-6 years ago, teams were also building real products for real problems, but they had no access to capital. They were therefore limited in how far they could grow, and they had trouble attracting talent.
“All these companies were living on nothing, but they have real value. The core was really good; they just didn’t have oxygen. Now the market realizes they exist. Fire has been smoldering and they threw gasoline on it.”
The question of talent: build locally and develop the ecosystem on the continent
The panel feels today there is really good talent at an affordable price on the continent. Aboyeji emphasizes the need to develop local talent: “Build locally — the ecosystem benefits when we develop local talent.” His strategy: “Clone yourself, and build your own talent pipeline.”
“Over the next 18 years, Africa is going to contribute more than half of the earth’s humans. We need to create tech and infrastructure for tech to deliver to all of those people.”
The biggest challenges faced by entrepreneurs on the continent
John Otu: Developing a solution that is very current, new and not very common requires education of users
Paul Bomani: Tanzania needs a regulatory environment that is friendly to startups, and a revised tax regime. Also infrastructure. There is weakness in institutions / connectability
Trevor Kimenye: There is a lack of infrastructure. As well, it’s difficult to get payments, and we face a lot of risk
Mark Straub: [Smile Identity] is a pretty technical product. We have a limited number of engineers. We are also working to make product easy to integrate
Iyin Aboyeji: Training talent is way easier than finding senior talent and personnel. Hire a head of people.
- In terms of global recognition, it’s very hard to get airtime at a top company in America. It’s hard to build a global brand out of Africa.
- In terms of a vested interest, the challenge is often managing government
See more photos from TNF San Francisco on Facebook, and look out for more TNF events coming up in London and SF! Don’t forget to register for our flagship conference, the MEST Africa Summit, in Cape Town this June.
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Due to COVID-19, MEST postpones training program to next year and doubles down on growing portfolio companies
At MEST, we continue to be deeply concerned about COVID-19 and have been closely monitoring developments locally and globally. Our number one priority remains the health and safety of our community and we will continue to follow local authority and health official guidelines.
Due to the ongoing nature of the pandemic and the uncertainty that the future of travel holds, we have been unable to conduct in-person interviews and host recruitment around Africa for our next cohort. For this reason, we have taken the decision to postpone the Training Program to next year.
While these circumstances are indeed unfortunate, we see this as an exciting opportunity at MEST to double down on providing support and mentorship to our existing portfolio companies and the African ecosystem.
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