Local entrepreneurs are underrated

Andile Masuku

Andile Masuku

Published Mar 3, 2017


I was privileged to address delegates at the FCB Africa

Conference 2017 - a gathering hosted by one of South Africa’s well-respected

advertising agencies, FCB Africa, this week. The event brought together the

group’s agency partners from no less than 30 African countries.

Most of the deliberations centred around the importance

of changing individual and organisational outlook and practice-- with an

emphasis on the need to invest heavily in proactive digital transformation

initiatives to ensure we all remain competitive in this increasingly

digitally-driven global economy.

At the forum, I shared an argument I’ve posed before,

that Africa is home to the truest form of innovation because its brand of

innovation is born of two things: a keen survival instinct, and a desire to

progress and thrive despite circumstances.

While the correlation between staying on top of digital

transformation trends and remaining commercially viable appears decidedly clear

to advertising and media agencies, Africa’s investment community does not seem

to possess a similarly progressive mindset. This needs to be addressed if

promising tech ventures on the continent are to get the resources and support

they need to significantly improve the lives of the average African. I believe

a mix of counter- productive attitudes held by the continent’s investors is

leading to an unhealthy fixation on traditional big ticket investment plays in

the tech space.

African investors tend to favour deals that either appear

too big to fail or business opportunities that are led by precedent.

Ignorance, a fear of the unknown, greed, an unwillingness to delay

gratification and even laziness - all contribute to sustaining a

deeply-ingrained disinterest in funding early-stage tech start-ups.

Two venture capital interests, the Netherlands-based

Velocity Capital and the US-based Quona Capital (manager of Accion Frontier

Inclusion Fund), have led a Series-A investment round in the South African

mobile payments start-up, Yoco.

It’s telling that Yoco had to cross the oceans to find

suitable partners to support its bid to build on the success of enabling 6500

South African merchants to accept card payments totalling more than R1 billion

per year. It certainly appears that Quona and Velocity Capital have snapped up

a peach from right under the noses of Africa’s venture capital (VC) and

institutional investment community.

Given Yoco’s ambitions to grow nationally, regionally and

internationally, its decision to go with foreign, fintech-focused VCs with

solid track records was partly strategic. Yoco co-founder and chief executive,

Katlego Maphai, said as much when I asked him what criteria they used when

courting investment. This certainly isn’t the first time that a stellar South

African fintech start-up has had to impress foreign suitors to land a big deal.

Yoco CEO Katlego Maphai. Picture: Supplied

Dominique Collett is a senior investment executive at

Rand Merchant Insurance Holdings. Previously she was a co-founder of a mobile

money start-up called Tyme (take your money everywhere). Tyme’s mission was to

provide affordable yet commercially viable financial solutions for the

unbanked, low-income market. In February 2015, Tyme was acquired by the

Commercial Bank of Australia (CBA) for a rumoured $40 million (R523.2 million)

- the deal came together after Collett and her co-founders had pitched their

business to various big-name VC and institutional investment interests on the

continent, but were not taken seriously.

Since CBA’s acquisition of Tyme, significant time and

effort have been spent on cementing key strategic relationships in South

Africa, China, Vietnam, Indonesia and India, as well as overhauling the firm’s

technology. It’s unfortunate that it took all that for Patrice Motsepe’s

African Rainbow Capital to finally see value in acquiring a 10 percent stake in

Tyme. A deal that CBA probably only finds necessary for the sake of enlisting

black shareholders to improve its prospects in South Africa.

Better late than never, I suppose.

Andile Masuku is an entrepreneur and broadcaster based in Johannesburg. He is the executive producer at AfricanTechRoundup.com. Follow Andile on Twitter @MasukuAndile and the African Tech Round-up @africanroundup.


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