We pledged for diversity in the Startup Studio worldwide Network and now we are exploring diverse locations with a potential for expanding Innovation. In our recent webinar series held on June 2022, our speakers Malanee Hutton, Head of Venture Design at Founders Factory Africa, Lyndsay Holley Handler, Partner and Chief Venture Builder at Factor[e] Ventures and Ndubuisi Kejeh, Founding Partner of Mustard gave valuable insights on venture building in Africa. Yes, Africa is our first destination for venture building world touring and we are happy to share with you some of the insights from the webinar!
If you are located or focusing on Africa, any other region, or country that you think is underrated in their venture building efforts or needs huge support to boost the innovation ecosystem, reach out to us and we will be happy to organize a discussion.
Make sure to follow us on LinkedIn and join our LinkedIn group to not miss the next webinar sessions. If you want to watch the full conversation, make sure to watch the recording of the webinar. The recordings of previous sessions are available within StudioHub premium membership packages. But now, let’s dive right in …
Venture Building in Africa
The venture ecosystem in Africa is growing rapidly: more than 118% year-on-year growth in equity investments between 2020 and 2021. This data alone says a lot about the opportunities in Africa. But while numbers are growing, there’s still a lot of inequality in this growth. In Kenya, less than 25% of the equity goes to local founders. In other African countries, it’s even less than 10%. Also, less than 7% of funding goes to women-led companies. Most of the capital in Africa goes to four countries: Nigeria, South Africa, Egypt and Kenya. So there are lots of other markets that are not benefiting from the growth in the venture capital market. Fintech and software get a lot of investment. But other sectors like energy and agriculture are not getting as much attention. And these are important sectors when we consider climate change. So there are different gaps there that we could fill with the venture studio model. In the next paragraphs, we see three different approaches from three venture studios to change venture building in Africa.
Factor[e] Ventures has invested in more than 20 ventures in their portfolio, across energy, agriculture, mobility, and waste. With decades of combined experience supporting and scaling ventures in emerging markets, they’re focused on providing companies with the tools and resources they need to scale their businesses and impact globally through their formally launched venture studio.
Founders Factory Africa (FFA) is a corporate-backed investor, venture builder and accelerator on track to build and scale 100+ tech businesses across Africa (current portfolio is just under 50 startups). FFA operates a unique early-stage investment model that involves leveraging investment partnerships with leading corporates to back promising Founders with cash and expert, hands-on operational support.
Mustard’s mission is to build better products, better brands and better perceptions for Africa. Mustard believes Africa’s future image will be largely shaped by the brands it is able to produce, and their ability to attract and move global audiences.
Lyndsay Holley Handler: «When you look at the data, startups created in venture studios record a 53% IRR, compared to 21% IRR of traditional startups. Venture studios reduce the time between startups getting started and raising the seed round, which is important in speeding up the process of venture building and increasing overall returns. Startups created in a studio also see a shorter time to exit. For all these reasons, we’re excited to implement this model when building ventures in Africa. Our mission at Factor[e] Ventures is to build high-impact energy, agriculture, WASH and mobility ventures that increase income in Africa and mitigate climate change.
We are still testing and iterating our venture building process, but so far we have identified ten important stages, from ideation and piloting of ventures with co-founders, to empowering co-founders to spin out ventures backed up by meaningful amounts of capital. We support these ventures over time and aim to invest up to $1,000,000 in successful ventures that would go through this process. We hope to build 25 companies in the next five years that increase income and reduce carbon emissions. We also hope to do this with diverse teams, aiming to have over 60% African and over 50% female leadership in these companies.»
Founders Factory Africa
Malanee Hutton: «Founders Factory Africa (FFA) is three things at its core: a venture builder, an accelerator, and an investor. Our focus is to build and scale startups across Sub-Saharan Africa. We currently concentrate on three verticals, namely FinTech, HealthTech and AgriTech. We are a corporate-backed venture builder with large corporate shareholders cum investment partners.
At FFA, we run two programmes to enable entrepreneurs in their growth journies. A BUILD programme and a SCALE programme.
Our BUILD programme is designed to increase the chance of success and make it as easy as possible for founders to launch their venture, reducing risk and increasing speed to market. We help early-stage ventures validate their core hypotheses and build the foundations – team, product roadmap, partnerships, growth plan, fundraising strategy – necessary to drive towards the next phase of growth. Our SCALE programme helps ventures hone product-market fit and accelerate growth. We partner with founders to define and scale their vision and mobilise an expert cross-functional team to help them achieve it. Our tailored approach means that support is laser-focused on helping founders achieve their following milestones. We work collaboratively to address uncertainty, reduce risk, and accelerate learning. The result is assisting ventures to go further, faster, and sustainably. All our investments involve deploying a combination of cash and bespoke hands-on venture support (“services”) for each startup in exchange for an equity stake.»
Ndubuisi Kejeh: «Mustard is essentially a venture agency. We’re built on this core belief: Africa’s future image will be largely shaped by the brands it is able to produce and their ability to attract a global audience. What we see around us is that there are no global brands that stem from the continent and we think that the brand thinking on the continent at the moment is far too low.
We are essentially on a mission to build better products. We used to be a pure agency, but now we call ourselves a venture agency. We put together an investment vehicle, and we’re now using that money from the investment vehicle to work with potential founders. We’re working with them and investors to try to build from scratch things that we think could become global brands.
We are a venture agency because we are intentional with where we work. We treat the people we work with almost like clients. We intend to build just three to four companies per year. We kept secondary what we do as an agency, which is to also build narratives for founder-led companies. »
About the Speakers
Malanee Hutton, Head of Venture Design at Founders Factory Africa. Malanee has over 15 years of experience in the financial services industry and has held several roles at various leading corporate and investment banks. In her current role, she is an experienced venture builder and innovation specialist working across Sub-Saharan Africa, building venture backable tech businesses and assisting start-ups in catalysing their growth.
Lyndsay Holley Handler, Partner and Chief Venture Builder at Factor[e] Ventures. Lyndsay Holley Handler has over 18 years of leadership and operations experience building social ventures in the energy, agriculture, and fintech sectors in Africa. Lyndsay was the CEO of pan-African solar company Fenix International, where she built a team of over 1,100 employees to deliver clean, affordable power to over 3 million people. After leading Fenix through an exit to ENGIE, Lyndsay advised high-growth start-ups on the continent and taught venture building classes at the African Leadership University.
Ndubuisi Kejeh, Founding Partner of Mustard. Ndubuisi has been building technology ventures for well over a decade. Ndubuisi is the Founding Partner of Mustard, a ‘venture agency’ that believes Africa’s future image will be largely shaped by the global brands it is able to produce. Mustard’s team consists of engineers, designers and storytellers, who invest their expertise and capital to originate Africa-focused ventures with visionary, veteran and influential entrepreneurs, and realise audience-moving brand narratives with the founders of exceptional initiatives.
ABOUT THE AUTHOR
Currently – Finishing my Bachelor’s Degree in Polytechnic of Turin in Management and Engineering, while exploring the world and new opportunities.
Not planned – Recently found out that I enjoy writing about innovation and the future of business and entrepreneurship.