A great Founder is at the heart of a great startup
The advantage local Founders have over their expat or foreign-based peers is their ability to tangibly interact with the core problem they are trying to solve.
This thought, and many others, formed part of panel discussion featuring our Managing Director, Bongani Sithole, at the Africa Women Innovation & Entrepreneurship Forum (AWIEF) Conference 2022 in Cairo on Tuesday, 27 September. The panel’s overarching topic was Venture Capital and Support for Africa’s Bright Ideas.
Bongani was joined on the panel by Aly El Shalakany [Chairman, Cairo Angels Syndicate Fund], Roberta Annan [Founder & Managing Partner, Impact Fund For African Creatives], Nora Toma [Deputy CEO, Education For Empowerment], and Itumeleng Monale [COO, Johannesburg Stock Exchange]. The panel was moderated by Andrew Gwadiva [Vice President, GreenTech Capitals Partners].
Other issues touched on by the panel included the dynamic between founders and their ideas, which of these is the most important from an investor perspective, and gender parity within the African VC ecosytem.
Below are some of the thoughts Bongani shared with his fellow panellists at AWIEF 2022:
On gender parity within the African VC ecosystem
“From a Founders Factory point of view, starting with our company, we are very intentional about balancing gender. We have more than 40 people currently and we are sitting at 50% women in our company. That is very intentional.
And, the way in which we build businesses, because we invest from early-stage, from concept to seed-stage businesses, we currently have just over 30% representation of women [founders]. The question that we always ask ourselves is ‘How can we get to a 50% representation of women?’
Again, it’s very intentional. To your point, Nora, I think as investors, we are very conscious about the ideas that come through our doors, the type of investments that we make, and how best we can support women to be able to reach gender parity. It’s something that we prioritize every time a business comes to our doors.”
On the importance of the startup idea versus the startup’s founder
“I have a simple answer to that. It’s the entrepreneur and the reason why is, for us, the idea comes second.
We believe that a founder has to really be connected to the problem that they’re solving, right? In some instances, you might find there’s a significant problem because you are working with the wrong entrepreneur. The business is not going to go anywhere. But, where you find the right entrepreneur, where they might be trying to solve the wrong problem, you could really work with that founder to then pivot into different opportunities.
Across the 50 businesses that we’ve invested in, the businesses that are really exciting and growing in our portfolio are businesses with great founders… Sometimes you get these founders, they’re just so clear on what they’re trying to solve for. You have less questions, right?
A great founder who understands their numbers. They understand the problem that they’re trying to build for. They understand the customers that they serve. Those, for us, are the things we focus on. All-encompassing is really the entrepreneur that’s at the heart of the business that they’re building.
On angel investment within the Africa VC ecosystem
“When we started Founder’s Factory, our point of view was that Africa is a huge geography, with few ‘investible’ businesses [from a traditional VC perspective]. So the question for us was ‘How do we take a risk at a very early stage to essentially co-create and build with great founders on the continent to be able to increase the pool of investible businesses?’.
The question of angel investment comes into play, right? Now, we’ve seen this many times. There’s this ‘missing middle’ where we [FFA] become the first check to these founders and they build for the first six to 12 months. The business is really not there yet where VC can feel comfortable to come in, yet the $100 000 we’ve given this founder has run out. [In these situations] the importance of angel investing in Africa is really, really huge. And, I think if we can be able to do more of what Aly and Nora are doing on the continent, that is really what we need.”
On the value of working with locally-based Founders
“At the heart of it [a startup], it’s really the entrepreneur. I think what Aly and Nora have already said, we’ve seen a couple of founders who are sitting in the US and trying to build for Kenya or trying to build for Nigeria. If you’re not on the ground as a founder, it doesn’t really matter what you’re trying to build, cause you really have to touch and feel the problem and be able to talk to the customer on the ground.
That, for me, gives me a lot of validation because your learnings will help you to pivot or it’ll help you to know whether you are providing a solution to your users because you can speak to them every day.”