We started SeedAfrika because we recognize that the foundations of the vibrant venture capital economy in the US is based on infrastructure that provides abundant energy, clean water, housing, internet access and other basic necessities for a sustainable middle class. Unicorns like AirBnB, Paypal, and Uber – platforms as they are – themselves are built on a platform of core technologies that provide the jobs and industries that enable the development of an internet-based sharing economy.
Looking at Africa, we feel that it is essential to develop similar infrastructure that enables cheap access at scale to basic necessities in order to ensure that many more millions of Africans can participate as consumers in the internet-based sharing economy. And we have the opportunity to develop this infrastructure while avoiding many of the pollutive steps taken by the US and Europe in their own industrial development. Renewable energy, efficient water use systems, precision healthcare, and ubiquitous peer to peer finance are all achievable goals.
And there are thousands of innovative companies across the continent that can help provide these services. But broadly, they lack access to seed-stage capital, and so miss opportunities to prove concepts and quickly scale the successes. Part of the lack of access stems from local investors who are – due to lack of local investment capital – able to have their pick of investment opportunities and are therefore more conservative in attitudes towards early-stage risk. Another part stems from misconceptions about the business environment held by many investors in the US and Europe who otherwise might be tempted to invest.
Our challenge to investors in environments like Silicon Valley that are saturated with me-too startups that yield a ~10% success rate once funded, is why not extend the pipeline to countries where the cream rises to the top much more visibly and the US dollar goes much further? Why not focus on companies that are able to identify innovative and profitable ways of serving the lower-end of the market en masse rather than me-too products that compete for the marginal dollar of disposable income from the well-off?