Flow of finance into African markets

 

 

 

Andela is perhaps the biggest tech story to come out of Africa in recent years with investments from Google and Facebook  founder, Mark Zuckerberg’s Chan-Zuckerberg Initiative.

But CRE Venture Capital counts as biggest believer in the Andela story, having led its Series A round, and continues to be heavily invested in Andela. This is in addition to other great African tech startups that CRE is involved in.

 

And this week, we have the pleasure of being joined by Pardon Makumbe, one of the founders of CRE Venture Capital. Pardon chronicles his journey to eventually founding CRE Venture Capital, starting out in Zimbabwe, before going on to school in the UK and US at Princeton and Wharton.

And despite working in management consulting in New York City, he realized that he wanted to focus on investing in Africa, so he took up positions at Emerging Capital Partners in Johannesburg and Temasek in Singapore, before moving to the Rothschild family office in London. Then in 2015, he came to found CRE with his co-founder, Pule Taukobong.

 

The vision came out of the realization that even though there was funding coming into Africa, most of it tended to be focused on later stage investing, and often not to early stage ventures which really needed the capital infusion.

This meant that there were some really enterprising  ideas that were not being pursued. Hence, the company was set up with a focus on Sub-Saharan Africa. They mainly target entrepreneurs who have built up a good value proposition using their own personal resources.

 

“The free flow of information has covered the gap between perception and reality about Africa. This is in contrast to times when people only got to see  Africa through the lens of traditional news outlets as a place of famine and war. Social media platforms now provide a more nuanced view of Africa, and form independent views on Africa.”

 

CRE is sector agnostic and merely seeks out the best positioned entrepreneurs–with the right ‘intangibles’. They maintain flexibility to invest all over Sub Saharan Africa. By getting to know the business and the entrepreneurs well , they are able to help budding businesses develop the right mix in order to achieve success.

Through prior successes, CRE is able to assure investors that any business they become involved with is geared for a favorable result.

 

And when prompted on why Africa has seen an upsurge in the amount of financing that has come into Africa, Pardon has some interesting insights. The free flow of information has covered the gap between perception and reality about Africa.

This is in contrast to times when people only got to see  Africa through the lens of traditional news outlets as a place of famine and war. Social media platforms now provide a more nuanced view of Africa, and form independent views on Africa.

 

Perhaps another profound  thing has been the successful case studies of African companies that have achieved big success like Discovery Health, and may have dual listings on world Stock Exchanges, thus showcasing the potential for success in African countries.

While the physical infrastructure, might not be as good, the technological infrastructure in Africa has grown in leaps and bounds–and you can even find hi-speed internet in a slum without running water. This positions some sectors to overperform.

 

Further, the benefit of diversification cannot be overlooked as most African countries economic performance is not directly correlated to that of more developed nations and thus provides a diversifying component to any investor.

Most African countries have implemented major reforms in country level governance and improved economic stability, this despite rumored troubles ahead of elections but of late there hasn’t been major instability in the major economies. Similarly, macroeconomic indicators like inflation are now under control.

Local institutions now also have more experience in protecting property rights, thus assuring potential investors that their investments will be well-protected.

 

And while Pardon notes that the return on investment may not have increased with regard to African investment, the perceived decrease in riskiness in Africa assets makes investing in Africa an important diversifying strategy in investment management. Investing in solar energy or payments systems in Africa provides a shield against singularity type events for Western world investors.

 

He finds the value proposition for wisinomad as important. “Find value by connecting the dots.” is one of Pardon’s mantras and wisinomad facilitates people from different backgrounds meeting through a common love and desire to explore Africa and co-create.

Through that they can generate new business solutions and strategies to old problems. He stresses that a program like wisinomad might not derive immediate results but to encourage engagement beyond the program.

 

Visit the CRE Venture Capital website to learn more about the companies that CRE is invested in.

Wisinomad brings together social entrepreneurs, digital nomads and investors from different sectors to connect with local businesses , governments and startups alike.

To learn more about wisinomad, visit www.wisinomad.com and send in your application.

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