Thursday 28th September goes down as the day that the ViKtoria Business Angel Network was launched. The ViKtoria Business Angel Network (VBAN) brings together local and international angel investors who want to make investments in a syndicated manner by pooling their expertise and funds together. The focus of the investments is in tech start-ups in East Africa. Stephen Gugu, the Principal at ViKtoria Ventures, the VBAN manager, talked about the benefits of angel investing and the key learning from ViKtoria Ventures experience since its founding in 2011. “‘Tech startup’ does not sit as comfortably as ‘real estate and other traditional investment options’ in the mouths of many East Africans, especially in Kenya, when it comes to investing. However, we believe that in the coming 5-10 years African technology will become a key investment destination as exits start happening and the current crop of startups start maturing. However, for this to happen, investing in great ideas needs to increase a great deal,” said Gugu.
This thought was also emphasized by Tomi Davies, the key note speaker, President of the African Business Angel Network and co-founder of the Lagos Angel Network. During a closed masterclass session with the angel investors, he gave his thoughts on some of the questions that one has to address when it comes to investing based on his experience in tech and media investing. What makes a great entrepreneur? How much should you invest? What target rate of return should you aim for? Why should you invest in groups (syndicates)? “We need to always negotiate a win-win relationship with the entrepreneur. It is important therefore, to take a good look under the hood.”
ViKtoria Ventures, the manager of VBAN, has been working in this space for the last 5 years and will be responsible for providing deal sourcing, structuring, due diligence, post investment monitoring and investor syndication for the VBAN members. “In our experience, we have found that there are many start-up companies worth investing in – the businesses are scalable, the entrepreneurs are passionate and their capital requirements can be syndicated” said Stephen Gugu.
VBAN hopes to attract two kinds of investors: individuals and investment groups already investing in East Africa. VBAN members benefit from a curated pipeline from ViKtoria Ventures, training and networking opportunities with fellow investors, start-ups and industry leaders. The members are expected to play a crucial in providing much needed mentoring and connections to the companies they make investments in.
Mr Ritesh Doshi, a seasoned investor and entrepreneur shared his experience with Naked Pizza, which he eventually exited to Pizza Hut. Not all his experiences have been home-run’s however. “We have to realize that it is okay to lose money. Investing requires patience. It is clear however, that the solutions for Africa will come from Africa.”
The investors were joined by ecosystem players for a panel led discussion on the investing space in Africa. “We are seeing a shift towards building companies. It is more about results rather than a focus strictly on capital,” said Andreata Muforo, a Partner at TLcom, a fund that is investing in tech in Africa. We need to look at how we can use existing technology to provide the services Africa needs. One such service is being provided by a company called Buymore Point of Sale (POS). Tony Kuchio, the entrepreneur behind Buymore shared the work they are doing by providing a technical solution to micro-retailers. Their point of sale solution has helped over 180 small business owners over the last 3 years. Buymore is one of the start-ups that VBAN has invested in.
‘For Africans by Africans’ is a great way of viewing VBAN. As an angel investor himself, Stephen Gugu is very realistic in his expectations. “As in any investment, there are risks, the key is building a portfolio that helps to diversify the risk, and hence our syndicate approach. An investor can quickly and without a significant allocation get to the 10 – 15 startups recommended to diversify risk in early stage investing.”