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00:00I would like to begin this conversation and kind of like from a broader view and then we'll get into some some themes as we get into it. And to you me kind of the question of 5 billion was raised last year. This is an exceptional compared to the previous years. What happened. What changed. Very good question. What what changed in one year. You know I've been a technology investor myself for the past 20 years and I moved from Silicon Valley to to set up a D.C. firm on the continent about 12 years ago. So I've really been waiting for for this day for us to be able to say what you've just said which is five billion dollars invested and one year. I just know a few things. One is that over the past several years the underlying infrastructure that is required to be able to build technology businesses has been developed. So that's made it possible for people to go out and build businesses. I think that's that's a big factor. Another factor is the influence of something called Y Combinator and Silicon Valley. So a few years ago about three years ago had the first few African companies go through a Y Combinator. And those companies have several of them have actually done quite well that really increase the profile of the African Investment Opportunity. And in Silicon Valley the way things work in the valley you know once once one person starts to look all of a sudden everybody starts to look you. And then you get this this flood of money coming into the into the continent. So for me very very excited and hope that it continues for a long time. I mean you you've worked on the continent from South Africa and now you're based in London. But I think you have a very good view from East Africa as well where most of this thing's begun back then. How what changes have you seen over the years to come to this. Time. Yes. Thanks and glad to be here. I mean with with what Yami has already said on and I think that the transformation on the infrastructure cannot be understated. I mean it's been hugely transformative in most markets and in and also that while there's always kind of this drive to keep bringing down the cost of data improve the infrastructure the cost of data has really fallen significantly over the past decade. And so just the Internet actually just being more accessible. And on the skill side I'm glad the minister mentioned that that's a big piece of not only what needs to kind of continue but also has been the last several years huge efforts to develop digital skills in different ways. You actually start to have a market that is we have always had the numbers. We didn't have had the people on LinkedIn say let's say I have the access and the ability to actually start to use a lot of the applications that were being developed certainly being innovated on in the previous 10 years as well. So that's been a big piece. And I think certainly the exits have been really gotten because that was always the question for a number of years whether anything exists. And so that is also kind of certainly stimulate a lot more interest. Well yeah I mean I think that trend is continuing in 2022 and the first four months are low. And I think we've raised about 2 billion on the continent. And one of the companies that's raised money or at least announced is Copa. You raised 50 million at the beginning of the year. Could you tell us the difference in this round compared to the previous rounds and how that investment process has changed. I wouldn't say the process has changed. I think investors fundamentals are still the same. They're still looking for organizations that can scale organizations that have built up track record organizations that can reach profitability at an acceptable future point. And organizations that have business models that are replicable across the continent. And I think that's what we're starting to see more broadly that the rope the unicorns that are emerging are not emerging as unicorns because they're ideas now they're emerging because they like we have tried to do is create platforms that are building significant number of customers that are returning and adopting the value proposition that's being offered and utilizing the emerging technology that's on offer not just from a consumer interface perspective but actually to deliver successfully the business as well. Yeah. I mean one of the things that comes up when you're discussing taking the speaking in Africa is there's some divisions like Francophone and Anglophone or sub-Saharan Africa and the North Africa housing having its own kind of space. But for Cope here I find it interesting I think e-commerce platform. But it's not the same model as Ecstasy Junior. What's what's your thesis of scalable e-commerce businesses on the continent. So the business that we've built is a BTC business which is focused very much on the 750 million emerging middle and lower income consumers across the continent. Yes there are different operating conditions in Francophone in East Africa and southern Africa and the Maghreb and so on. Those those conditions are different. But fundamentally the needs of the historically underserved consumer that has a very small wallet size that has limited access to the Internet and has not had choice and access to fair pricing and so on and quality that remains the same across the continent. And I think so long as as copy does you stay focused on the needs of that consumer. And building an offering which is appropriate to them then you have a model which can be adapted and adopted anywhere. I mean something interesting that came out about CAC was I think 70 percent off the edges that you have happen to be women as well. And kind of it goes back to the synchronization of the off because economy at least the semi part is run by women. And that brings us to this current position of if the economy is being run by women then how comes the investment space in the tech space is not reflective of that and ISIS. Why. Why is that. And also maybe go into what's being done to close that gap. Sure. And just to give you a sense of order of magnitude I mean of the five plus billion raised last year going into early stage tech different course slightly different things. But but the ones that have gone into kind of women led businesses it's like less than 1 percent something less than 2 percent. It's really low. And while that kind of it's also helpful to appreciate that all of the money that's gone and most of it's gone into fintech some mega deal so that some kind of skewing around the overall pie. But I think what we look forward and saying you know the context probably can be raising 10x the best in the next five or seven years. We get to really look at what's going on with with money not flowing to female founders. I think a lot of it is know I think just it's happening by you know not by design certainly but you know there is a number of issues that have come up. And so there's I mean the way that many people are thinking about it is one you don't have a diverse enough pool of investors. Right. So in terms of fund managers LP PS I see members predominantly male and predominantly foreign investment. And so looking at how do you actually really drive where women say you know those decision making processes that we look both at how deals are sourced and very much the Mormon shows and network that is in many places and those tend to be gender specific. So if we start to to kind of diversify on the funding side of the proxy bringing more diverse networks coming into let's say that you know the pipeline deal flow there's also a lot of you know both research but also people's lived experiences on actually fundraising and bias that comes into the process itself. And so women being looked at as more you know what's your track record and more like this is gonna be really challenging because men are kind of asked more kind of for future oriented potential oriented types of questions in the process itself. So I think a lot of the you know there's a lot of very active conversations certainly in Kenya and Nigeria. This is not like something that has not been discussed in a lot of you know across everything from the founders to investors. And I'm starting to see a lot more investors deliberately bringing in women and to you know into the funds at a partner level et cetera in those that were it not necessarily had any gender lens any type of you know you know Angelina's aspect to their investment. And also seeing that LP ISE are also had the asking questions and giving technical assistance in different ways to just bring in white in the pool both from the pipeline side but also in the decision in there. They're very much interlinked. Yeah. I mean we've we actually just had a story on on this gender gap on Bloomberg Quicktake. It's just like women fighting this to me to say our cliches because you expect African women to be selling tomatoes on the side of the road which is not. Which is not necessarily the case. And it shouldn't be kind of just following that. Yomi over the past year and two years especially during the pandemic we have seen a lot of deal flow is going through. And partly that's why we have had this 5 billion investment but that has also raised some of these questions. Also the question of the gender question has also been raised but also of governance and due diligence. Not going to go into the details but there's something I think you call the zoom deals. Can you just talk about the difference between how deals in office are made and how deals in San Francisco are made and what the two sides can learn from each other. I guess the more fundamental differences between the approach of a typical venture capital investor and when you go to do a deal and a private equity investor. So and on the African continent historically everybody was a PE investor. I invest in real assets and so forth. So you spend a lot of time doing due diligence. You hire accounting firms to look at the books and so on and so forth. Right. That's sort of standard P E type type work. And the venture business actually doesn't work that way for several reasons. One the companies are much smaller. So there's been many times if you get did invest their notebooks to look at anyway. So historically it just hasn't worked like that. But the whole system was contingent on. So let's say you are going to lead a series B deal. You did that with the understanding that the institutional investors in Silicon Valley heard that the series they had done their jobs. Right. So typically you would do what's called a bring down due diligence. So what's changed since the series A which means you assume that the prior investors did that their work. Now the problem with that in a new environment is that you don't necessarily have this whole ecosystem of institutional investors who have done the work before you. So if you don't do the work then there's a problem because somebody has to do the work. Somebody has to be on the board somebody has to be watching it. Everybody can be sort of remote and hoping everything goes goes well. So. So that's one of the things that I think for all of us in the industry it's quite important to focus on certainly from a Tea Party perspective. We take it very seriously. So we we apply the same level of rigor to all of our investments whether they're Series V investments or a leveraged buyout. But as we get one more money coming into into Africa suddenly if if I were still at my old firm in Silicon Valley look at a deal in Africa I wouldn't just go to do a deal without somebody who is a knowledgeable local investor investing alongside us. So at least we know that's somebody who understands the local environment the kind that can help do the groundwork and ensure we don't run into any any issues. So that's that's actually quite important. But the reality is look in an upmarket. There's a big fear of missing out. Everybody wants to get deals done. So you're going to have this everywhere in the world because deals are getting done in five minutes. Obviously we have a correction now so hopefully they'll be somewhat disciplined in the process going forward. I mean interesting you bring their formal fight there but apparently there's also your mark which is the joy of missing out on some bad. And Tim on this. How do you prepare your company. How do you prepare yourself when you are approaching investors so that you know this this metrics are met this due diligence and governance issues are already addressed. I mean in establishing a business like copier you continually wear two hats the one that runs the business and the one that raises money. And they frankly take virtually equal amounts of time. And you need to put effort into both of them. And as a very early stage company and speaking as a company now that's come through three significant fundraising rounds. You just have to get better and better. Really where it starts I think is with the people. The people that you have on your board are absolutely critical. We've put a lot of effort into having the strongest most diverse most locally knowledgeable board that we can. The investors that you build up in your history who can who are credible or reputable and locally knowledgeable again who can AGM you was saying give that level of recommendation. I think it is extremely important. And just being prepared trying to understand the way that investors think the language they speak and making sure that you are continually in a state of fundraising and ready to have the conversation. I mean speaking of people on your board I think you've got an X Amazon dedicated to to join the team. So. Such valuable experience comes comes in handy. Yeah I mean Amazon obviously is a great shining example of success to all of us and the principles with which they operated. The business that Jason Lombardo recently appointed director Jason Murray Rather brings to us is is inestimable really. He is the knowledge and learnings that we can get from him. Allow us to sort of make great leap forwards very very quickly. I see. And I'll ask this question with one of the question that has come through in tweets. What other diesel services and technical solutions does Africa need like remote healthcare. FTSE. And explain that just to. Where is the Africa tech space going. What should be what opportunities and what. What isn't the future for the takes. I mean it's a really exciting point of time. I mean some of you may have been working in the space my whole career and never kind of been things you kind of dreamed of like happening now. I think looking ahead there certainly I think a lot more just volume of companies being founded. Different types of people coming into found companies. A lot of activity outside of the big four markets. So the big four being Nigeria Kenya South Africa and Egypt other markets on the continent and so on. Yes certainly. Just the question here was actually specific about healthcare. But in Kenya I was certainly seeing a lot of healthcare startups getting funded just different types of services in the health tech space as well as education. And then also looking forward I think there is that they that they are seeing more growth in local investors. So in terms of the early stage Angel precede a lot of activity there as well as increased interest and activity around local corporate venture as well into this space. So I think that's going to be quite interesting and something that hasn't been necessarily as active. Yeah I mean I think that conversation is very very. It really is having it's about having local investors in local startups and partly because it's also solves one problem. I think you talked about this before and one of the challenges is currency issues that you have when you're investing in some of the African countries. But in addition to kind of say maybe you can speak about it. What else do you see to be also a challenge struck opportunity. The currency of course is is a challenge given during what we've seen in many countries. One of the ways to try to let the several ways to address it. We look for businesses that are spread across multiple African countries as a way to diversify risk from a currency perspective. The ideal situation would be to have a business that has local currency costs and hard currency revenue. That's that's the Holy Grail. And we're going there to find one or two of those. But beyond beyond that you know you can. You just have to be able to outgrow the currency issues which is one of the reasons why a lot of the interest we're seeing in Africa is really to the point I was making earlier around female founders where they tend to be focused on where the money is going. The reality is most of the money is going into tech because there's a hyper growth businesses. Business is growing 50 100 percent a year. Am I concerned that the currency is going down 7 10 percent. No not really. Then day. But if I'm investing in a business where I'm underwrite into a 25 percent growth well 10 percent currency depreciation really eats into my returns. So so the focus then naturally has been on hyper growth businesses. So that's the other way to to try to to try to address it. But there are a lot of different lenses due to look at it because the other point here is that almost all of the private equity broadly defined included RTS capital and the continent is in the US dollars. So fundamentally there's a currency mismatch because if we had local pension funds invested in local fund managers in local currency then you wouldn't care. Nobody in the US worries about currency mismatch because you know there's no mismatch on the currency. So that's that's a different point around where the money is coming from. But just fundamentally those are the ways we try to address the problem. Unfortunately we have come to our time has run out but we have so many other things we could have talked about for hours and with that I'll just say thank you for listening attentively. And thank you for the panelists for this very insightful comments. Thank you.

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TPG Rise, Copia, and WomenWork on Africa’s Booming Tech Sector

Yemi Lalude, Partner, Head of Africa, TPG Rise, Tim Steel, CEO, Copia, and Isis Nyong'o Madison, Co-founder, WomenWork; Principal, Asphalt & Ink discuss digital services and tech-enabled solutions in Africa’s tech sector with Bloomberg’s Samuel Gebre, Africa Correspondent, Bloomberg at the Bloomberg Invest: Focus on Africa event. (Source: Bloomberg)

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