Afrigather In 1967, a 12 months after Botswana gained independence, diamond firm De Beers found the Orapa kimberlite area positioned about 240km west of Francistown in north-central Botswana, in southern Africa.
The diamond mine discovery triggered an exploration increase throughout Botswana. It’s additionally credited for remodeling the Botswana economic system, because it allowed the federal government to put money into vital social providers and nationwide infrastructure. Since then, the nation with a inhabitants of two.4 million has additionally moved from being one of many world’s poorest international locations to an higher middle-income nation.
At the moment, Botswana contributes 20% of the tough diamond provide globally and half of the nation’s authorities income comes from this business. The diamond business contributes 40% to Botswana’s Gross home product (GDP).
Regardless of the positive aspects from the diamond business, Botswana’s dependence on diamonds makes the economic system weak to exterior shocks.
In 2019, a gaggle of enterprise professionals in Botswana and surrounding international locations who have been cautious of the nation’s dependence on diamonds, got here collectively to help native companies with entry to capital, mentorship and different sources.
Mythri Sambasivan-George, an African girl of Indian origin, was one in all them.
Sambasivan-George was born in Zambia, schooled in Botswana and graduated from the Botswana Accountancy Faculty in 2002 and in a while a chartered accountant. She spent virtually 8 years at KPMG Botswana the place she led audits on monetary and listed establishments and carried out some monetary advisory work for different shoppers.
Sambasivan-George then joined Letshego Holdings, a listed pan-African monetary providers group with operations in 11 international locations throughout Africa. There she held 4 roles in C-suite degree positions together with Group Finance Supervisor and Group Chief Business Officer.
In 2020, the 12 months she turned 40, Sambasivan-George determined to take a step again.
“I used to be at Letshego for 10 years, and simply earlier than COVID hit in 2020 I made a decision that I needed to take a step again since I’ve been working for nearly 20 years,” Sambasivan-George stated. “I used to be burnt out and I knew that if I didn’t take a break then, I’ll most likely not do it.”
So she arrange a consulting agency that focuses on technique, company advisory and enterprise growth, particularly within the early stage a part of an organization’s lifecycle.
Whereas doing this she stumbled throughout angel funding.
“I discovered that I had plenty of time. So I used to be saying sure to each dialog, each request and likewise asking a number of questions,” Sambasivan-George stated. “One factor led to a different and I got here throughout a small group of enterprise professionals who have been eager on organising an angel community. So I made a decision to throw in my hat to that dialog to turn into a part of it.”
The next 12 months, the Angel Network of Botswana was shaped. Two years later, the Angel Community of Botswana has 48 members and has invested over $300,000 in 6 startups inside Botswana and neighbouring African international locations.
Over a name, Sambasivan-George spoke to TechCabal about how the Angel Community of Botswana invests in startups.
Daniel Adeyemi: Inform me in regards to the Angel community Botswana.
Mythri Sambasivan-George: We’re not sector-agnostic however geography-agnostic, to the extent {that a} startup is inside Africa. We wish to put money into Botswana and assist these Botswana startups and founders develop outdoors our borders into the remainder of Africa. However equally, after we discover a very compelling funding from one other market within the area, then we contemplate the probabilities of bringing them into bots (nickname for Botswana).
One in all our greatest investments is into the Launch Africa Tech enterprise fund, which is now most likely stepping between the $20–25 million mark and has about 70 tech-enabled portfolio firms spanning Africa. Nearer to house, we’ve invested in Organic Naturals Skincare, an natural skincare firm, Vantage Properties, a Proptech firm, which does automated valuations and fashions and likewise offers bespoke valuations. It’s making an attempt to turn into a knowledge home for property companies.
We’ve additionally invested in Ponatshego, an E-commerce market. We’ve invested in a authorized help tech-enabled enterprise that seeks to democratize the providing of authorized providers to lower-income folks and Small and Medium Enterprises (SMEs) and likewise right into a startup in francophone West Africa.
To this point we’ve been in talks and partnered with totally different Botswana authorities companies, significantly the Botswana Digital and Innovation Hub, the Botswana authorities company liable for fostering innovation and digitalization of the economic system by way of youth and modern enterprises.
We additionally began working with the Botswana Funding and Commerce Heart, which is an funding and commerce arm of the Ministry of Commerce and Business in Botswana. They’re extra targeted on creating companies which are export-oriented and serving to to diversify the nation’s economic system from diamond dependence.
We additionally partnered with a number of banks. Throughout Africa, we’re a member of the Africa business angels network (ABAN). We work lots with Dazzle angels, they’ve been helpful in referring feminine founders. We additionally work with the Dakar Network Angels.
DA: What do you look out for in firms earlier than investing?
MS: We principally search for a enterprise that’s fixing an actual drawback that must be solved or has created an answer with proof that works. Product-market match and problem-solution match should even be confirmed.
Subsequent, we take a look at the founders. Are they motivated and dedicated? Have they got pores and skin within the recreation? Are they self-aware?
We even do due diligence on the founders psychometrically. Typically we attempt to perceive the place we have to spherical out the sides. We additionally then take a look at the financials and controls within the firm, in addition to the potential for future development.
DA: Do you put money into pre-revenue or post-revenue firms?
MS: It’s a bit nuanced. I’ll offer you an instance, we just lately invested in a enterprise which actually wasn’t making something vital when it comes to gross sales however the founder had a very good thought to make use of the indigenously rising vegetation in Botswana to create regionally made cosmetics, significantly for African pores and skin.
She began enjoying round with this concept and product when she was 16. Over the subsequent 4 years, she examined the product many instances. She even had a waitlist of about 1,800 individuals who had tried the product and needed it.
So in the event you can show product market match, however you’re pre-revenue, we’ll take you on as properly.
DA: What’s your ticket dimension?
MS: In Botswana, the ticket sizes are comparatively small as a result of it’s a small economic system and valuations are decrease.
We’ve usually carried out between $30,000 to $55,000 ticket sizes on the primary spherical, after which on subsequent rounds, if the founder is working out of working capital, we’ll fund them or do a hybrid mezzanine (debt and fairness) spherical.
DA: What are the purple flags you look out for?
MS: A founder who has blind spots and doesn’t realise it. For instance, they insist that they’re proper, even when educated buyers give them opposite suggestions.
That’s a giant purple flag as a result of it means you’re not self-aware. It means you’re unable to hear actively. One other main purple flag we regularly search for is once they haven’t confirmed their mannequin. Possibly they wish to be all issues to all folks. You’ve received to be clear about what you don’t wish to do. Having a founder and a group who simply needs to do every thing suggests to us that they don’t know what they’re imagined to be doing.
We additionally usually have points round valuations the place founders overvalue their companies, however these are normally handled by way of a back-and-forth. Additionally they don’t perceive that valuation is extra of an artwork and never a science.
DA: How do you conduct due diligence?
MS: It actually will depend on the readiness of the corporate as a result of if their information are all over, then we’ve set to work with them by way of the due diligence groups that we rent, to really construct a knowledge room with them.
There was one other nice firm that we invested in the place the due diligence took about 4 and a half months as a result of the founder was simply not organised. It was a very good enterprise and really investable however the founder didn’t have his stuff so as. We had one other one which took only one month. So it actually will depend on how organised the startup is.
DA: What’s one thing totally different you’ve experimented with?
MS: Just lately, we have been reviewing the funding purposes we have been getting and we have been reminded that the startup ecosystem in Botswana continues to be very a lot in its early levels.
With a purpose to enhance founders, we realised we needed to do greater than free teaching periods to make these firms investible from a monetary viewpoint. So we conceived an thought of what we known as mentorship as an funding. It’s a mannequin that I do know has been used internationally. However once more, it’s one thing we expect is form of new, modern, and definitely aware of what’s wanted on the bottom in Botswana.
We held our first mentorship funding demo day in September with a woman-led eCommerce startup. We’ve already received two mentors who wish to discuss to her and help her and the entire assemble there may be that the mentorship time is valued.
The mentors change their time and information in time for an fairness share within the enterprise. That’s one thing nice I hope will take off as a result of it’s one of many catalytic results I feel we have to develop the Botswana startup ecosystem.
Secondly, the advantages of Pan-African relationships can’t be overemphasized. A living proof is the proptech startup that we invested in final 12 months, which additionally received extra funding by way of ABAN and received a contest for grant funding. This startup, which is woman-led, discovered the extra monetary sources very useful. And so we’re hoping to do much more of that. In order that we are able to leverage these Pan-African partnerships and even world partnerships for the good thing about our startups.
DA: What are some traits you’re seeing available in the market?
MS: We noticed that COVID gave tech-enabled companies in Africa, which is the world’s largest rising continent, a leapfrog benefit. Then afterwards we noticed a spate of extremely positioned funding values and valuations.
Now I feel that these valuations are going to begin coming down a bit of bit with points like inflation because of the Ukraine–Russia battle. The greenback power and greenback inflation as properly impression commerce with Africa, regardless of the African Continental Free Commerce Space (AfCFTA).
Possibly what’s going to occur is that there’ll be cooling to some extent of the valuations of those companies. And hopefully, what that will imply is that extra people who find themselves fascinated about startups in Africa can take part on even larger scales and ranges and take them ahead.
I imagine Africa is the continent to put money into in the case of getting high-growth companies which are serving a vibrant market that generates actually substantial demand. Africa is the birthplace of good concepts and collaboration.
So I feel that that scene typically other than the valuation continues to be one thing to observe with curiosity and take part in in the event you’ve received the capital to place in danger, a minimum of for the subsequent 10 to fifteen years.
