Forward Thinking Investors

Forward Thinking Investors

When starting a company in Africa, be prepared to encounter fear-based questions, rejections and investors who flat-out want nothing to do with investing in small businesses and startups in Africa.

This is definitely true of investors outside of Sub-Saharan Africa, but strangely also true of many investors in the region. We've found that there is a chasm between investing in new ideas and entrepreneurs versus financing a trade deal or a short-term business loan that is highly collateralized.

That's ok. One segment of investor is focused solely on maximizing return, thus earning the title "investor." But often these investors are shortsighted when it comes to constructing an overall startup ecosystem to enable future business development in their region. In order to expand new ideas in Zimbabwe and the surrounding nations, a new breed of investor must arise.

The Forward Thinking Investor

Philanthropic Investment (making a difference with investments while also expecting a return) adds accountability to third world projects. It's is a relatively new formal style of investing (this type of investing has been recognized formally for about a decade). For new ideas to succeed in 3rd world Africa, investors must understand that investing in people in the third world is a long term investment and it takes time (often a lot more time) and a bit of serendipity to scale a company the right way in Africa than it does in Europe or America.

From our relationships and small successes, we've found that forward thinking investors have a few things in common:

  • They invest in relationships long term.
  • They are willing to make a difference, but hold the founders accountable to the business plan, strategy, and financial responsibilities.
  • They don't freely or openly invest in any business that comes their way, they invest in people, story, impact, and return.
  • They are understanding when it comes to the risks associated with doing business in Africa.
  • They are constant learners—not assuming that they have it all figured out, but are a great partner and mentor.

These types of relationships take time to build and must be sought out. We've recently experienced the importance of experienced wisdom on our team in Africa. Commonly referred to as an "elderly face" locally, it's important to have a successful, experienced investor or partner on a team. You should have an experienced, wiser partner not merely because of experience and advice, but also the clout, credibility, verbiage, and social prowess they bring to the table. As a young business person, you can bring energy, ambition, and drive to the project, while a successful, battle-tested business person brings their background, long term successes, and wisdom to the company.

This is an ideal scenario, and these relationships are not easy to come by, but they should be developed, cultivated and sustained over time. That's part of our goal with the startup ecosystem we're building. Bringing the battle-proven, older, and experienced business community together with the new energy, ideas, and startups. More to come on this.

Investing In Emerging Markets

One of these forwarding-thinking investors that we have found is Interlink Capital. We've been impressed with the level of understanding and professionalism the team at Interlink maintains when approaching third world investments. They truly are leaders in their field. To illustrate the point, Interlink has conducted a groundbreaking micro-finance deal in Zimbabwe. And most recently, they have partnered with one of the more well-known and forward thinking firms in Iraq—working to develop Iraq and the Middle East, as well as their work in Sub-Saharan Africa.

We're excited to continue working with Interlink Capital and applaud them for pioneering capital investments into often uncharted territories. This type of investing takes guts, strong relationships, and patience.

Here's to a prosperous future investing in Iraq, Zimbabwe, and the emerging world.

The right people can make a difference no matter location.

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Tommy is in Ethiopia this week for a follow-up scouting trip regarding a water drilling project we are developing. There is massive opportunity in this space in rural Ethiopia and we have an amazing plan to drill commercial wells enabling us to churn enough revenue to build the company, while also drilling 3 times as many local wells for the communities surrounding the drilling sites. We're very excited about this. Be looking for that update.

Tim is in Kansas City again this week working with Foolish Things Coffee and Create The Movement Marketing of Tulsa. In partnership with the Kauffman Foundation (one of the foremost investors in entrepreneurship education), we are launching 1 Million Cups in Tulsa, OK, USA on October 30th. This will be a great thing for the Tulsa entrepreneur community and will also give our team first hand experience in launching a local community movement. Our hope is to further the community in Tulsa, while also learning some valuable lessons to deploy in our work in building startup ecosystems in Sub-Saharan Africa.

Thanks for reading, we'll keep the weekly updates coming! Stay tuned for more on Ethiopia and on the 1 Million Cups initiative in Tulsa.

Cheers,
Tommy & Tim

(photo via trey ratcliff)