Last June we hosted the Africa Renaissance Conference. We’re now a few months away from the anniversary of the 1st ARC and have started to think about what kind of speakers we’d like to have this year. It’s early days and we’re also thinking about some housekeeping issues like redesigning the website, evaluating how last year went and how we could improve on that. In the midst of that there’s actual everyday work that we all have to do. Nevertheless, in framing the sort of event we’d like to have this year we thought it would be great to think about what we actually want to achieve. What's the story? The things that come to mind are future/commons/progress/distribution. This essay is an attempt at articulating these ideas. We’re going with a google doc because we’d like your feedback. Please share your comments here and let’s see where this goes and what can be built/done.
Crossing the void...
Being an optimist and a founder in Africa can often feel like an exercise in faith. It feels a lot like Indiana Jones walking across a chasm in “the last crusade.” Uncertain and scary, but the founder leans on their knowledge to walk across. You do it because what’s on the other side is worth the risk; but it doesn’t change the fact that you’re walking a tightrope. It takes optimism to take each step. But what if optimism and talent aren’t enough. What if there is a strong wind making it even harder to balance..
Last year Africa raised more in VC than has ever been the case. In fact, Africa did so well in VC that more money was deployed in this asset class than was done in private equity. This is no small feat--it’s historic. PE deployment in Africa has historically been much higher than VC and by several magnitudes of order. Last year, there was a flippening. This is incredible and we certainly hope the traction continues. However, when you dig down into the numbers--it becomes clear that African VC is really about deployment in 4 markets; South Africa, Nigeria, Egypt and Kenya. That's 4 of the 54 countries in the continent. There are a lot of reasons why this is happening, but the biggest ones come down to (a) the size of these economies (b) the comparative wealth of these economies (c) large populations (d) availability of talent (e) momentum. These are good reasons to invest; but they mask a significant achilles heel. The market is the continent--not any one given country; and in non-capital intensive businesses--continental distribution is what matters most. In fact, being over-dependent on a home market with unpredictable regulators can be a source of significant risk.
In some regards what’s happening in the tech/VC space in Africa is not dissimilar to the dynamic that has existed in the US where SV/SF has dominated capital flows. There was SV/SF, then NY and Boston, and then everyone else. This isn’t new or unique. In general the cluster effect is normal; people tend to agglomerate in hubs, it could be a city (London) or a neighborhood in a city (Sandhill road). This has been the way people build ecosystems. However the internet allows for new possibilities. The internet is still young, and so the delay in transition towards a geography agnostic perspective has been reasonable. Regardless, the transition towards a remote economy is now well on its way. SF/SV is slowly being unbundled and more opportunity is flowing elsewhere in the US. Miami and Austin are the best examples of places benefiting from this. But more generally more and more people see the internet as the new “home city.” Coinbase choosing not to have a physical headquarters is a great example, Gitlab takes this further by being entirely remote.
The internet is now the world’s biggest city. Its neighbourhoods are verticals; fintech, De-Fi, SaaS, etc. Anyone can be a member of this city as long as they have connectivity, they can contribute, they can consume, they can earn, learn or spend. Doesn’t it say something that the most valuable startup built in the last 10 years was built by an anonymous founder? People have voted with their feet--using bitcoin without knowing where the founder was really from. Geography was irrelevant--the quality of the idea is what mattered; and it’s been world changing.
Why is this important?
Capital flows are not reflective of the quality of ideas or their potential for continental scale. They are mimetic. A playbook for Africa has been developed and in this playbook market entrance starts in the 4 countries listed. This represents significant progress for the continent overall in that proof of concept is being achieved. However, the mimetic feedback loop is suboptimal over the long-term. It’s creating a longtail for capital flows where the power law is not optimizing for the potency of ideas and continental scalability--but the presupposition that becoming big in one country translates into scale elsewhere. However just as SF isn’t the only place in America that can build great companies (new places are emerging), capital allocators must look everywhere talent exists. Companies like Skype, Nokia, Spotify, Ericsson, Philips and Bolt were all founded in small countries. To scale they had to internationalise early and rapidly. This international-first mindset had a material impact on the cultures and market perceptions of these businesses. Many people do not see Spotify as Dannish, or Skype as Estonian. They are global products. Rapid internationalisation created a culture synonymous with global 1st. It also means that companies learn to navigate jurisdictional nuances earlier versus later.
What's the point of all this? Well, ultimately in technology it would seem what matters most is (1) the quality of ideas (2) the quality of founders (3) execution (4) momentum. The last point is dependent on access to capital. If the longtail of capital deployment optimizes for the first 3 points, then it doesn’t matter where in the continent a founder is from or lives. If the continent is the market--capital will finance the scale. What’s more, smart founders from small markets will almost certainly see the continent as the prize. Our friend Stone Atwine, co-founder of Eversend, a Ugandan neobank, is a great example of this. His neobank is already available in 4 large markets. He’s had to prioritize internationalization to achieve scale and limit country (read regulatory) risk. Capital allocators need to pursue the Stone Atwine’s of Africa with the same level of interest that they pursue founders from larger markets. Why? The potency of the internet to change lives needs to be distributed to every-place where talent exists.
The internet is THE distribution channel
Nothing more exemplifies the subheader than the story of the inaugural African Renaissance Conference held in 2020. Organised by remote volunteers (who for the most part, were strangers to each other), in less than 21 days, it attracted speakers from all walks of life (Iyin [ex Andela & Flutterwave and now, Future Africa] and GB [now CEO of Flutterwave], Shola [CEO of Paystack], Balaji, Patrick Collison + many more to list here) and was attended by over 1400 people. Attendants heard about the conference on Twitter, signed up, participated, networked and then moved on with the rest of their weekend. For us the experience really impressed upon us just how impactful the internet is.
Anywhere where a talented person with a computer and an internet connection exists--there exists the potential for a continental champion, or even better--a business that can become a champion in the global south or even the world (Worldremit we’re talking about you). The internet makes this possible. Investors can meet with founders online (Twitter/Reddit), having meetings on Zoom, founders can provide data rooms to allow remote access to all data, and if on-the ground due diligence is needed; the local offices of global firms like PWC, or Dentons can do the leg-work for investors; and execute terms on Docusign. If the continent is the market, and the talent is on the internet...shouldn't we act like it? If we recognize this, shouldn’t the few things we have the ability to influence reflect this thinking? We believe the answer is a definitive yes. To that end, we’d like this year’s ARC to reflect that thinking.
Beyond talent and opportunity…
The continent is growing rapidly. We’re ~17% of the world’s population but this will rise to >40% by the end of this century. What’s more it's possible that it may continue growing through the next century, albeit at a slower clip. The continent owes it to itself to make the future brighter. More equitable distribution of economic opportunity reduces the potential for broad geopolitical and economic stresses. Europe has experienced significant migrant pressures over the last several years, however the internal migrationary pressures within Africa have been greater. Economic collapse in Zimbabwe created a wave of migrant labor into South Africa. Problems in Somalia affected Kenya. Unequal distribution of opportunity, begets future problems. Whilst the internet can’t solve everything--it can inspire, and it can open new possibilities. Many African policy makers do not see the internet as an enabler or economic progress. It’s seen as a thing that happens far away in America, and a few select youngsters in Nigeria and Kenya. It’s also difficult to extract rents from it--so it goes ignored. Whilst this has created space for young people to build quietly, it also means there hasn’t been a concerted effort to build talent in the space. Distributing opportunity to more founders across the continent allows for forward thinking policy makers to gain the courage to support technology founders and nurture talent.
The future is a commons. Like a public park, the entire thing has to be well maintained and kept secure. When a part of the park is a security risk, or is full of trash--fewer people may visit the park. Bad actors may grow in impunity, robbing more people or filling the park with more trash until eventually the entire park lays abandoned. Each day of quiet vigilance to keep the park secure and clean secures its future. It builds a mimetic loop wherein people collectively choose to protect the park because that's what has always been done. It's not debatable: the future is a commons. Like a post pandemic earth, no one is safe until we are all vaccinated. Vaccinating the haves at the expense of the have nots, gives the virus time to mutate, come back stronger and inflict more damage. Our point is that African founders can shift the narrative--we can point out opportunity wherever it exists. We can build an ecosystem that exists first on the internet and builds for the continent as a whole--and perhaps even the world. Capital allocators can do the same too. Africa’s future is either opportunity for the world or headaches for islands of prosperity on the continent and the rest of the world in general. Whereas other regions have taken on a returns first attitude, in our view that narrow scope of action is not reflective of the common problems the world faces. Poverty in one place is ultimately migratory pressure for everyone else, degradation of ecosystems and pollution in one place, affects climate for everyone else. The future is common to all. Millennials have an opportunity to build a world where capital allocation and the support of talent reflects these realities. If great ideas from great founders are supported--the returns will still remain robust.
In Renaissance Europe it was common for the great artists of the day to be nomadic. They travelled to wherever their talents would be appreciated. Leonardo travelled from Florence to Milan and then Paris. He chose to be where his talents were appreciated. We know about Leonardo, but what about all the artisans who weren’t lucky enough to have proximity to forward thinking patrons? Leonardo wasn’t alone, all throughout history but more recently the modern era--talented people go where they are appreciated. When Einstein feared for his life, he left for the USA. So, to the extent the rate of progress [in general] is slowing. Maybe it’s slowing because it’s harder because fewer people are being connected to opportunity than should otherwise be the case. The world needs more hubs where the Leonardos of today can thrive. It’s not a given that they will be able to move to a city like Paris or New Jersey. They may continue to stay in whatever city they already live in, without the support of a forward thinking patron like Leonardo had, or the ability to travel internationally like Albert did. So...the world loses out on their potential. But imagine if that wasn’t the case. Imagine if that talent could be unleashed into the world. Finding people like that and sharing their talents with the world would be amazing.
With that in mind, we’d like to showcase a lot more founders and builders from around the continent at this year’s African Renaissance Conference. People from the forgotten cities and countries. The builders working quietly in high impact areas that many people are yet to hear about--but ought to. If you know people who fit that bill, please let us know about them. If you know makers, creatives, writers or even policy makers trailblazing quietly...let us know. We’d like to make sure they have a seat at the virtual table, alongside builders and makers from the big 4 economies and elsewhere in the world. Anything’s possible on the internet--lets make the future we want. Things done in the present compound over time. This is just one step, but with time--who knows what's possible…
The embers are already burning. The torch is already luminescent, dancing as the wind blows. Founders may be walking the tightrope across the void, but intrepid capital allocators and allies are right there with them--cheering on and walking the tightrope too. VCs and angels are taking notice of the talent in typically under-represented or forgotten corners. You have the likes of Goodwell Investments taking a more geo-agnostic approach; investing in places like Mozambique as well as more established markets like South Africa and Kenya. FirstCheck Africa is backing female founders in Nigeria; providing preseed investments to people who may not have otherwise received capital. Enygma Ventures backing women founders in Southern Africa. CC-Hub launched a design lab in Kigali, Twitter recently announced the launch of it’s Africa HQ--in Ghana. This is progress. We just need more of it.