Leapfrogging
Introducing local community capital in Africa
In 2007 Kenya pioneered mobile money, leapfrogging entire sectors of the developed world's financial system.
Unfortunately, in the 15 years since Mpesa debuted, there has not been another paradigm shifting breakthrough.
The good news is a number are on the way.
Nairobi's tech ecosystem is on fire with entrepreneurs and investors flocking in to build and back new ideas.
Last year, foreign investors ploughed $5.2B into African startups.
Critical Questions
These are the questions we must ask ourselves:
Are African investors set to miss out on yet another exciting investment opportunity right in our own backyard?
Will we be leapfrogged by smart money from the West or can we rise to the occasion and stake our claim here at home?
Power of Venture Capital
Venture capital is the act of deploying risk capital to fund the development of new products and technologies
Annually, venture investment makes up only 0.2% GDP, but delivers an astonishing 21% of U.S. GDP in the form of VC-backed business revenues - Brookings Institute
Venture capital-backed companies account for 41% of total US market capitalization and 62% of US public companies’ R&D spending - SSRN
Among public companies founded within the last fifty years, VC-backed companies account for half in number, three quarters by value, and more than 92% of R&D spending and patent value - SSRN
Venture capital and the startups they back are the engine of US economy
Africanizing Venture Capital
Elevate HR, a Nairobi based startup is pioneering a community based fundraising model that makes it possible for locals to participate as angel investors at levels they can afford.
Birthed within the Impact Africa Network startup studio, Elevate HR has built a growing community of over 700 HR professionals to come together to share ideas, learn and network. Naturally, the community are prospective customers and potential investors for the company.
The company has created a structure for their community members to invest into the company and help with growth.
Here is a snapshot of an investment gala the company held for it’s community at a hotel in Nairobi.
This is nothing short of an opportunity to leapfrogg traditional modes of venture capital where only high net worth individuals and well capitalized institutions have had access to the opportunity.
Africans are a community oriented people and must leverage their strengths to be competitive in a globalizing world. This localized, community based venture funding model is the beginning of a something huge for Africa’s tech ecosystem.