What DEMO Africa Taught Me About Investing in Africa

A few weeks ago, I had the privilege of attending DEMO Africa in Casablanca, Morocco. DEMO Africa is a yearly event that brings together entrepreneurs and investors from across the continent of Africa. This was my first time attending and it was a great primer into the African entrepreneurship ecosystem.

My favorite session was the infrastructure summit which was hosted by the US State Department.

In it, we discussed some of the core systems underlying the African tech ecosystem and an overview into what infrastructure projects have succeeded (and failed).

I came away from the conference with the following insights that I’m planning to keep in mind when evaluating investments across the continent of Africa.

Many Telecos Don’t Connect to Google/App Stores
I talked with an entrepreneur who built a coworking space and accelerator in Morocco. He exclaimed that while Morocco has a number of trained engineers, it was difficult to advise them to build apps when many consumers don’t have app stores. I was so surprised — how does someone get a phone without one of these app stores built in? Through research, I realized that the only reason our phones can operate app stores is because we provide them with financial information. App stores don’t work without credit cards.

Most telecos that operate across Africa have different financial payment plans to fit their users more effectively. These innovative systems don’t yet cooperate with Google Play and the App Store.

This is slowly changing though. Orange just launched direct billing in Egypt allowing the market to access the app store. We’ll see how this continues to evolve.

Why this matters: The “traditional” application ecosystem is stifled across the continent. This is a huge opportunity to invest in an alternative ecosystem.

Data Storage For Most Consumers is Extremely Limited
Unlike in the US where unlimited data plans are the de facto option for many cell phone owners, large data plans in many African countries are still relatively abnormal. This has made consumption of entertainment (especially in Nollywood!) difficult. Many of Nigerian soap operas uploaded onto YouTube went unseen by Nigerians due to their data plan constraints. To combat this, Google created YouTubeGo which allows users to download videos when connected to wifi to consume later.

But first, the phone has to come equipped with the YouTubeGo app because (as I mentioned before), many phones do not have Google Play or App stores.

Why this matters: Investing in high-data usage tech companies will likely shrink your market size significantly.

Getting from One African Country to Another is Hard
DEMO Africa featured entrepreneurs based in Togo, Coitivoire, Ghana and others. I learned that their travels into Morocco were really difficult! Multiple shared that it was cheaper for them to fly to the US/Europe than across Africa.

When digging into this, I learned:

“The continent is home to roughly 12 percent of the world’s population and will be responsible for most of the global population growth over the next three decades. But it accounts for just 1 percent of the world’s air travel market. The flights that do exist are often more expensive than routes of similar duration elsewhere in the world.”
Many African countries are mired in protectionist policies that make traveling across the continue extremely difficult.

Why this matters: If you are hoping your company will expand across the African continent, take into account that each country operates very separately.

No Great Customer Acquisition Channel
One of the most common concerns that I heard from African investors was: access to market. The word on the street is that Jumia, despite it’s critical acclaim online, is not experiencing great traction. There is still a lot of distrust in ecommerce. So a focus from investors has turned to B2B. Many consumers are excited about working with large African enterprises to improve experiences.

Why this matters: If you are investing in a consumer company, go really deep with the entrepreneur on their G2M strategy.

Repatrition Just Getting Started — Long Way to Go
Another common concern I heard from investors was: there are not enough African entrepreneurs are investing in Africa. On the other hand though, I was surprised by (and excited to see) that many of the startups at DEMO Africa were launched by Africans who have recently returned to the continent after living, studying and working abroad. But there is still a long way to go.

Why this matters: The lack of investment in African startups by African entrepreneurs is felt mostly on the angel/Pre-Seed side. This has ripple effects across the ecosystem.

I hope this helps others get more information on the African ecosystem. I’m extremely bullish on investing in this fascinating and rich continent. Precursor has made two investments here already — Tastemakers and Buycoins!

I’m plotting my next trip to the continent soon. This time to Lagos! If you are hosting a tech conference in Nigeria, let me know. I’d love to make it!

Grace Hopper, Female Founders & Structural Inequality

#GHC18
I recently got the opportunity to speak at THE Grace Hopper Conference 🎉. It was my first time attending and I didn’t quite know what I was in for.

I was blown away by the brilliant women I met there and the investment poured into the 3-day affair to make sure that they were supported. Parties, panels, job offers… You name it, Grace Hopper had it!

And to top it off, the programming featured legends like like Anita Hill, Emily Chang, Priscilla Chan and Gwynne Shotwell.

Our Panel
I joined a mix of investors and entrepreneurs to talk about Female Founders. We focused on the structural barriers facing female founders. We were pretty divided on this issue which made for a really juicy conversation.

Some of the investors argued that the venture capital firms are beyond repair and that we need to start from scratch. Some of the entrepreneurs argued that if we don’t improve the cultural realities that many entrepreneurs have to face, we won’t improve the outcomes for female founders.

I thought everyone on the panel had a point. The journey ahead is going to require a unique way of thinking.

Which reminded me of the importance of exploring how other historically underrepresented groups have addressed similar barriers. Being an African-American woman, the one that resonated most quickly to me was that of black people entering into higher education.

Learning from the Journey of Others
While I was at the conference I couldn’t help but getting struck with a little deja vu (twice!).

1. Grace Hopper felt like the National Black MBAA. The National Black MBAA was founded in the 70s to black MBA graduates access positions at top companies. I attended one NBMAA conference when in business school. I received a job-offer from Kimberly-Clark on the spot!

Grace Hopper encouraged the same behavior. There is a resume database set up in advance and it is common practice for recruiters to seek out female talent. I saw recruiters from Google, PayPal, Slack, etc. giving offers on site to women who they found to be qualified candidates.

2. Governor Jerry Brown signed an affirmative action policy. He passed legislation in California that mandates every board of a public company to have at least one woman. This sounded really familiar. Almost like affirmative action.

Affirmative action is intended to promote the opportunities of minority groups within a society to give them equal access to that of the majority population*.

All of this deja vu worries me because time hasn’t treated NMBAA and affirmative action well. Attendees at the NMBAA are now about 25% white and most growing industries like tech companies don’t make time for it. Prop 209 was signed into place in 1996 to overturn affirmative action.

So, I think it is important to see this moment of focus on and empowerment of women as fleeting – unless we take serious steps to ensure it is sustained. Giving one woman a job in tech and another a board seat will not save us. This was clear over this past week with the Kavanaugh confirmation. Just because we had enough women in the Senate to overturn Kavanaugh, didn’t mean we had enough votes to keep a sexual predator out of the Supreme Court.

We need to take our action a step further. Increasing diversity is a necessary, but not sufficient step to creating more equality.

What is it about government and corporate institutions that makes diversity so difficult, and how can we change that?**

*https://web.archive.org/web/20150518061955/http://blogs.law.harvard.edu/sharamkohan1/affirmative-action/

**More on this in upcoming articles! Still teasing through my thoughts. I always welcome your opinions, you can find me here on Twitter @sydneypaige10.