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FIP 99: How local founders can attract foreign impact capital, with Andreas Zeller

This episode shines a light on why local founders, who have excellent businesses, struggle to attract foreign impact capital. Open Capital Advisors has been advising in Africa for 9 years now, helping entrepreneurs grow, and helping advance economies, whilst also helping build a generation of business leaders in Africa. Based in Kenya, Uganda and Zambia, covering 20 countries in Africa and have worked on 450 engagements to date.

On this episode you’ll learn:

  • Village Capital studied the amount of impact investment money going to local founders, which showed less going to local founders. Some of the reasons is the lack of understanding by local founders about what is needed to raise capital, not being active in the networks that foreign investors are active, and knowing how to communicate effectively. Alot of OCA’s work goes towards bridging this gap.
  • Many impact investors from North America or Europe don’t have local offices and are not familiar with cultural norms or business practices in country. When they do, local staff are not part of the decision making process, so when they take deals to their investment committee, made up of members who are not familiar with the context, they’re often rejected.
  • Founders need to get good at how they describe themselves to foreign funders, how they articulate their value prop, how much info they need to share.
  • Another challenge is that local founders might expect to build a relationship over several interactions, whereas foreign impact investors might expect to develop a relationship over one meeting, because their time is limited in country.
  • Local founders might not have international brand names on their CVs like international founders. They may still have very good CVs with experience at reputable local companies or universities, but are not known about by international investors.
  • The due diligence process can be more effective by helping local founders understand what is necessary, what information needs to be shared and when.
  • Local events can be organised to allow for more touch points between local founders and investors.
  • One of the biggest frustrations of all the local founders that OCA works with is for an investor to quickly say No, if its a No, instead of wasting their time for 3-6 months on a lengthy process process.
  • A greater understanding of the language used by investors would help the whole process. But investors should not expect Founders to be finance specialists to enter into these conversations.
  • A primary reason why investors might give a No to local founders is lack of documentation and record-keeping. Also, a simple inability to communicate with local founders effectively. Also lack of trust, that local founders might not be willing to give a share of their business to international investors.
  • Local founders should also be clear about what they mean by impact, including how it will be measured – which is much harder than financial indicators.
  • Local founders should do their due diligence on investors, who you really trust, who believes in you and your company, and what they fund.
  • Funders who fund broadly, either early stage or later stage, who’re open to any stage of business, often, in fact, do have a sweet spot.
  • Getting support can help local founders, be it a mentor, an accelerator, or a business support provider, who are plugged into the investor community.
  • Andreas has seen a shortage of qualified Chief Financial Officer type human capital, who are people who can run analyses, help businesses make decisions, or form strategies. They created Arcadia to fill this gap.

Links to resources:

Connect with guest

FIP 74: Gender Smart Investing with Suzanne Biegel

On this episode we continue our podcast takeover series with Tamsin Jones of The Boardroom Africa. Her guest today is Suzanne Biegel of Catalyst at Large. Suzanne has more than 25 years’ of experience as an entrepreneur, investor, board member, and hands-on operational manager. Her consulting, speaking, facilitation, writing and field scanning is in gender lens investing, globally and spans work with a variety of institutional actors.

On this episode you’ll learn:

  • About what it means to practice smart investing for gender impact. Suzanne provides tactics and strategies to help us improve.
  • The importance of having a culture that is built to last. Suzanne has learned through experience that there is strength in diversity.
  • If you don’t have a management team that reflects who you are representing, you might be missing something. Inherent value in having different perspectives.
  • Suzanne tells us about the benefits of analyzing your business through a gender lens.
  • If you are designing products for women and girls, wouldn’t it make sense to have them involved in the design process?
  • Pay attention to ‘hidden influencers’ along the way. These might not be your customers, entrepreneurs, or end clients, but could be the controllers, HR staff or accountants in the company. Are they benefiting from the resources and support? Who is in your supply chain?
  • Is your company paying attention to women’s needs? Transportation? Child Care? Is there a safe way for women to get to and from work?
  • From a customer standpoint, how are you speaking to your women customers? Are you being respectful? Are you hitting stereotypes? Start by asking questions.
  • The data shows that once you get product market fit right for female customers, they will be more loyal. Once you secure a female customer, they tend to be more communicative about the product to others and in essence become an ambassador. They are more likely to recommend products and more likely to buy more.
  • Be purposeful in where you use your energy. There are a lot of people on the same journey as you. Find partners and work collaboratively where possible.
  • Start with a problem that you are really trying to resolve and go towards it relentlessly.
  • There are endless events and resources worldwide. People are realizing there is power in connectivity! Visit a few of Suzanne’s resources below…

Links to Resources:

Resources for Investors:

 

Connect with Suzanne:

  • @womeneffect
  • @zanne2
  • #genderlensinv