FIP 102: Why donor money is distorting the entrepreneurship ecosystem in East Africa, with Fiona Mungai of Endeavor

Fiona Mungai joined endeavour with six years of experience working in Private Equity and Asset Management in East Africa. Fiona started her career at British American Asset Managers and then at Actis — a leading pan emerging markets private equity fund, She he been a founding member and Board Director of the East Africa Venture Capital and Private Equity Association that has 100+ members.

On this episode you’ll learn:

  • Endeavour supports high impact entrepreneurs. Why? Because high impact entrepreneurs are able to create thousands of jobs, can come up with a business model that is scalable, and can create millions of dollars of revenues.
  • High impact entrepreneurs will also support the entrepreneurship ecosystem, by creating an entrepreneurship culture within their organisations, empowering their employees to think about spinning off to create their own businesses, are willing to mentor the next generation of entrepreneurs and re-invest capital back into the ecosystem.
  • There are very few venture capital or early stage funds operating in East Africa. Even those that do label themselves as venture capital, have the risk profile of private equity funds. Which means they do less hand holding and have a lower risk tolerance.
  • As a result, many entrepreneurs in East Africa have to look for investors aboard, for example in the US or Europe, and growing their networks and relationships with these investors from afar can be a challenge.
  • Endeavour connects businesses with international investors, by organising roadshows for entrepreneurs and networking events with investors in the Middle East, Asia, Europe and the US.
  • International investors have a certain expectation for how companies should be packaged, which companies in East Africa need to know about. This includes things like governance structures, leadership and HR structures, business model optimisation, and business model valuation.
  • There is alot of soft money (grants) supporting entrepreneurship in the East Africa ecosystem. Those providing the soft money may also be advising the entrepreneurs, but don’t necessarily have experience running a business that has scaled. The prevalence of grants to scale businesses can create a dependency, that hinders the ability of the business to scale.
  • Endeavour also advocates for entrepreneurs to pay it forward in (a) investing money back into the ecosystem after an exit / liquidity event, and (b) mentorship, by supporting up and coming entrepreneurs with advice and access to networks.
  • Relationships takes time, so you need to be on the road meeting potential investors at least 12 months before you need the funds. The feedback you receive from investor conversations can feed back into your business and will serve you well as you go back on the road.

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