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Nicole Dunn and Brian Kearney, hosts of The Next Frontier Podcast, interview founders and investors in Africa, from Pre-Seed to Unicorn stage entrepreneurs and angels to professional VCs. The podcast aims to shine a light on the dynamic startup ecosystem and bring equitable funding to entrepreneurs that are tackling the most difficult problems on Earth. Their goal is to shift the narrative on startup investing in emerging markets and help grow the African yearly VC inflows to $20 billion.
New episodes drop every Thursday in your favorite podcast app and at nextfrontierpod.com.
Leah Nduati: I don't want to say public sector is getting it wrong because they're really trying. They're really trying. And I think for them, they just have to have a balance between enabling startups and also making money because they need to make money to run the government. So I feel that it's not where they're getting it wrong, but where they could learn a bit more is on how they can enable more startups to grow, enable more business to happen. That way, if they're collecting a certain amount of tax it's on mass rather than taxing a small bracket and making them feel a lot of pain.
Nicole Dunn: Welcome to the Next Frontier. I'm Nicole Dunn, co-founder and COO at a venture-backed African startup. I'm a VC investor turned startup operator, passionate about unlocking untapped entrepreneurial potential in Africa.
Brian Kearney: And I am Brian Kearney, a three-time entrepreneur, nonprofit founder, and angel investor based in the U.S. I am excited about connecting capital to entrepreneurs solving the world's toughest problems.
Nicole Dunn: Join us as we change the narrative on startup investing in emerging markets and help bring the yearly African VC inflows to 20 billion dollars.
Brian Kearney: Thank you for coming. Typically our first question is just learning a little bit about your background in startups. So I always really like to ask about the first time you remember thinking about entrepreneurship and diving into business. Do you remember what that was?
Leah Nduati: First time I really thought about business, I'm Kenyan and I live in Ghana, so I remember going into a supermarket in Ghana and then seeing all these products like sausages and milk coming all the way from the UK and yet I was coming from Kenya and we produce a lot of milk and some of the best sausages. So then I thought why aren't we doing business across the continent and that was actually my first thought. And so I set up something called the Kenyan Trade Expo in Ghana and I started doing trade facilitation between Ghana and Kenya, connecting businesses and connecting people. Yeah, that's where it started.
Nicole Dunn: That's amazing. I think it's such an interesting question is, you know, there's so much ability and capacity to produce goods and services in Africa. Why do you think we're consuming goods from abroad?
Leah Nduati: The first thing is there's really a lack of proper logistics, and that's why we're excited to see startups like Lori that are handling the logistics issue, and we're also excited to see the African Continental Free Trade Agreement coming into play where African countries want to trade with each other.
But we really need to start the issue of logistics. We need to start the issue of different standards in different countries. So we should harmonize our standards. So if I'm bringing a product from Kenya, it's already been certified in Kenya. It should be okay to sell in other markets instead of me going through the whole bureaucratic process of trying to certify again, and then also ease of movement. So I don't know, you guys are not from Africa, but as an African trying to travel within Africa is very difficult. We always have to struggle with visas and then ticket prices are really high. So if we're not allowing people to move across our continent, it's really a barrier to making trade easy and making business easy. Those are the issues we need to cover. Yeah.
Brian Kearney: Yeah, that makes sense. Brian, I'm in central Illinois, spent some time in Uganda so close by Kenya about not a huge amount of time, only about six months there. My background is startup sales and building a couple of businesses to pay my way through college.
Yeah, I've had a podcast in the past interviewing founders in Africa, and then Nicole and I are building out this one to have a little bit more structure to it.
Nicole Dunn: Yeah, and great to meet you. I actually am from Africa, so that's maybe useful for you to know that what we're trying to do here is try and bridge the gap between entrepreneurs in African markets and then capital providers who, as you know, are largely international still today.
So yeah, Brian kind of represents one half of that world, and then I'm a co-founder of a FinTech based out of Cape Town and spent some time at Founders Factory Africa doing, I think, somewhat similar work to what you do at the ROOM in eight different African markets. So I will try and probe on more of the local context, but we're really keen to hear more about the real challenges and where they might be bias or misperceptions about the continent. So you'll hear us kind of maybe ask things that to you seem obvious, but we hope that through profiling these stories, we'll be able to catalyze more investment into funds and businesses that are in Africa.
Leah Nduati: Okay, cool. So yeah, so maybe I'll introduce myself as well. Originally Kenyan, I came to Ghana for work. My background is communication and advertising. So I've worked in communication for over 10 years, working with brands, building brands. And then I moved into trade facilitation when I saw that gap and there was not a lot of trade going on between the two countries.
That was about 2015. So I worked in trade facilitation for a while and actually what pushed me into acceleration was noticing that some of the startups that wanted to expand into new markets were actually not ready to expand into new markets. So then I joined GrowthAfrica, which was an accelerator that was based in Kenya and in four other countries, and I set up the accelerator here in Ghana.
So I ran GrowthAfrica for three years before I came to join the ROOM, primarily working with growth stage startups with over 50k revenues annually and doing some kind of business for over three years. Yeah, so that was at GrowthAfrica.
Then I've joined the accelerator at ALX Ventures. And here we support primarily tech startups. They’re not early stage, but they're also not close stage. So they're just somewhere in between, and we support them to scale, give them structure, access to talent and also tech support so that they can go into the markets.
And for ALX Ventures, it's across Africa so we support startups from across Africa. We have eight physical locations, and then the others are virtual, and we are headquartered in Mauritius. So Mauritius is our ninth country, but we don't have a hub there for learners.
Brian Kearney: That's interesting.
Leah Nduati: I have a wellness startup. It's called Yoga Experiences Africa. So I'm actually a yoga instructor. And so I'm building like a kind of a marketplace in Africa for where you can find yoga teachers anywhere in Africa where you land, and yoga experiences. So ultimately we want to turn Africa into a yoga destination just like Bali and India ‘cause we have everything.
Nicole Dunn: Amazing. Yeah, I agree. There's absolutely a place for that. Okay, cool.
Leah Nduati: Are you based in Cape Town?
Nicole Dunn: Yeah. I'm based in Cape Town and yeah, very grateful to have been to both Ghana and to Kenya, so two of my favorite places, actually. I think I could live in Kenya. I dunno about Ghana yet. I think I could visit there frequently, but I don't know if I could live there.
Leah Nduati: I could live in Cape Town. It's very nice. So now we have some background. You wanna take it from–
Nicole Dunn: For context–
Brian Kearney: Yeah. I have a question on the initial switch from marketing into trade facilitation. That is really interesting and not a super common pivot. Tell me a little bit more about that and how you got that started. Any challenges that were there starting that up or was it pretty smooth sailing?
Leah Nduati: Of course. So in doing communication and branding, I got contacted by the Ministry of Agriculture in Kenya. They wanted to do a trade show in Ghana. So with my branding business, we set up the trade show for them, organized like the stands for all the businesses that are coming, snd then what we realized is that the Ministry of Agriculture from Kenya came to meet the Ministry of Agriculture from Ghana to talk about trade.
So these are government officials, this is government to government, business is not involved. So really, if your government is having trade agreements, these are supposed to benefit the business people. So that's where I saw the gap because we had all these products from Kenya, from Ghana, but the people that were talking to each other were not business people. They're not entrepreneurs. They're government. So government just facilitate and then we business people take advantage. So that's when we saw that we needed to do another expo where we actually sensitize the business community and brought the business people to their form so they could actually do the connections and do the actual business and money can flow. So that's why it started.
Nicole Dunn: Super interesting. I mean there's this perception, I suppose, especially when it comes to business in Africa that no one market is big enough and to really scale, and you've obviously worked with a lot of entrepreneurs at the growth stage where they're thinking about things like market expansion.
There's this perception that you have to be in multiple markets to reach scale. I'm curious about your thoughts on that. Does that hold true for you? And is there enough right now to support businesses to scale into new markets?
Leah Nduati: Yeah, I think if you're in certain markets like Nigeria, obviously the market size can support your business without having to scale outside, but in some markets, for example, like Ghana, Ghana is a small market, and if you look at most of the francophone countries, they're small markets, but there's still value to be offered to consumers. So I believe as an investor, you should be looking at, for example, if you're investing in a startup, you should be looking at investing in them for the whole of Africa or for multiple African markets, not just one African market. And now it's because there's so many collaborations, there's so many buyouts, we're seeing stronger startups buying smaller startups. So it's very possible to expand easily by acquisition right now within the continent. I do believe you have to have an Africa-focused investor lens, not just one market.
Brian Kearney: Would you say that within those markets, there's sub markets that are easier to have some of those bilateral agreements between the countries? Or what does that look like?
Leah Nduati: You mean within the continent?
Brian Kearney: Correct.
Leah Nduati: Yeah. So for example, if you're a startup in some francophone countries, if you get one license, it operates for eight African countries in the francophone region because they use one currency and they speak one language. So one license, for example, if you're a FinTech, one license, eight markets, that's really easy to go about.
But if you're looking at maybe francophone to anglophone, that's usually a bit more difficult. So when you're talking about bilateral, yeah, English-speaking countries are–easier to partner with English-speaking countries, French-speaking to French-speaking. But that said, there's still a possibility, for example, we have a startup called Farmerline in Ghana, which is an ag-tech, and we supported them to expand into West Africa.
So now they're in agriculture, they're in Togo, and they're expanding, they're in Benin, and they're expanding to Burkina Faso. So it's just a matter of really looking at what partners you can get on the ground. And as long as the solution applies to most of our African problems, then it's easy to scale.
Nicole Dunn: It's super interesting. I mean, you've spent a bit of time, as you say, in trade facilitation between different countries. And you mentioned in that some of the barriers that are faced by African startups with different regulatory regimes or different standards so expanding into a new market has a whole lot of friction.
And one of the developments you mentioned was quite exciting is the African Continental Free Trade Agreement. Do you think that goes far enough or is there still work to do to encourage better collaboration between different African markets?
Leah Nduati: Yeah, so I still feel like there's always a divide between the diplomats, the policymakers, government, and business. So what I feel we still have a key role to play is connecting, for example, the business community or the startups to government, to policy makers and getting them on one platform and getting them to make decisions in one way. So for example, I mentioned FinTech, we've seen a lot of challenges.
For example, in Kenya, we saw cheaper cash struggling—paystack when they were struggling with licenses, but this shouldn't happen. Essentially, if we're a FinTech in Kenya, we should be able to also scale easily to Ghana, but this can only happen if the regulators are talking in one language across the countries and if the regulators are talking with the startups in one language across the different countries.
So right now there's still that divide and I feel like there's a space there that needs to be filled because one decision will be made, but we can see anyway that things are happening that will support that. For example, Nigeria, we have the Startup Act. In Ghana, we're also just about to launch the Startup Act.
The different countries, I guess, also Togo has a Startup Act. So I guess it's starting to happen, but unless we're all talking one language and we're moving in one direction and we understand that what we're doing is creating economic growth opportunities and creating jobs, then it's easy for us.
Brian Kearney: Yeah, that's interesting. I wonder what the correlation would be between that and like NAFTA in the U.S. with Canada and Mexico, where there's a large part of Canada that speaks French predominantly, and Mexico predominantly speaks Spanish, so the languages are separate, but the business is typically done in either English or Spanish, not as much in French, which is interesting. Do you think there's space to do that and not have something lost with having to switch to a specific language for some of those countries, whether it's French or English, what do you think that would look like?
Leah Nduati: Like I mentioned, francophone, right? If you meet anyone, most people from francophone countries, they can speak English and French. So I think we have to come to an understanding that we speak different languages and maybe prioritize, for example, anglophone countries. We could do a bit more in terms of being able to speak French because a lot of the French-speaking countries, they can speak English, and so they're able to really move around in francophone and anglophone.
If you meet an anglophone person, they'll go to Cote d'Ivoire three days, they'll be upset, they'll come back, they say they don’t want to go there again just because they couldn't speak the language. And it's deliberate on the French side, and you can see also in Kigali where they used to speak French alone, they also made sure that everybody can speak English.
So they're able to really bring business to the country and bring a lot of people on board in whatever they are doing and what investments they have to offer. I feel that it's happening, but there could be more in terms of the anglophone side really pushing themselves to be able to communicate with the French.
And maybe it's something from all the way from education, from primary school to high school, because I see that the francophone countries, that's what they've done. You are able to learn English from a young age, and so you're able to communicate. If you want to be successful in Africa, you should be able to speak English and French. And we have to be deliberate about that.
Nicole Dunn: Yeah, it's interesting because speaking the same language can mean many things when it comes to harmonization across countries. So you were starting to hear a little bit about regulation and it's often cited as a big barrier in Africa that regulation is opaque or regulation is lagging what FinTechs and startups generally need to be able to thrive, and I'd love to pick your brain. You mentioned some of the developments there. So startup acts in various countries across Africa, we've seen more and more governments starting to launch things like regulatory sandboxes for FinTech. Where do you think they're still falling short?
I mean, one of the better-known examples of a progressive government doing things that are at the same time contradictory is in Ghana, right? Where you've got a startup act, you have a central bank trialing central bank digital currencies, but at the same time, they imposed a tax on mobile money transactions, which seriously damaged for a time the adoption of that new payment method. So where is public sector getting it wrong?
Leah Nduati: I don't want to say public sector is getting it wrong because they're really trying. They're really trying. And I think for them, they just have to have a balance between enabling startups and also making money because they need to make money to run the government.
So I feel that it's not where they're getting it wrong, but where they could learn a bit more is on how they can enable more startups to grow, enable more business to happen. That way, if they're collecting a certain amount of tax, it's on mass rather than taxing a small bracket and making them feel a lot of pain.
So that's where I feel that it's usually a big problem. They need to focus on enabling, for example, Accra should not be the only hub. There should be a hub in Kumasi where a lot of entrepreneurial activities’ happening. There should be a hub in Takoradi. There should be a hub in the north, and entrepreneurial activity should be happening across board, and they should be able to track that.
So they are unable to track that. They're only able to track just a few entrepreneurs and a few businesses, and because they have their eyes on them, then they tax them, and then they keep increasing the taxes because they have a small pocket of entrepreneurs to tax, and then it becomes painful. And these entrepreneurs are usually the big job creators end up laying off people and it just becomes a vicious cycle.
So I feel like it's not where they're getting it wrong. It's where they need to improve on is increasing the tax bracket, not the tax bracket, increasing the tax pool who they tax, but also enabling those people to be able to succeed in business so they can collect their taxes.
Nicole Dunn: I think enabling such a good word, right? And I think where what's encouraging is some of the enablement around how to better engage with the financial system so things like regulatory stand boxes. Something I feel quite passionately about those expanding the view of what enablement looks like. So you've spoken about it there, you know, more progressive tax regimes that don't penalize success in the startup ecosystem, really incentivizing through things like tax concessions early on or for example, in South Africa, where I'm based, it's virtually impossible to give an employee ESOP or equity in a startup without it being taxed as income and that completely then dilutes the effectiveness of the incentive, right? So I really like your characterization of enablement that it's not just about passing the relevant regulations or creating space to engage with the government body, but actually thinking more broadly about what startups need to succeed and creating an environment that supports that.
Leah Nduati: Yeah, I totally agree with you. That's where the gap is. So I feel like everybody is trying now. I said we saw the president of Kenya going all the way with tech companies to the U.S. to invite investors on board. And so we can see that government is really trying to support the startups.
But at the same time, we can see some startups failing and making other startups look bad. Like in Ghana, we just had Dash that just closed after collecting about 89 million dollars in investment. So I feel they have to have a balance where they make sure that we're not looking bad. We're not defrauding people at the same time, we're able to scale as startups.
Brian Kearney: Yeah, that's interesting. And it is a difficult position because there's almost more of a light shown on startups in Africa. There's more of a barrier because in the U.S. companies raise 89 million dollars and go to zero all the time. You don't even hear about it. So that's one kind of unique difficulty, but what other unique difficulties in fundraising do you see?
Leah Nduati: Yeah, that's a really amazing question. So there's another unique difficulty that I see is, you know, in the U.S., a lot of their startups will have had the opportunity maybe to go to uni or go to an Ivy League or a good name university, but maybe most of the founders in Africa have not got in that kind of education or educational background, but they know the market. They know where they are playing. They understand the nuances and most times you'll see that maybe some investors will dismiss them because they don't have that kind of education, they don't have that kind of background.
That's a unique difficulty. Another unique difficulty is, and we've seen this as a debate in Kenya over the years, is more startups that have funded–maybe now it's starting to change, but before, you would need to have like a white co-founder to build that credibility. It's like your startup is not credible enough if you don't have a white face or something like that.
And so we saw a pattern where most of the funding was going towards a lot of Ivy League students who have come from the States and then set up their startups in Africa, but then there's a shift that is changing very slowly. We still have that bias or that difficulty still at the back of our minds so it's something that needs to be overcome.
But we also do understand that it's easier for me to give money to someone who looks like me, so it's something to work around. I would say, for example, a lot of investors, if they're putting money in VCs, those VCs should have some presence in Africa. At least have someone in Africa or spend some time in Africa so you understand how the markets work, so you're not very biased when it comes to selecting.
You can't pick the same startup in Africa as you pick a startup in the U.S. The nuances are different. The returns will be different. The opportunity is different and there's a way to look at it differently.
Nicole Dunn: It's so interesting. And as you say, it's been terrible to see the data on where capital flows in Africa and the imbalance, particularly in markets like Kenya of capital flowing into expat founders rather than local founders who really understand the market and are representative of the consumers in that market.
I've recently just been through a fundraise and even as a white person, I was shocked by the bias in general around Africa as a market and as an opportunity and the amount of time I had to spend just justifying the reason that our business existed because the gap in market education was just so big.
I mean, you've worked with a ton of startups. Have you seen that as well, where actually there's just an additional burden placed on founders to explain the market in countries where data isn't always as readily available?
Leah Nduati: Yeah, and that's the biggest challenge is data, you know, so actually we have one startup called Rwazi, which is really trying to work on making data available, but this is consumer data. So for people like FMCGs, so they have people on the ground, they call mappers and they have mappers in different countries. So you simply have an app, whatever you're consuming, you log it in, and this is data being collected that is passed on to the businesses or the FMCGs or the multinationals.
So I feel that there's a lot of opportunity there, and actually, that's, Brian, that's one of the challenges or difficulty is access to data. There's not enough data to justify the market size, to justify consumer demand. So I feel like there's also a gap there where startups could actually take advantage of creating a data pool, available data on each market, and how investors can come into that market.
But then having said that also, we're still a growing–most African countries are growing economies, right? From an investor perspective, you also have to be experimental, yeah? And when you're working with startups, for example, if you have an operating partner attached to the startup, just encourage the startups to be experimental and then learn from the data that comes out of that and learn from the response of customer response and market response.
So it's something also that can be built upon instead of like demanding for the data, which is not there. Can we find a way where we can run the business that in a way that we can collect this data and learn from this data?
Brian Kearney: Yeah, that's fascinating. How do you typically help founders bridge that gap between trying things and collecting that data, knowing that most of what you're trying is going to fail with what we were just talking about where there's like a higher barrier that if you do start to fail, there's going to be some of that, oh, well, I thought it was going to fail anyways and maybe I should not fully like double down and funnel my money into companies that are struggling.
Whereas again, in Silicon Valley, that's not the case. Like, if they start seeing a little bit of data, they're like, “Okay, well, just pivot, you'll figure it out.” How do you bridge that gap?
Leah Nduati: So the one thing we're trying to do is we're trying to create startups that are not really dependent on external funding. So we have this thing that we say we want to build unicorns–not unicorns. We want to build camels, not unicorns. So camels can withstand any kind of difficulty. So for example, we're seeing a lot of startups now really struggling because investment is drying up. We're in what's called a freeze or a winter, a funding winter.
So what we're trying to do with startups is before you go into investment, we try to get you to traction. And so we do a lot of low touch and low expense experiments for you to make sure that you're talking to the customers, you're getting feedback from the customers, they're validating your product, they're using your product.
So for us, it takes a bit of time before we tell them that, “It's okay. You can go to fundraise.” We need to validate their business. Otherwise, you're going to be a funding junkie. You're going to be dependent on funding and your business is not really sustainable and it's not really solving a problem because if you have to keep running your business based on external funding, it means you're not solving a real problem or a real challenge for Africa.
So one of the things we also look at for our startups is are you addressing a major challenge? And we have grand challenges in Africa like health care, agriculture, infrastructure. So are you addressing a grand challenge or are you also taking advantage of a grand opportunity? And those are the setups that we see that have an opportunity to scale.
But at the beginning, it's going to be difficult because we have to experiment, we have to validate, we have to get consumer feedback, customer feedback, and make sure that we get that product market fit without massaging the numbers or making it look good.
Nicole Dunn: It’s so interesting to hear the kind of work that you've been doing and it makes me think of a debate I was in about a year ago now about whether venture capital is working for Africa.
And there's a couple of schools of thought here. The one is it hasn't had a fair chance because venture capital's been applied in a very nascent ecosystem where there weren't businesses and people and organizations like yourselves who are able to play that angel investor accelerator role to really get businesses to a place where they are venture ready, and so it's unfair to judge venture capital based on its ability to grow and scale and meet the needs of businesses that perhaps weren't venture backable to begin with. And then there's maybe another school of thought to say, and the reason I'm curious to get your thought is you said it yourself, the opportunity is different, the returns are different that perhaps venture capital in the way that we know it is not appropriate for the kind of companies that Africa needs and that we need to localize the asset class and think more creatively about capital models to really be able to grow and scale businesses that are solving these very real problems.
Where do you land on that? What's the role of venture and does it need to localize to meet the needs of African startups?
Leah Nduati: Definitely, they need to localize. Venture capital needs to localize. That's why I said if you're a venture capital firm or you're a VC, you need to have some local skin in the game.
Either you have a team on the ground or even you can attach operating partners. And I feel that when it comes to kind of financing and the kind of financing they can do, I mean, we've looked at blending financing. We've looked at safes, and I feel like that's the best way. And instead of injecting like a big lump sum of money, maybe like 2 million dollars, you can invest slowly, and keep bridging and keep adding. So what you are doing is essentially giving like experimental capital to start with. And then if you validate, because I'm sure they all have some play around money. If you validate, then you can now inject more capital. And I feel like also when they're doing their due diligence, it's sometimes very harsh for young startups.
They're not gonna have everything in place. They're gonna have like their financials’ completely okay. Things like that. So it's something that maybe if you're coming on board as a VC, you need to understand that I need to be a partner to the startup. I need to help them to get where I need them to be.
I can put some injection funds to just experiment. If the experiment goes bust, it's okay, we'll not proceed. If it doesn't go bust, then we inject a larger sum of money, and then we continue the growth. So I feel like that's the approach right now. It's like a yes or no, you know, it's black and white at the moment. We're injecting or we're not injecting. And then the accelerators that can inject some funds, they take a big chunk of equity before the startup has even gain traction. And then when they keep growing, you see that they're so diluted, founders are so diluted, so they even lose motivation to keep scaling the business. They leave, they go get jobs. So I feel like there needs to be a balance.
We have to stop being very cannibalistic or very aggressive with the startups. We have to become their partners, support them to grow, experiment with that. They're solving a problem and then we continue. But at the end of the day, also, it's about impact as well as making back your money.
Brian Kearney: Yeah, that's so interesting. And I think it is an interesting debate on if venture works, but I think what is maybe even more interesting is if you look at, right now, what it looks like the return profiles are is one thing. But if you kind of extrapolate that 20, 30, 40 years down the road, it's very different because if you look at the demographics of the U.S., the EU, they're really bad like it's not in a good place.
And like you said, Africa is growing, the demographics there are better. And when you were talking about large problems, in business, you get paid for solving those large problems. That's how you make large returns. Do you think those large returns are possible in Africa on the scale of the venture we've seen in the U.S., the EU, Southeast Asia? Do you think it's similar potential returns?
Leah Nduati: I think so, but not in the same time. So when you're investing in Africa, you want to get your returns. Sometimes they want maybe five years, get your return back in five years or 10 years. But I feel like in Africa, it has to be like 15 years. So you have to be there for the long term.
Otherwise, it doesn't work. There's so many nuances, like we said, regulation. When you start scaling other issues come, other problems come. So until we refine all this to the point where it's easy to scale across Africa, first of all, so government and policy is the same. In Europe, it's easy, in North America it's easy, but in Africa, it's not easy.
So until we have that already, and until we understand that it takes a long time for consumers to also come to your product, understand your product, get addicted to your product. Consumers are very flaky so that's another thing. And it takes time to build trust with consumers like this. Sometimes they'll start engaging with you, but in the back of their mind, they know in five years, they will not be here.
So I'm also looking at my other options. So for you to build trust with the consumers, just like all the Facebook, Google, they've been there for a long time for them to get the returns they're getting. It takes a long time. So I would say if you're an investor, you're looking at the African market, you should look at 15 to 20 years to get that kind of return, to blow up the way you can blow up. I mean, we've seen Flutterwave and what they're doing. It takes time. And so that's what I would say. You can blow up the same way. You can get the returns that you want, but not in the short term.
Nicole Dunn: Yeah. I think what you're saying is so important. You've said a couple of things about the way venture needs to change, and I think the patience of capital is a really important component, but also what you said earlier about that iterative capital injection. And something it makes me reflect on, you mentioned earlier agriculture and farmer line. You know, a lot of the problems in Africa require business models that are not fully software solutions, right?
So in farming and agriculture, there's huge scope for Internet of Things and those kinds of technology businesses, but hardware is not yet ubiquitous. So in order to enable those kinds of solutions, you first need to build a business or get the hardware in the hands of all those farmers, which, to your point, expands the timeline for a return, but also means that you need fairly regular injections of capital in those early years.
I'm curious ‘cause you've been in the ecosystem for a while. Where do you think we are on that timeline? We've seen some foundational, I suppose, infrastructure be built by, you know, Flutterwave is a good example. What are the kinds of business models you think we're going to start to see over the next 10 to 15 years on the continent?
Leah Nduati: Actually, I'm glad you mentioned things like infrastructure so I just wanted to bring it back. When we look at startups, the ones that have high potential to scale are the ones that are tech-oriented. If we look at Africa, only a certain percentage is tech savvy, so it also comes with a lot of time doing behavioral change, a lot of time doing training before adoption, before you get to adoption, before you get to the user being addicted to your solution so that alone shows you the amount of time you need to do especially on behavioral change.
That's a lot. And also building credibility. And so in the future, what I'm seeing, I see a lot of, for example, also mPharma, you've seen mPharma, which is in MedTech. Now what they've done is a lot of acquisition for fast scale so I see that as a pattern that's going to happen. A lot of the larger startups or startups with a large pool of funding will be able to acquire smaller startups across the continent as a strategy for expansion, and then I also see a lot of edtech building up.
Education in Africa is changing significantly, like the way we deliver education, the way people want to accept education. Before it was very rudimentary. You're from South Africa, so you know things like metric and all those. They'll stop to matter.
So right now, for example at ALX, as part of African leadership group, we offer simple courses. You don't have to go four years for a degree. You can do one and a half years and get a really well-paying job. So I'm seeing a lot of that in terms of how you deliver education easily to give that person a skill that will shorten the time between getting that skill and getting a job or getting a rewarding, then let's say not job, even if you want to be an entrepreneur, a skill that will get you the income that will give you a sustainable life. So EdTech is going to change a lot. I see health tech changing. We're working with one startup now that's actually using VR sets to train, Saar Jones and Ed, what are they called? Medical students. So they've launched in Rwanda. They've just partnered with one of the universities there. So we're going to see a difference in how medical education is delivered. What else do I see a change in? Did I say health tech? Yeah, I said health tech and in health tech, this is where we capitalize on data.
So I feel like we're gonna get a lot in terms of data collection, startups that use data, snd we have some startups also that are using this data for AI models and machine learning. So that's also an angle that's going to go, a trajectory that's going to come up. I've seen a lot of crypto failing, so I don't know how that's going to go forward.
Yesterday we read about another–is it called Vibery or something–that has also shut down so I don't see–I still see banks and financial institutions being strong, but I'm seeing them being a bit more open so to allow for online transactions, digital transactions, cross border transactions, that's going to happen, especially with the AFCFT also coming on to board.
So it's going to be easy to transfer money. It's going to be easy to do business across Africa.
Brian Kearney: Yeah. Tell me more about what you've seen with crypto and blockchain recently, and what the conversation might have been about that 18 months ago, 24 months ago. What's the change looked like there?
Leah Nduati: Okay, I'm not very conversant with blockchain and crypto, so I'm not gonna give a lot, but I know that the market was very positive about that.
We had a lot of startups. I forget the names, but we had some key startups and even raising funding. I think there was one called Yellow Card in Nigeria so there was a lot of positivity. There was a lot of excitement for crypto, but then in the last two years, it's gone really down.
Everybody's, if you have money there, you're taking it out. We're trying to recover, and a lot of the shutdowns are not helping in confidence so we're going back to traditional banking or online banking, and online payments, which is sad because this was a good alternative for payments and for storing monetary value.
Yeah, I don't know if it's gonna come back. I feel like it's on a decline and it's gonna be a long time before we trust crypto again. That's my opinion from where I sit. I'm sure there are more people who are still excited about it.
Nicole Dunn: Yeah, it's one of those debates where there's a lot of skepticism and then equally these sort of evangelists who think it's going to solve the world's problems.
It seems like you can't have a middle, a new, you know, a sort of middle view on these things. Changing gears a bit. I mean, there's a perception, I suppose, when people think of building businesses in Africa, and as you rightly say, there's huge problems here. There's lack of access to your very basic services, food, health, education.
But at the same time, I think something I deeply believe is you can build world-class businesses in Africa that solve problems even in developed markets, right? There's a really great example of this in South Africa called data profit that helps to optimize manufacturing productivity through using artificial intelligence and Africa's played this sort of unspoken and unrecognized role in the AI revolution that we're going through at the moment.
You've started a business, which doesn't naturally fit into the bucket of the traditional African business, which is around building a yoga company and wanting to make Africa a yoga destination, which might be seen as some as sort of a luxury company. So I'm curious on your thoughts on this. What motivated you to start that company given kind of the context that you come from and a lot of the perceptions that you've seen around what an African business looks like?
Leah Nduati: Just doing yoga, expressing the benefits, and also traveling around Africa and trying to connect with yoga communities and finding it difficult.
I thought there should be an easier way for you to access yoga, that's one. And then there should also be an easier way for everybody to experience yoga and the benefits, and it's not only yoga, it's like yoga and wellness across Africa. As much as we're going very tech, we're also seeing a need for community and community building and so we feel that's also something that we want to work on.
So essentially, the platform is two ways, to enable anyone who wants to access yoga, to get to a yoga teacher, making sure that the yoga teacher is verified. It's easy to find them, and also you can curate your own experiences if you went to the teacher.
And then on the other side, a lot of yoga teachers in Africa do not make a sustainable income. So I was sitting with a teacher in Togo, and she was telling me that throughout her life, she's had to do something else, but also teach yoga. And then her last statement was like, “Oh, you can't do yoga alone and make money or live sustainably.”
That was essentially her statement. So personally, I want to debunk that through this platform and make sure that, you know, Africa can build their brands. They can make money by building that student communities and also by partnering, you know, I'm hoping down the line, we could partner with people like Hello Yoga, Lululemon, all these brands that are not looking at the African market, but we have a 313 million size middle class in Africa that they could target.
So these yoga teachers could be the vessel to bring the brands into this market. It's a big and ambitious idea and startup, and I remember speaking to someone at Founders Factory Africa and they were like, “Oh, this is not solving a problem at mass,” so it's not something exciting, and that was actually discouraging. But then we also applied for something called the Shark Tank of Wellness by the Global Wellness Institute. It's like one of the biggest institutions on wellness, and the Shark Tank of Wellness is like a competition where you bring your opportunity and then three of you are selected to go pitch to some Wellness Sharks.
So out of like over 300 startups, we've been selected as top three and we're actually going to the shark tank of wellness. So that feels like a good validation for our problem. And yeah, I feel like it's a need. It's going to be a need for a long time. People need community, people need to work on their wellness.
And if a lot of people are doing yoga or even focusing on wellness, we won't see a lot of conflict because everybody will be zen and happy. I'm just joking, but it's important. Yeah, it's a good tool. The other thing also is when I was doing the expo, the Kenya Trade Expo, when I was doing trade facilitation, so for me, Africa is very close to my heart and the things I look at are things that can actually bring peace. So for example, if Uganda is doing business with Ghana and Ghana is going to war, Uganda will have a stake. They'll have to say something because they're losing a big chunk of their income.
So I feel that if we're trading across Africa, we have an interest in each other and therefore we're able to bring peace because when you're making money, you don't want any conflict there. And the same thing with yoga, you know, if everyone is able to access a tool for coping and a tool for well-being then there's less chance of conflict, and there's more chance for peace. So I believe if we find tools to connect Africa, we have stake in each other's interests of survival, then there's less conflict, there's more peace. I don't know. I feel like I don't–
Brian Kearney: I like that. Yeah, that's awesome. And it also sounds like at first look, you wouldn't think that your background would be perfectly suited to this.
But then when you talk about, “Oh, well yeah, we'll also have partnerships with these companies.” It's like, oh, clearly that's pretty much exactly what you've been doing, except at the same time that you're helping these countries within Africa work together and have a stake in each other's interests, you would then also be having countries outside of Africa have a stake in Africa that's not just resource-driven, that is based on the people in the market, which is a much better partnership long term for everyone so that's really interesting. Is that something that's kind of developed and you've seen that's a potential, or is that something that you had that vision going into this?
Leah Nduati: For everything I do I just look at Africa as a whole continent. If you look at the United States, it's a continent. It's different countries brought together, but it's one country. And then we compare the American economy to the Ghana economy. Ghana is like one state in the whole of Africa. So in my mind, I always consider Africa as one big market, and it's–we're ready to spend.
We're growing our middle class, we aspire to better things. We're traveling across the world. For example, when we were doing the trade expo, we're looking at tourism. Every summer there's a whole chunk of Ghanaians that go to either the UK or to the U.S. and they're spending money there.
Today I was with one of my yoga teachers who's trying to teach me how to split, and she was wearing full Alo gear from Alo Yoga. So I was like, oh, do they ship it to you here? And she said, “No, we only buy it when we go to America.” So she'll go to America and buy a whole set of outfits from Alo Yoga. Why is it not easy to just bring that stuff here? So there's a market waiting. It's just that you need to be bold and you need to take it up. When we started the platform for the yoga teachers, they're like, they're so excited because they get to meet teachers from across the continent, they can do more things, they can partner.
So there's this opportunity, but we always look at one country at a time, which is, it's not a big opportunity if you look at it that way. So it's always been at the back of my mind to answer your question.
Nicole Dunn: Yeah. I think it's so interesting that reaction that you said you had, even from an investor based in Africa, that it was like this isn't a big problem.
And I think that's exactly part of the problem here in the ecosystem is you've got to be solving for starvation for it to be a viable business, right? But as you say, there's a growing middle class, people have more and more sophisticated needs and growing incomes and there is a much bigger opportunity than I think people really appreciate, and I think you've articulated that so well in the story you've told and in the business that you're building. Go ahead.
Leah Nduati: It's also selfishly like trying to show the startups that we can also do it. There's always this thing that those who can't teach, and those who can't do they teach, so for me, I want the startups to see that when I tell you to do it, I'm also doing it. So we're in this together. We're all founders and it's possible. It's possible to push the envelope and make an impact.
Nicole Dunn: I was just going to ask you about that. So it's actually the same reason I became an entrepreneur because I'd been on the venture side and, don't worry at all, you know, I'd been on the venture building side and I felt a degree of imposter syndrome that I'm giving out this advice.
So I'm trying to advise businesses on how to scale, but I haven't done it myself so do I really know what I'm talking about? And I'm really curious, you've gone on the same journey and it sounds like had some of the same thoughts. Is there anything that–or what has really surprised you about being on the operator side that maybe you didn't know or weren't as aware of being on more accelerator investor side of the table?
Leah Nduati: Well, I think my level of empathy has increased ‘cause you're trying to do so many things, so many thoughts in your mind, you have so many people to meet and talk to. So sometimes when we tell some founders like, okay, let's focus on this, and then they don't do it. Then you're like, well, this guy's doing what you're telling them or why they're not taking our advice. But then there's so many other things going on at the back of their mind, and so many people depending on you to make this work, so many people you need to talk to, so many things you need to validate so I feel like a bigger level of empathy for the founders.
If they miss a meeting, understand, you know, there's so many other things going on. We can reschedule, you have to be like a total hustler. Then you get sleepless nights because this thing is in your head. It's like a baby. It's crying. You have to wake up and feed it, so yeah, I feel like that's the main thing I've understood, the level of empathy. And you know, when I was doing the expo and all that it was still a start up, but it was different. It was a different kind of startup, and at that time, I didn't have the patience. I was thinking that this thing should grow faster. But now, after working with the startups, especially through COVID and now starting my own startup, I have a different mindset with my wellness startup.
It's I'm not in a hurry. I want to grow it slowly and sustainably, and I feel like I understand when the founders are doing that. We don't need to rush them. How do you feel, Nicole, being on the other side?
Nicole Dunn: Yeah, it's funny. I said the same thing, the exact same thing when people ask me, my empathy for the founder experience just massively increased and, you know, you can sit there as an investor and go, why didn't this metric move? And as a founder, I know now that I'm like there are 200 reasons that metric didn't move, which one would you like to know about? Yeah, that empathy and really understanding like how tough it is and how much you're trying to juggle and trying to balance focus, but not closing down opportunities.
It's the micro-decisions you're making every single day, the context switching, the resilience is just astounding. I went back to all the founders I worked with and said, “I have infinitely more respect for you than I had just a few months ago,” because it's really, really hard.
And for me, I think one of the things I've really had to learn, and it was actually Amandine, the CEO of Paystack, who said this to me, she was like, “The one thing you have to learn very quickly is how to disappoint people at a rate they can accept,” which for me, you know, I'd always been high performer, people pleaser, don't want to let anyone down, and now you're in a role where you always let people down because your team wants more from you than you can possibly give your investors want more from you than you can possibly give, your clients want more than you can give at that time, but you've got to say “We're building on it. We'll work on that feature,” and that's before you get into personal life where there's a lot of sacrifice that happens there, right?
So your family, your friends, your partner wants more from you than you can give. So that really stuck out to me, like learning that skill and coping as a skill is something, for me, I've really had to practice now being on the other side.
Leah Nduati: That's amazing. I love that. And you are doing fundraising. I haven't even started yet. I can imagine where you are. Brian, you had a question?
Brian Kearney: That was actually going to be my question. With the model you have where you want the slow kind of profitable growth is what it sounds like. What are you looking at for fundraising? Are you looking for smaller partners? Are you looking for maybe a bank? Are you looking for traditional VC? What does that look like?
Leah Nduati: So I'm more interested maybe an impact investor, but not now. So I want to give myself another year to, you know, we're still testing the market and getting validation.
We just put out our MVP. So for now, I just want to see how it pans out. Yeah, it's a big opportunity, but we'll possibly start fundraising at the maybe mid next year. We just want to make sure everything is set nicely, but we have set up a crowdfunding campaign just to get that experimental money and support my team that has been working with me for no fee.
So yeah, I'll send you the link so you guys can also contribute. Yeah, so we're just doing crowdfunding, and then we'll take it forward from there. Like Nicole said, it's a new market and so as much as you get some validation, you're still questioning a lot so I want to have all the answers like ticked. So there's some key five metrics that we keep checking and I want them to increase over time. And so we have a pattern that we can justify when we're talking to investors.
Brian Kearney: Yeah, that makes sense. That's awesome. And please do send that we'll add it to the show notes as well.
One kind of final question. We're getting close to the end of our time. Unfortunately, it's been a great conversation. What are you most excited about in the African startup ecosystem? What excites you the most about it?
Leah Nduati: The most exciting thing for me is the resilience. Like Nicole said, we started Accelerator in 2020, thought a lot of the startups are going to crash. Most of them are thriving, like almost 95 percent of them are thriving. At the same time now, what I'm excited about is a lot of founders realizing that they need to build sustainable businesses. So based on our learnings from this year and possibly next year, because I believe the winter is still going to be on for a while, in the next five years, we're going to be having really seriously sustainable businesses.
That's something that I'm really excited about. And most of them will be tech-driven or tech-enabled so that's also really exciting, yeah, and running across Africa, that's a given.
Brian Kearney: Yeah, that is exciting. That's awesome. Something that I still don't think has quite gotten through people's heads here in the States, but we're in the same place.
Yeah, the unprofitable growth startup is not quite as attractive now as it was two years ago. So that's interesting. Yeah. Well, I appreciate your time. It's been great. Hopefully, we'll be able to do this again a little bit down the road, particularly when you're starting to look at your next steps for fundraising. I'd love to dive into where you're at right then and the struggles you're going through and the good and bad and all of the above but–
Leah Nduati: Cool. You didn't tell me what you're excited about. I'm keen to hear from you and Nicole.
Brian Kearney: Yeah, no, that's great. I am the most excited about kind of two things, I would say. One, particularly, I'll use this podcast as my example, what I'm excited about here.
I am excited about teaching people a counter-narrative because all we hear here in the news are only the bad parts. The example I use is here in the States. I'm from Illinois so Chicago is our big city. You only hear about the bad parts of Chicago. If you hear about Chicago in the news, it's because it's the most dangerous place outside of Iraq is usually what people say.
And it's just not true. Like it's not true, but that's what you hear. So there's a similar thing in Africa where you only hear about the, to use startups as an example, you don't hear about the startup succeeding, you hear about the big dramatic failures, and I'm really excited about helping kind of counter that narrative.
And then on the individual side, what I'm most excited about as far as startups go is the insurance and agtech coming out of Africa is really cool and it's solving problems in a really unique way that is fascinating to me. So that's the industry I'm most excited about.
Leah Nduati: Nice. Yeah. We have one startup called Gump and they're doing insurance just for like simple tech devices in Africa. In the States, I think when you buy something you can buy with insurance, but in Africa, we don't have that. You buy your iPhone, but there's no insurance attached to it. So there's a, we have an amazing startup, like they've already raised like 600,000 dollars and they're raising two million dollars now. They're doing a good job. I’ll share that with you.
Brian Kearney: Yeah, that's cool. Please do.
Leah Nduati: Yeah. That's a good industry. Nicole, what are you excited about? I feel like I'm interviewing you now.
Nicole Dunn: No, it's good. We love this. It should be a two-way chat. I'm excited that more and more entrepreneurship's becoming an accepted profession where good talent is actually leaving secure, comfortable jobs in order to start businesses. I think that hasn't been the case, and you're starting to see this multiplier effect now. For me, I think we are in a phase where startups today are solving for infrastructure gaps so money movement, logistics, you know, I think there's some really interesting activity happening there.
I think the next wave is going to be how startups can solve for structural gaps in African economies. So one of the best examples I've learned about recently is a 3D printing startup that based on the fact that manufacturing capacity is severely constrained in African markets for a whole range of reasons, the traditional model of these big centralized manufacturing plants is not going to be effective really, but there's still a big opportunity to drive growth and prosperity through that sector.
And so what they've done is they've set up these decentralized 3D printing hubs essentially to enable decentralized manufacturing, and I think that's a really cool example of how new technologies and innovative thinkers can help to really overcome some of the structural limitations of the African markets that we've talked about a bit today.
Leah Nduati: Yeah. Amazing. I love that. Where's that startup? The 3D printing one? Where are they based?
I think it's called SeekMake. I think they were in North Africa.
Leah Nduati: Cool. I love that. Awesome. This was lovely. Thank you so much for having me on the call.
Brian Kearney: Yeah. Thank you for coming.
That's it for today. Do you want to learn more about investment opportunities in Africa? Go to nextfrontierpod.com for more episodes, new insights, and the latest trends in the African startup world.