Venture Capital Firms Will Play Key Roles In Africa's Economic Growth - Dr. Ola Brown

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Sunday, March 15, 2020 / 06.40AM / Ottoabasi Abasiekong for WebTV / Header Image Credit: WebTV

 

Venture Capital firms will be at the centre of the economic growth and transformation in Africa said, founder Green Tree Investment Company, Dr. Ola Brown.


Brown made the observation while participating in an online conversation on venture capital titled,  "Discourse on Venture Capital Financing In Africa" organized by Proshare Nigeria Limited as part of it's conversations on alternative capital financing. 


Leading a presentation on the "History and Emergence of Venture Capitals In Africa", Dr. Brown described VCs as major catalysts of enterprise development and economic shifts globally.


She made reference to the Igbo apprenticeship system "Imu-Ahia" which gained prominence in the Eastern region after the Civil War of 1967. Brown described it as one of the largest business incubators on the globe with a $4bn turnover.


Looking at developed countries like the United States of America, Brown singled out, SEQUOIA, a global Venture Capital firm that invested in companies like Apple, WhatsApp, Oracle, Linkedin, GitHub, YouTube, Instagram, Yahoo, Nvidia, Paypal amongst others.


Their investments have led to the companies controlling over $1.4trn in public market value equivalent to 22% of the American Nasdaq. The companies combined are valued at $3.3trn.

 

According to her the investments of SEQUOIA Capital in particular helped to build an era of innovation and technology that has repositioned America's economy and market.

 

From the traditional era of the dominance of companies like Exxon Mobil Oil & Gas Company and Walmart Group, tech companies like Apple and Google are dominating the capital market thanks to the investment of VCs like SEQUOIA.

 

She also cited Israel a nation of 7.1m people as a model of a start-up nation that has benefitted immensely from Venture Capital and Private Equity investments.

 

Through the massive venture funds that has come into Israel the middle-east country produces more start-up companies than large, peaceful, and stable nations like Japan, China, India, South Korea, Canada and the United Kingdom.

 

The Founder of Flying Doctors Investment Company believed Venture Capital funds will go a long way in transforming Africa's economic landscape, from a continent seeking aid to one creating wealth.


Giving an example of China, she quoted a World Bank report that stated that about 500m people were lifted out of extreme poverty between 1981 to 2012, with the poverty rate drop from 88.1% to 6.5%.


This was achieved through China's focus on making cheap hardware like clothes, shoes, household items and machines.


She stressed the need for Africa to give priority to making software which has immense prospects for revolutionizing the economy of the continent, citing India as an example of a nation that has experienced growth in industry with over $100bn  software export from the country.


"Everything we do in the next few decades will be defined by technology. Technology holds the potential to lift hundreds of millions of people out of poverty. Venture capital as an asset class, and fund managers with operational expertise/experience and deep relationships are the heroes of growth; Founders will be at the centre of this transformation" Brown said.


She tasked policy makers in Nigeria and Africa on the need to strengthen Startup Acts, broadband infrastructure, provide enabling policies like increased investments in education/skills and an enabling tax regime.


For the International Aid organizations and Non-Governmental Organizations she called for the concentration on the creation of wealth on the continent, as against focus on poverty alleviation.


The Discourse featured a conversation with entrepreneurs and investors on VC Financing in Africa with Mr Dotun Olowoporoku, Associate Investment Director, Novastar Ventures, Mr Eghosa Omoigui, Founder and Managing General Partner of EchoVC Partners and Mrs Genevieve Barnard Oni, Co-Founder, MDaas Global as discussants.


Some of the key takeaways from the panel session include;

  • The need for mission-driven entrepreneurs which is critical to enterprise development in Africa.
  • The need for compelling business cases and clear themes that can serve as the anchor of businesses which can attract VC funding to scale across the continent.
  • The reality that not all businesses are for Venture Capital-backing and it will take robust processes, strategies and a solid trajectory to woo VCs.
  • Africa needs to have an effective model on customer behavioural patterns, which will lead the direction for how VCs can invest in companies in Africa.
  • Africa has the opportunity to leapfrog and achieve development especially through critical investments in industries like Software, Media Technology, Fintech amongst others.
  • The Coronavirus will have wide implications on the investments of VCs in Africa, but remains a great opportunity to see more critical venture funds go to strategic businesses in the continent.
  • In the face of the twin effect of the Coronavirus global pandemic and the crash in international crude oil price, businesses must innovate and strategize to navigate the period.

 

Brown engaged Barnard Oni in a one-on-one conversation on MDaaS Global Healthcare company, and how VC investments helped to scale its operations.


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