Elite Founders and Invisible Markets: Lessons from Our Inaugural Eco Pilot Fund Journey in African Eco-Dynamism

Two years ago this November, in partnership with Shell Foundation and UKaid, we publicly launched the EchoVC Eco Pilot Fund I with a straightforward thesis: take institutional first check risk and back elite African founders at the earliest stages building Africa-focused climate and climate-adjacent solutions that lift incomes while cutting emissions, in service of smallholder farmers, transporters, and micro-entrepreneurs (ME).

We explicitly designed this pilot fund as an experiment to quickly but prudently unravel the knots in backing underrepresented founders in historically underfunded sectors. What we learned has reshaped how we think about early-stage climate investments in Africa.

Our Eco Pilot Fund I had two core objectives:

1. Write first institutional checks into elite African founder-led companies.

2. Debug how to employ early-stage flexible financing and support structures to finance underrepresented founders and underfunded sectors.

We also explored:

• Energy storage.

• Cooling innovations.

• Off-grid clean [electric/pressure] cooking applications and solutions.

• Smart energy systems/mini-grids.

• Renewables access and new applications.

• Waste.

• New approaches to urban mobility, including alt-powered two- and three-wheelers.

• Rethinking business models.

By deploying $2.75 million of pilot investments across 15* companies, we’ve confirmed that the climate tech opportunity in Africa is simultaneously larger and more nuanced than anyone imagined. Our blog post, "The Missing Middle: Why Africa’s Climate Operators Are Stuck Between Studios and Scale," serves as the lead-in to this one.

Eco Pilot Fund I represents more than just another climate-focused investment vehicle; it’s a thoughtfully designed, experience-formed strategic response to the unique challenges facing African climate entrepreneurs and a blueprint for how sophisticated investors can drive both returns and impact in underserved markets. The fund was designed to support thoughtful ‘experiments,’ each of which had a very low financial cost of failure but potentially uncapped upside.

This post distills observations, learnings, and recommendations from our journey, spanning neoenergy and energy access, food systems, waste, sustainable transportation, circular economy solutions, and the micro-SME backbone of African economies.

The Market Reality: A House of Mirrors

While headlines celebrate climate tech becoming Africa’s fastest-growing investment sector, capturing one-third of all startup funding by 2024, the reality beneath those numbers tells a more complex story. Yes, capital is flowing, but it’s concentrating in familiar patterns: late-stage deals (many still with early-stage risk profiles), technologies with questionable local proof points, and founder profiles that mirror traditional calcified venture capital preferences.

Courtesy of ‘A Playbook for Financing ClimateTech in Africa.’

This growth masks a troubling concentration problem. Just 10 companies captured more than 50% of total climate investments between 2015 and 2024. d.Light, SunKing and BBoxx/PEG raised not less than ~$1.3 billion in aggregate. Only ~147 climate tech ventures have raised any disclosed institutional funding.

Most tellingly, per the playbook, fewer than 10% of deals in the last decade fall in the $250K-$1M range, precisely the capital band where early pilots must become investable businesses and where risk-on funding is essential to make that leap.

The result? Potentially transformative innovations requiring thoughtful, market-tethered experimentation and companies led by women (or founders of African descent) remain systematically underfunded.

““There’s a tremendous amount of craftsmanship between a great idea and a great product… and it’s that process [of experimentation] that is the magic. It’s through the team—through a group of incredibly talented people—bumping up against each other, having arguments, having fights sometimes, making some noise, and working together... they polish each other and polish the ideas. And what comes out are these really beautiful stones.””

— Steve Jobs

What The Data Says (And Why The ‘Missing [Extended] Middle’ Persists):

Headline funding momentum conceals significant concentration risk and structural gaps. Four patterns seem to shape how founders and funders actually execute in real life:

• Concentration: A small set of narrative-driven product categories and companies capture most capital, while frontier, local founder and science-led deals lag.

• Stage mismatch: Sub-$1M checks are scarce; the $250K–$1M band, the bridge from pilots to commercialization, remains dangerously narrow.

• Instrument mismatch: Equity gets overused where outcome- or asset-backed or revenue-linked instruments would fit better; debt remains expensive or unavailable early on.

• Geographic and gender skew: Big-4 markets and male-led teams dominate; women-led and locally rooted [science] teams face longer paths to everything.

Courtesy of ‘A Playbook for Financing ClimateTech in Africa.’

The data also reveals a concerning fade rate: only about one-third of ventures that secure initial funding progress to a second round.

Courtesy of ‘A Playbook for Financing ClimateTech in Africa.’

This “missing [extended] middle” problem appears to hit hardest for:

• Science-based ventures requiring longer development and go-to-market cycles.

• Women-led and local founder ventures [that appear to be] facing systemic barriers.

• Hardware solutions needing working capital for inventory and invoicing delays.

The Four Gaps We Encountered:

Through our thesis-building and investment process, we identified four interconnected gaps that traditional VC approaches appear to consistently struggle to address:

• The Pipeline Gap: Founders (many first-timers or sole founders) navigate lengthy R&D cycles, murky product-market fit, and tangled policy hurdles. Women-led or locally rooted teams and science-based ventures face the steepest challenges, often missing patient capital or the [cross-border] technical+commercial blend that draws institutional capital.

• The Funding Gap: Early checks arrive as being too small, too rigid, or too late. Perceived risk scares off local investors, while international capital chases later-stage, proven models. This creates a classic "valley of death" between proof-of-concept and commercialization. We are still puzzled by stories of investors that spend 9-12 months doing diligence and then invest $50,000-100,000, if at all.

• The Gender Gap: Male-only teams capture 85% of funding volume, while women-only teams secure less than 1%. Yet data reveals that mixed-gender teams with scientific and business expertise will outperform single-gender, single-discipline alternatives in impact persistence, community reach and adoption and positive financial returns. Examples include Koolboks, M-KOPA, SunCulture, EcoPost, FiberText Green Paper, and Solar Sister.

• The Market Paradox Gap: Africa’s climate tech sector shows a unique trait that distinguishes it from other emerging markets: market-sensitive service innovation has outpaced infrastructure development. Mobile payment systems, ride-hailing platforms, cheaper-to-operate e-two-wheelers, and non-traditional asset financing models emerged before broadly held bank accounts and credit card schemes, adequate transport networks, distributed charging infrastructure, or deep and accessible lending pools existed. Much of this entrepreneurial innovation has empowered microentrepreneurs, crucial job creators in a landscape where private and public sector employment opportunities grow increasingly scarce.

Investors often hesitate, and often rightly so, to underwrite promising companies when they think invested funds will go toward market creation (as first to market infrequently results in first to crack it), but many promising markets are simply iceberg-like: mostly unseen, misunderstood, unmapped, and unserved, but ready for solution-focused operators. Business model innovation, e.g. the sachetization of consumption (bite-sized PAYG is now well understood) and distribution (not as well understood), is difficult to grok for those that are used to traditional product development, market pricing and adoption models as seen in more developed markets, but it can be the path to unearthing materially sized market opportunities.

Simply put, product-led growth (PLG) can be at par with, and may often trail, model-led growth (MLG).

An unspoken realization about the lack of [public goods] infrastructure (or the unfair imposition of its provision on the private sector) is that, by definition, it limits the size and quality of the companies that can be built.

This interconnectedness creates both opportunities and challenges.

Our ‘Ground Radar’ Observations:

Rarity of Elite Founders

The founder archetype we back, ambitious, grit-filled, high-integrity operators with deep customer insight, pastor-like magnetism, and sharp execution, is rare but decisive. Our hit rate jumps when we find teams with a hacker mentality, founder–market fit, and functional balance (science + commercial or commercial + domain expertise/networks).

Female Founder Gap

Our Eco Pilot I portfolio is approximately 50% female (co)founded. We’re aiming higher, but the top-of-funnel remains narrow. Disappointingly, we were seeing one in twenty in the pipeline for a while, even with open requests for startups and an open door approach to pitches. The ecosystem needs deliberate sourcing, coaching, and catalytic capital for women-led teams, especially in science-heavy verticals.

Capital Intensity & the Equity Trap

In energy, mobility, cold-chain, and agri-infra, working capital, assets, and loan books drive early needs. Funding these with equity alone proves inefficient and dilutive. Blended financing stacks will outperform and expand the potential for financial upside.

Ticket-Size Constraints

Pre-seed checks of $50k–$300k help companies start, but many opportunities need additional infusions of $300k–$500k at Seed and $750k–$1m at Seed+ to reach the consensus milestones that unlock institutional follow-on capital.

From our vantage points, we feel increasingly confident that smaller debt and equity vehicles are better equipped to underwrite very early-stage investments in this sector because of the mismatch of typical VC fund structures, but fund economics will require a rethink, possibly innovating around reasonable manager fees and fewer foot dragging processes while keeping vehicles nimble. Our sense is a not insubstantial number of fund vehicles are [sub optimally] designed for LP fit rather than market fit and the consequential fund size inflation has deleterious effects on properly weighted company pipelines and outcomes.

Investor Fatigue in Crowded Themes

Agri-tech, logistics, PAYG solar, and e-mobility have seen excitement-fueled ‘overexposure’ without consistent positive financial returns. Operators seeking investment must articulate ‘why us, why now?’ while demonstrating capital efficiency paired with significant momentum and market traction.

Furthermore, we believe that optimal investment structures and target return profiles of sustainability focused investments make for an awkward fit within generalist (Africa-focused) VC funds making opportunistic investments. Many climatech opportunities tend to be of the slow burn variety, and can take time to hit escape velocity, particularly when compared to say, fintech companies (even with the latter’s net 1-2% margin backdrop).

Sustainability focused investments should be made from standalone sector-focused vehicles with patient runways and investors. Such investments should properly be made from a vehicle for which sustainability is core to its thesis.

Seed-Stage Scarcity

At seed, only a few companies have been able to demonstrate directionally positive scalable unit economics without heavy subsidies. Late-seed/early Series A players exist (that are still willing to underwrite market risk), but we will remain selective and data-influenced at the seed stage. This means a) quantitative and qualitative evaluations of multi-disciplinary and mixed gender teams and product- and market-fit, b) market mapping, traction and adoption, c) unit economics, d) scalability indicators (and not necessarily proof points), forecasted real-world outcomes and impact and, e) patent and latent risk analysis. Priming the pre-seed pipeline is thus extremely important.

The Paradox of Optionality

Designing and deploying climatetech solutions often requires persistent local presence. Elite local founders can often maintain optionality (career and relocation) but the end customers that we all serve appear to have none. We have been quite distressed by how increasingly tough life is for the mass market population in Africa and recognize that increasing investing urgency paired with eliminating (or mitigating) founder and funding friction can accelerate the pace and quantum of impact.

Elite founders that know secrets about nonconsensus market opportunities and can design and deliver zero-cognitive-load products and solutions should always be supported and funded.

What Companies Actually Need:

• Access to ‘SKU capital’: Assets, inventory, lease/loan books, and working capital in local currency.

• Creative finance: Recoverable grants, revenue-based finance (RBF), asset-backed facilities, guarantees, and green bonds. Regarding initiatives, there’s good work being done here but products in market are still quite limited.

• Data & research: Streamlined diligence, sector benchmarks, and shared market intel to accelerate decisions.

• Capacity: Governance, financial ops, climate MRV, and shortened enterprise sales cycles, delivered as targeted technical assistance.

• Ecosystem: Mixed-sized local funds and credit sidecars; accelerators and incubators that understand financing instruments; corporate partnerships and policy navigation.

What We Learned: Five Key Insights

1. “Perfect” Companies Don’t Exist – It Takes Effort To Build Them
   The venture community suffers from “sector fatigue” in areas like agtech, logistics, PAYG solar, and e-mobility. Too many companies have been hyped with disappointing performance, creating impossibly high bars for new entrants. Early-stage founders now need to appear “perfect” to attract significant funding, a paradox that contradicts the well-known principle of ‘Don’t Let Perfect Be The Enemy Of Good.’
   
   Instead of waiting for perfect companies, we invested early and leaned heavily into operational support. We discovered that the right mix of capital and hands-on expertise at the pre-seed stage bridges critical gaps in team composition, product development, and go-to-market strategy.

2. Capital Structure Matters More Than Amount
   Traditional equity financing often mismatches the needs of climate hardware or hybrid companies. These businesses require patient capital for long development cycles, asset financing for physical deployment, and working capital for inventory management. Business model innovation should also be lauded. For example, hardware-as-a-service can scale sustainably (as M-Kopa has ably demonstrated).
   
   Our approach has focused on being strategic about risk, dependencies, financing instruments, sequencing, and timing. We started with first-check risk, helped secure grants, and created innovative hedging structures to attract lower-cost local currency revenue-based bank financing.

3. Women-Led Companies Need Different Capital Lenses
   Our portfolio is 47% women-led or mixed-gender management teams, significantly higher than industry averages. These ventures consistently demonstrate superior capital efficiency and stronger read-ahead adaptation to market challenges. Yet they face systematic barriers accessing traditional venture capital, requiring deliberate and different risk-on funding approaches.

4. Policy Environment Shapes Investment Opportunity
   Enabling policy proves as important as funding in determining venture success. Rwanda’s mandate for electric motorcycles, Kenya’s solar tax exemptions, 88% renewable power-sourced generation and upcoming E-Mobility Policy roll-out, Ethiopia’s ban on ICE (internal combustion engine) vehicle imports, and Nigeria’s EV and solar panel production partnerships created immediate market opportunities that transcended traditional investment risk analysis. Regulatory support matters as much as technical capability.

5. Local Context Drives Different Solutions
   The most successful companies we’ve seen didn’t transplant solutions from other markets. Instead, they mapped and developed innovations specifically adapted to African contexts. This meant understanding everything from mobile payment penetration, to informal transport networks, to pairing bite-size PAYG business models with on-demand access to pricey infrastructure, to seasonal agricultural cycles and climate risk, and why mislabeling smallholder farmers is a mistake.
   

   Companies that achieved product-market fit fastest had founders with deep local knowledge combined with international technical training/exposure. They understood both the problem context and accessible global solution frameworks.
   
   By way of illustration, neoenergy® is a gigantic opportunity. It is estimated that Africa has ~40% of global solar power potential yet accounts for ~1% of installed solar power capacity with nearly 600 million Africans still without electricity. As the World Bank put it starkly, 85% of the world’s population without electricity lives in sub-Saharan Africa. The implication of this is crystal clear. Waiting for public good infrastructure to be built, installed and delivered is unrealistic, leaving the burden and opportunity to brave entrepreneurs, their fellow travelers and support systems.
   
   It’s worth noting that financial innovation is happening at the later stages of companies. For example, D.Light finalized a $176 million securitization facility enabling it to serve six million households in East Africa whereby PAYG monthly receivables are securitized, offering an estimated 12% IRR to investors. This structure distributes risk among investors, sovereign entities and guarantors while aggregating and extending the benefits of group buy purchasing to drive positive economic and social impact. As of July 2025, the company has securitized $842 million of combined purchasing value. SunKing recently closed a $156 million securitization offering (8.5% yield) to serve one million households and has raised $450 million in aggregate securitized financings so far.

Finally, due diligence requires spending significant time understanding the how and why of local market dynamics rather than just comparing to international benchmarks or lazily relying on X for Y constructs. Another interesting exercise we work on with founders is unearthing who (or what [in]visible constituency) actively seeks to ensure that the founders not succeed when the outcome of their successful market-deployed solution is price deflation (so whittling away unearned arbitrage) or creating positive optionality for the edge consumer, SHF or MSME. A historical example is neoenergy and diesel suppliers in Nigeria (IYKYK). Understanding this dynamic can help influence the design of GTM strategies and (thoughtfully engineered) defensive partnership networks and pricing.

What Has Worked For Us (So Far)

• Multi-SKU financing beats single-instrument investing: pair equity for software and team opex with debt-like capital for assets and working capital, plus grants for derisking market segments.

• Coordinated BD intros accelerate time-to-revenue more than larger equity checks alone.

• Using grants to close market risk gaps that could stall otherwise fundable companies.

Our Approach: Elite Founders, Invisible Markets, Eco-Dynamism

Identifying the Sweet Spot

Our thesis centers on a critical insight: Africa’s [climate tech] landscape is dominated by “invisible markets,” sectors with enormous potential that traditional VCs overlook due to perceived complexity or capital intensity. Recognizing this requires a sophisticated understanding of Africa’s interconnected challenges.

The Elite Founder Thesis

What we believe our portfolio highlights is an emphasis on founder quality over sector trends. Our go-forward investment criteria (which frames our founder archetype) prioritize:

• Founder background, intellectual curiosity and genuine passion for the climate space.

• Execution capability across customer acquisition, technology, and operations.

• Talent acquisition and team-building skills.

• Adaptability and flexibility, iterative vision, observation-based tuning skills, persistent focus on the problem stack, and reflexivity.

• Investment readiness, coachability and storytelling skills.

• Integrity.

• Ambition with global perspective, broad-based impact, and grit.

• Inclusive approach to team diversity, ultra sensitivity to customer needs, and deep empathy.

Our standing order is to back elite founders focused on serving non-consensus invisible markets while building for scalability.

The founders and teams that selected us to back* them in Eco Pilot Fund I are as follows:

* Includes prior grant recipients

Impact Indicators Tracked:

Eco Pilot Fund I’s impact indicators include the following:

• Number of MSMEs supported or lifted, and number of customers served

  • Measured in collective ‘units,’ we forecast 310,000 by ’27 and 880,000 by ’32

• Number of MSMEs founded/owned/led by women (and women-as-end-users)

• Aggregate amount of capital disbursed to MSMEs (including equity, debt and grants)

• New jobs created and revenues generated (direct/indirect economic generating units [EGUs])

• Beneficiary span (e.g. MSMEs/SHFs/Low-income households)

• Additionality and amount of leverage

• GHG emissions reduced or avoided.

Ten-year target outcomes (Platform):

• Five million EGUs

• Three Million Households (reach and income lift)

• Fifty+ EchoVC Eco companies backed

• Five Million SHFs and MEs supported

• Five Hundred Thousand+ MT CO2e in GHG savings/reductions

The Road Ahead: Scaling What Works

Traditional VC models seek "high scalability and asset-light capital efficient models" that don't align with many climate tech solutions. A key insight in climatetech investing, where many opportunities are asset-heavy, is recognizing the importance of separating technology and operational execution underwriting from physical assets in the financing structure.

Perfect is the enemy of possible. Invisible markets are the frontier. Elite founders are the key.

Our market focused solution is to create a new platform, EchoVC Eco, that offers multiple funding "SKUs" available as risk- and stage-metered API-style calls:

• Equity for scalable technology, IP creation, and execution-driven components.

• Debt/asset financing for physical assets and infrastructure.

• Revenue-based financing for cash-generating assets and inventory.

• Catalytic working capital pooling to eliminate process delays.

This approach keeps venture capital focused on fast-paced high-growth potential while ensuring adequate funding for capital-intensive components. We've also observed that traditional debt works best when business model and management team maturity exist. Early-stage companies with high-growth potential but lacking this maturity deserve access to nimble debt-lite financing products.

We have the highest conviction that a cohort of companies, startups and high-growth SMEs alike, will hit escape velocity through a combination of pre-seed/seed financing, grants, and debt-like instruments. In other words, they'll likely never need later-stage VC or PE-lite investors.

Fund Structure Evolution

Based on our Eco Pilot learnings, we plan to launch our EchoVC Eco Platform that will offer multiple specialized vehicles rather than one large generalist fund:

• EchoVC Eco Pilot Fund II/III/IV/V ($3M): Direct replication of our successful pilot model, targeting 15 pre-seed investments and re-upping every 24 months.

• EchoVC Eco Seed Fund ($30M): Seed-stage funding for new or existing portfolio companies and similar ventures preparing for Series A readiness. Maintaining fund size discipline is critical.

• EchoVC EcoCatalytic: Blended finance vehicles offering small footprint debt and working capital, foundation grants, directed government guarantees, and institutional co-investment. TAFs will be invested in growing/developing portco team skillsets and cross-pollinating knowledge.

EchoVC will continue investing in and supporting Africa-focused pre-seed, seed and seed+ Smart Planet startups and high growth MSMEs that focus on:

• Agriculture

• Sustainable mobility

• Climate resiliency, adaptation, and mitigation

• Renewable energy access

• Regenerative/circular economy

• Empowering MSMEs

Fellow Traveler Strategy and Recommendations

We firmly believe eco investments require a more complex style of ecosystem coordination that’s impossible for any single fund or platform to provide. Our recommendations, some adoptive, to the various constituencies in the ecosystem are as follows:

For Venture, SME and PE-lite Investors:

• Write bigger, earlier ‘footing’ checks where the launchpad is currently weakest: $300k–$750k at Seed; $750k–$1 million at Seed+; $1-3 million at Series A-1.

• Structure for fit: Use asset-backed facilities and RBF for hardware-heavy models; reserve equity for software and team plays. Securitization works.

• Blend capital deliberately: Match currency and tenor to use cases; seek guarantees and first-loss protection to crowd in debt providers. Eliminate complexity.

• Underwrite founders, not trends: Insist on disciplined unit economics and clear ‘why now’ narratives in crowded themes but support thoughtful experimentation.

• Layer capital creatively: Combine and sequence grants, equity, debt, and alternative instruments to match each capital type to specific business needs. Use equity for technology development, debt for asset deployment, and grants for regulatory compliance and market risk testing.

For DFIs, Donors, and Foundations:

• Stand up guarantee and insurance layers that unlock local-currency asset finance as early as Seed/Seed+ stages. Current approaches to blended finance products are too process-heavy and unnecessarily complex.

• Fund nimble grants for pilots, MRV (Measurement, Reporting and Verification), and regulatory approvals while keeping process cycles under 90 days.

• Back women-led and science-led pipelines with targeted facilities and venture-building support. Speed up processes for fund commitments.

• Support local manufacturing and assembly through tax and procurement incentives tied to quality and safety standards.

• Build back-office infrastructure: Fund shared services (legal, compliance, technical assistance (TAF)) that reduce and spread costs across multiple ventures simultaneously.

For Corporates and Offtakers:

• Co-design pilot programs with purchase commitments or structured offtake options built in.

• Enable data sharing and interoperable standards to speed up integrations.

• Offer vendor financing or receivables programs to critical suppliers in cold-chain, mobility, and distributed energy.

• Create anchor demand: Government procurement access, corporate pilot programs, and off-take agreements provide the revenue certainty that unlocks private investment.

For Policymakers and Regulators:

• Reduce landed costs on climate-enabling hardware through VAT relief and duty exemptions for batteries, EV [CKD] components, and solar equipment.

• Enable lightweight licensing for small-scale energy and storage while standardizing carbon and impact MRV.

• Seed national green credit lines through development banks with risk cushions for early-stage ventures.

• Champion enabling policy: Create regulatory frameworks, tax incentives, and import policies that make climate solutions commercially viable.

• Develop local capital markets: Help domestic pension funds, insurance companies, and banks build climate investment capabilities to reduce dependence on international capital.

Conclusion: Building the Future We Need

The climate tech opportunity in Africa is real, large, and accelerating. But capturing it requires moving beyond traditional venture capital approaches toward more nuanced, locally-adapted investment models that work.

Our Eco Pilot Fund I in partnership with Shell Foundation represents more than an investment vehicle; it’s proving how sophisticated capital can address market failures while generating strong returns. By focusing on elite founders in invisible markets, using flexible financing structures, and setting explicit inclusion goals, we’ve created a template for climate tech investing across Africa.

Backing underrepresented founders in underfunded sectors in Africa isn’t just strategically important, it’s economically smart and materially impactful. Women-led, science-based, and locally rooted solutions can deliver superior climate impact and competitive financial returns when they receive appropriate capital and other company-building support.

The broader African climate tech ecosystem shows tremendous promise and accelerating growth. However, realizing this potential requires investors willing to innovate beyond traditional VC models, entrepreneurs who can navigate complex funding landscapes, and ecosystem enablers who can address structural barriers.

Climate investments in Africa can deliver asymmetric returns because the perception of risk from the sidelines is materially higher than actual risk when capital and thoughtfully designed company building are structured, paired and implemented correctly.

Voluntary carbon markets (VCMs), for example, are poised to become a ‘game-changing financing mechanism’ for African startups in cold chain, clean cooking, e-mobility, and waste management. With projected market values reaching $35 billion by 2030 and Africa positioned to capture anywhere between $6-30 billion annually (while supporting as many as thirty million jobs), these markets offer unprecedented opportunities for scaling climate solutions while generating substantial revenue streams for innovative African companies.

Opportunities for liquidity should organically arise. We anticipate that most exits will be generated by strategic acquisitions like Ignite Power’s acquisition of Engie Energy Access and consolidation plays like SteamaCo and Shyft Power Solutions or BioLite and Baobab+. PE-funded roll-ups always sound easier than they actually are in practice but there will likely be some attempts to do so as those present opportunities to deploy the eight- and nine-figure checks those funds need. Global players in energy (e.g. Shell, BP, TotalEnergies, Trafigura, EDF and Vitol) and financial services (e.g. Sumitomo) will also play a role in making acquisitions that fit existing strategic business units. The open question is if Chinese companies operating in Africa will buy-and-build or build. So far, they appear to lean towards building and executing either solo or in partnership with fellow geo travelers.

The path forward demands expanding both the volume and sophistication of climate investment. We need more capital, yes, but also better tuned capital. The market requires more diverse funding instruments matched to business models, investment timelines aligned with development cycles, and ecosystem support that addresses non-financial barriers alongside financial ones.

As our experience demonstrates, success in African climate tech requires understanding that these ventures aren’t just software or software-lite companies with an environmental angle. Instead, they’re complex enterprises requiring patient capital, operational expertise, and systematic approaches to scaling impact alongside returns. It is also clear that coupling impact with positive financial returns is nonzero sum.

We’re not just building a portfolio of elite founders leading incredible teams to drive long game change. In addition, we’re helping construct the financial infrastructure needed for Africa’s climate transition. The early results prove this approach works. Now it’s time to scale it.

The future belongs to those who can see and serve invisible markets and back the elite founders building solutions for and within them.

Africa is essential, not optional.

Our soon-to-be-launched Eco Platform shows the way forward. The time to act is now!

We invite fellow travelers—LPs, DFIs, foundations, family offices, fund managers and angels—to co-create the financial architecture for Africa’s climate transition with us.

Join us.

About EchoVC

EchoVC is a pioneering early-stage venture capital firm dedicated to empowering underrepresented founders and catalyzing innovation in underserved markets. We deploy sector-focused investment vehicles and leverage Observational VC© alongside deep local insights to strategically back transformative teams, technologies, and scalable solutions across high-impact industries in emerging economies. Our mission drives inclusive GDP growth by supporting ambitious founders building businesses that redefine the future of inclusive global entrepreneurship.

About Shell Foundation

For 25 years, Shell Foundation an independent charity registered in England and Wales, has empowered underserved customers in Africa and Asia to raise their incomes while lowering emission through clean technology solutions. From supporting early-stage innovation to co-designing partnerships with leading organisations and investors to de-risk capital, the Foundation creates the conditions for resilient prosperity among three core groups of people: smallholder farmers, transporters, and micro-entrepreneurs. Find more at https://shellfoundation.org

About Foreign, Commonwealth & Development Office (FCDO)

The Foreign, Commonwealth & Development Office (FCDO) is the United Kingdom’s government department responsible for promoting British interests overseas. It leads the UK’s diplomatic, development, and consular work around the world. Shell Foundation has been proud to partner with the FCDO since 2011. The partnership currently supports two jointly funded programmes under the FCDO’s Research and Evidence Directorate: Transforming Energy Access (TEA) and Catalysing Agriculture by Scaling Energy Ecosystems (CASEE). Both programmes are part of the Ayrton Fund, a UK Government commitment to invest up to £1 billion in Research and Development for clean energy technologies and business models in developing countries.

The Missing Middle: Why Africa’s Climate Operators Are Stuck Between Studios and Scale

A semi-deep-ish dive into the funding gaps, gender disparities, and strategic opportunities shaping parts of Africa's climate technology landscape.

We were honored to have contributed to Build. Commercialise. Grow: A Playbook For Financing Climatech Ventures in Africa. The rest of this post will capture and adopt a few takeaways from the playbook and blend in some of our observations which we articulated when we announced the launch of our Eco Pilot Fund I in November 2023.

 The Promise and the Problem

Africa's climate technology sector is having a moment. With one-third of all venture funding in 2024 flowing to climate solutions, the continent looks to position itself as a global leader in climate innovation. From Kenya's geothermal-powered carbon sequestration to Rwanda's mandatory e-motorcycle transition, African entrepreneurs are building solutions that address both local challenges and global climate goals.

But beneath the headline numbers lies a more complex reality. While the sector has raised over $4.3 billion since 2015, just 147 climate ventures have secured funding—and just 10 companies captured more than half of that capital. For most founders, particularly women and science-based innovators, the path from garage, lab bench or studio to commercial scale remains winding and frustratingly unclear.

Three Journeys, Three Funding Realities

Understanding Africa's climate funding landscape requires recognizing that different types of ventures follow fundamentally different capital journeys. Based on extensive research across the ecosystem, three distinct archetypes emerge (against the backdrop of technical risk, market risk, people/execution risk andfunding risk):

Software Ventures: The Fast Track

Asset-light climate solutions—carbon accounting platforms, agricultural data services, climate risk analytics—can scale rapidly on traditional equity funding. Companies like Kenya’s Gro Holdings (RIP💔) which raised ~$135m and built the world’s most advanced AI-native ag data and climate risk platform before shutting down after inexplicably separating from its founder and Kenya's Amini, which raised $2 million in pre-seed funding (and an additional $4m in seed funding) for climate data solutions, illustrate how software ventures can move relatively quickly through the funding continuum.

Funding Recipe: SAFEs and convertibles notes ($100K-$500K) → Priced seed rounds ($1M-$3M) → Series A with revenue-based components ($3M-$10M).

Hardware Ventures: The Asset Puzzle

Pay-as-you-go solar systems, battery-swap networks, waste disposal, and cold-chain solutions require a more complex capital stack. Unlike software, these businesses contain two distinct value drivers: the technology (which theoretically should attract equity) and the physical assets (which optimize better with[collateralized or venture] debt or working capital financing).

Uganda's Afresco, which raised $1.5 million in 2023 for solar-powered cold storage, demonstrates this hybrid approach, using milestone-based convertible notes for technology development while securing asset financing for equipment deployment.

Funding Recipe: Redeemable preference shares ($250K-$1M) → Blended equity and asset financing ($1M-$3M) → Structured growth capital with mezzanine debt ($5M-$15M).

Science-Based Ventures: The Patient Capital Challenge

Deep-tech innovations in areas like direct air capture, alternative proteins, and bio-materials face the longest development cycles and highest technical risk. Kenya's Octavia Carbon, which raised $5 million in seed funding for direct air capture technology, exemplifies how these ventures need flexible, milestone-linked capital until pilot data de-risks the technology.

Funding Recipe: [Convertible] grants ($500K-$1.5M) → Redeemable preference shares with carbon credit options ($2M-$5M) → Blended Series A with strategic equity ($10M-$30M).

The Gender Gap: More Than Just Numbers

The funding disparity between male and female founders in Africa's climate sector tells a story that goes beyond simple bias. Women-only founding teams capture less than 1% of total funding volume, but the reasons reveal deeper structural challenges:

The Science-Gender Intersection: Women founders are disproportionately active in science-based ventures—the most underfunded archetype. They're building solutions in blue technologies, circular economy, and nature-based solutions, sectors that collectively account for less than 5% of total climate funding.

The Skills Gap: Unlike their male counterparts, women-led teams are less likely to combine scientific expertise with business acumen. They're more likely to have pure science or technical backgrounds without the commercial leadership that investors prefer.

The Instrument Mismatch: Women founders are more likely to receive grants and awards rather than equity—instruments that often lack the signaling power and network effects needed to attract follow-on investment.

The Solution: Rather than trying to force women-led science ventures into traditional VC molds, the ecosystem needs financial instruments designed for their reality—patient capital that can support longer R&D cycles while building commercial capabilities.

The Missing Middle: A $250K-$1M Problem

The Yawning Chasm: No Catalysts for Thoughtful ‘Experiments’

Perhaps the most critical gap in Africa's climate funding landscape sits between $250,000 and $1 million—the exact range where most ventures need capital to transition from proof-of-concept to commercial readiness. Less than 10% of all climate deals fall in this band, creating a bottleneck that prevents promising innovations from reaching scale. With so few investments in this band, it means capital is concentrating on the ‘consensus’ opportunities, framed by funders (and often dictated by their funders) that are often disinterested in taking the necessary risks required to build a thriving and multi-layered ecosystem.

This gap is particularly acute because:

Angels, studios and accelerators typically write smaller checks ($5K-$100K).

Traditional VCs prefer larger, later-stage rounds ($1M+). Regretfully, the scope and depth of VC risk aversion at this stage means that founders have to contort in unattractive ways to showcase too-early proofs that will attract funding. These ‘proofs’ can limit the upside of the companies. Demanding profitability in the presence of non-scale often doesn’t scale.

The bottom line is that currently available financing instruments don't match the risk profiles of the recipients. Startups and SMEs are often too early for traditional debt or too risky for most equity investors. Concurrently, financiers are too process-heavy, or more importantly, not nimble enough.

The Rwanda Model: Policy as Catalyst

Rwanda's approach to e-mobility offers a blueprint for how policy can accelerate climate venture funding. By mandating that all public transport motorcycles be electric by 2025, the government created a captive market that transformed investor perception of risk.

The results speak for themselves: companies like Ampersand, which was founded in 2016 and operates in Rwanda, have attracted significant international funding (well over $21.5 million (and possibly up to $35.7 million) in equity, debt and DIV) because investors can underwrite predictable demand rather than speculating on market adoption.

Key Policy Levers:

Mandates that create guaranteed demand.

Tax exemptions that improve unit economics.

Fast-track approvals that reduce time-to-market.

Import duty waivers that lower capital requirements.

Targeted central bank interventions.

Beyond Blended Finance: The Enabler Ecosystem

While much attention focuses on blended finance as a solution to climate funding gaps, the most successful ventures require a more comprehensive support ecosystem:

Donors and Foundations: Fund expensive validation studies, carbon certification processes, and pilot infrastructure that private investors won't support.

Development Finance Institutions: Provide first-loss guarantees that unlock commercial lending and anchor LP commitments that help new climate funds launch.

Corporates: Offer the most valuable non-cash support—launch customers, pilot partnerships, and procurement agreements that validate commercial viability.

Government: Create enabling conditions through policy advocacy, regulatory sandboxes, and public procurement programs.

The EchoVC Insight: Why ‘Traditional VC’ Doesn't Work

Our deployment experience with Eco Pilot Fund I has clearly illuminated why traditional venture capital approaches often fall short in climate sectors. As we noted in our fund announcement materials in November 2023: "Regular Africa VCs are not a good match for funding as they seek high scalability and asset-light capital efficient models."

Twenty one months later, we have the highest conviction that that remains true.

We have identified specific challenges:

Investor Fatigue: "Investors are getting 'fatigued' with certain sectors such as agritech, logistics, and e-mobility" due to previous disappointments.

Working Capital Mismatch: Often, we see companies that have to wait 60-90 days post delivery to be paid on invoices. Since it is highly inefficient to use equity funding for these capital uses, these companies need to raise debt or grants.

Scale Requirements: Banks avoid risk mismatches and need larger loan sizes than typically appropriatefor seed-stage companies.

Label Distinction: We see more high-growth SMEs and fewer startups in the conventional sense.

Our pioneering solution has been to innovate by creating EchoVC Eco as a platform, in contra to a fund, with access to multiple funding "SKUs" that can finance companies more efficiently, and stage-appropriately, than traditional single-instrument approaches.

We will be announcing our Eco Pilot Fund I portfolio in the next month and will share a bit more about our thinking, learnings and how we plan to contribute to solving the ‘missing middle’ gap whilecontinuing to offer first institutional checks.

The Mobility Sector Deep-ish Dive: What Works and What Doesn't

Africa's mobility sector offers the clearest view of how different funding approaches play out in practice:

Currently Fundable:

Asset Financing with proven unit economics (Moove's $750M valuation partially proves the model and M-Kopa is doing interesting things as well). An understated benefit of this is driving microentrepreneur employment. We have been pleasantly surprised by the not-insignificant opex reduction enjoyed by E2W and E3W operators switching from fossil fuels.

Electric 2&3-wheelers with battery-swapping networks.

Commercial fleet electrification with government partnerships (e.g. BasiGo's electric buses in Kenya).

B2B logistics platforms digitizing truck logistics (funder fatigue exists here but there are some interesting players like Kenya’s Lori Systems that continue to validate the opportunity).

‘Informal’ fleet managers like Nigeria’s Shuttlers handling increasingly massive passenger volumes.

Too Risky Currently:

Consumer four-wheeler EVs due to high costs and limited charging infrastructure:

Obtaining local capital is quite expensive and the competitive dynamics will pit startups against unbelievably well-funded competitors from Asia. The local consumption dip in China may or may not provide a limited window of opportunity for local African startups to serve the market. We have seen in the past how the policy changes there have ‘directed’ startups to focus on their local markets and put a pause on expansionary ambitions.

Heavy long distance commercial EVs requiring extensive charging infrastructure:

It’s worth noting that Dangote Industries has committed to CNG-powered trucking infrastructure to address friction-free distribution of Dangote Refinery products. While we are confident that pencils were sharpened in the TCO analysis, it’s unclear (for now) where the refueling infrastructure will be underwritten and by whom.

Investment Thesis: The Next Decade

Based on our analysis of funding patterns, policy trends, and market dynamics, we believe several key themes will define private sector funding of sustainable mobility solutions and infrastructure in Africa over the next decade: 

2025-2030: The Formalization Phase

Policy-driven electrification: Rwanda's e-motorcycle mandate becomes the template.

Asset financing maturation: $3.5-8.9 billion in E2W financing by 2030.

Infrastructure buildout: Urban charging networks reach critical mass. Peri-urban and rural deployments will lag.

Local manufacturing: Transition from assembly to component production.

2030-2035: The Scale Phase

Grid integration: Smart charging with renewable energy becomes standard.

Transport-as-a-Service: Integration of formal and informal transport.

Battery-as-a-Service: Interoperable swapping networks create recurring revenue.

Rural connectivity: Last-mile logistics using E2Ws and E3Ws.

Investment Priorities:

Electric commercial fleets: Bus rapid transit expansion to 20+ urban metros.

Integrated logistics platforms: Regional consolidation across Africa corridors.

Green infrastructure bonds: Carbon credit financing for charging station networks.

Science-based innovations: Patient capital for breakthrough technologies

Our view is that Afrexim Bank should be a major source of capital and conviction.

Practical Recommendations: The Four-Step Framework

For investors looking to deploy capital more effectively in Africa's climate sector, a systematic approach may help navigate the complexity:

1. Locate: Map the Funding Gaps

Identify which stage of the Build → Commercialize → Grow continuum being targeted.

Assess local capital market depth and regulatory environment.

Map existing funding providers and their typical instruments.

2. Position: Define Your Thesis

Choose your archetype focus: software, hardware, or science-based.

Determine your risk tolerance and return expectations.

Align your fund structure with the capital intensity of your targets.

3. Apply: Match Instruments to Risk

Early stage: Convertible grants, redeemable preference shares.

Commercialization: Revenue-based financing, asset financing, SAFEs.

Growth: Preferred equity, venture debt, mezzanine structures.

4. Enable: Leverage the Ecosystem

Partner with DFIs for guarantees and co-investment.

Engage corporates for pilot partnerships and offtake agreements.

Work with donors for validation studies and impact certification.

The Path Forward: Five Strategic Principles

Separate Technology from Assets: Fund IP and software with equity, physical assets with debt and leasing structures

Back Balanced Teams: Mixed scientific and commercial expertise outperforms single-discipline teams.

Keep Cap Tables Clean: Avoid complex SAFE stacks and disputed IP that deter follow-on investors.

Plan the Full Journey: Map funding continuum from pre-seed to exit before making initial investment.

Leverage Non-Cash Value: Pilot customers, technical validation, and carbon credit pre-sales often matter more than cash.

Conclusion: From Garage and Lab Bench to Commercial Scale

Africa's climate technology sector stands at an inflection point. The innovation is there—from direct air capture in Nairobi to solar-powered cold storage in Lagos. The market demand is real, driven by both climate necessity and economic opportunity. The policy support is growing, with governments recognizing climate tech as a path to leapfrog development challenges.

What's missing is a funding ecosystem that understands the unique capital needs of climate ventures and provides appropriate financing instruments at the right scale and timing. This requires moving beyond one-size-fits-all SV VC approaches to recognize that software, hardware, and science-based ventures need fundamentally different capital strategies.

The stakes couldn't be higher. Africa faces some of the world's most severe climate impacts while also holding enormous potential for climate solutions. Getting the funding equation right isn't just about generating returns for investors, although admittedly important. It's also about unlocking innovations that will reshape both the continent's development trajectory and the global response to climate change.

The data shows that when African climate ventures get the right capital at the right stage, they can achieve remarkable results: 30-70% IRR in mobility asset financing, commercial viability in off-grid solar at scale, and breakthrough innovations in carbon capture and waste recycling. The challenge now is to systematically replicate these successes across the broader ecosystem.

For investors, development partners, and policymakers, the opportunity is clear: help bridge the missing middle, back the right teams with appropriate instruments, and unlock Africa's potential to lead the global climate transition. The continent's entrepreneurs are ready. The question is whether the funding ecosystem will rise to meet them. 

How to finance Africa’s food systems: rethinking from first principles

In the spirit of our practice of what we term ObservationalVC©, we have always called smallholder farmers ‘risk managers’.

We were reminded of this when we stumbled upon ‘VCs need their money back’: Why Sustainable Startups Struggle To Fix Our Broken Food System.’

It is a thoughtful article that echoes a lot of the thoughts we shared at the #AFSForum2024 and embedded in the insights we have shared with potential investors in our upcoming Africa-focused Eco Seed Fund. The need to rethink how to properly and sequentially finance food systems is critical. Venture capital and PE-lite can certainly help but we will need a community of different types of investors and financial support.

As shared on the panel we spoke at (and as quite a few LPs have heard from us), there are some fundamental drivers that should underpin decisions and resource allocation in African food systems.

(1) Smallholder farmers ARE risk managers. Once they are so defined, it forces the ecosystem to rethink how best to support them. As risk managers, smallholder farmers deal daily with input risk, climate risk, financing risk, yield risk, post-harvest risk, government agency risk, supply chain risk, storage risk, personnel risk, mechanization risk, etc. If there was ever a more encouraging scenario for decision fatigue, we haven’t seen it. Once viewed through this lens, it becomes easier to understand why our smallholder farmers are spot and not futures traders.

(2) We have never understood why the primary producers of value in food supply chains get paid least and last.

(3) Access to financing means offering a menu of different financing products that are customized to stage and context. During the #AFSForum2024, a repeated refrain by ag operators from different countries on the continent was that the cost of financing posed a hard cap on their ability to operate and deliver food products. Our view, having been investing in this sector for nearly a decade, is that the ability and willingness of smallholder farmers to improve yield, increase productivity and expand outputs is a direct function of their ability and willingness to take risk which is positively correlated with how ecosystem supporters assist them in eliminating or mitigating risk.

Identifying the mismatch of finance products with the pursuit of market opportunities is an important early step.

(4) The need to rethink from first principles how to identify, sequence, finance, build, deploy, operate and maintain the infrastructure in support of our food systems has never been greater.

(5) Our view remains that the market needs many small-check investments that set out and explore hypotheses around products and infrastructure that can mitigate or eliminate all or many of the risks set out above.

When we launched our Eco Pilot Fund I in the fourth quarter of last year, our specific remit was to take first institutional check risk, make fast-twitch investments into African-led startups, apply the institutional capital lens in backing the founder archetypes focused on building large, high-impact businesses, and explicitly fund ‘experiments’ and hypotheses that were climate-focused or in climate-adjacent or climate-sensitive sectors.

10+ deals later, we will be announcing the outcome of our learnings this quarter but we can say with confidence that the need for our custom designed investment vehicles has never been greater and more importantly, there is clear product-market fit which should hopefully get existing LPs, DFIs, NGOs and foundations (that have historically supported investments in these sectors) to rethink copy-and-paste approaches in a market that has headwinds that don’t necessarily exist elsewhere (or at the scale or volatility, at least).

The larger successor fund vehicle we are raising, EchoVC Eco Seed Fund I, will run the second leg of what we hope will be a world-record-setting relay team.

It goes without saying that it takes a village. In addition to our missionary founder-builders and their teams, we also are incredibly grateful to our supporters, Shell Foundation, UKAid (and FCDO) for recognizing the opportunity to completely rethink traditional approaches, supporting our innovative pilot fund structure and giving us the runway to design what we hope will be the definitive neo-architecture for food, ag and climate-sensitive products, services and infrastructure in Africa.

#WeAreEchoVC

EchoVC announces close and launch of $2.5M Pre-Seed Climate, Energy & Sustainability Pilot Fund, Eco Pilot Fund I

EchoVC, a seed and early-stage technology venture capital firm focused on investing in underrepresented founders and underserved markets, is thrilled to announce a significant milestone in our journey towards fostering innovation in Africa and supporting ground-breaking ideas, products, solutions, and platforms. Today, we are proud to introduce our latest pre-seed fund vehicle – EchoVC Eco [/iː.koʊ-/] Pilot Fund I.

Fuelling Impact, Innovation & Sustainability with Technology:
As a venture capital fund dedicated to unapologetically investing in underrepresented founders and underserved markets, EchoVC is excited to launch EchoVC Eco Pilot Fund I - a $2.5m ‘pilot’ fund in partnership with Shell Foundation with co-funding through UK Aid from the UK Government.

This new fund vehicle represents our commitment to identifying and investing in the most promising pre-seed startups shaping the future of climate, energy, agriculture and mobility. Through our fund, we seek to foster very-early-stage enterprise development and innovation with solutions that enable an income uplift for all the participants along the journey.

Why Eco Fund I?

In keeping with our mission to close the funding gap for underrepresented founders and startups targeting underserved markets, we invested in sector-sensitive companies targeting climate, agriculture, energy and transportation over the last 6 years. Backing incredible founders such as Sara Menker at Gro Holdings, Bim Adisa at Beacon Power Services, Dami Olokesusi at Shuttlers.NG, Desmond Koney at Complete Farmer and June Odongo at Senga, we got a first row look into the journey of these mission-fuelled founders.

Following this, we then spent over a year deep diving to understand where funding flows to, and how it affects, African entrepreneurs within these sectors. Despite marked interest (growing year on year) in harnessing the business potential on the African continent, the distribution of funding to entrepreneurs remains uneven. A sample taken from venture financing deals occurring in Africa between 2017-2021 showed that [Black] Africans accounted for 28% of CEOs and 31% of executive teams of the startups winning financing deals. For the subset of energy, mobility, and agriculture-related firms, the equivalent distribution is 21% of CEOs and 36% of executive teams. That is why as an emerging solution, our Eco Pilot Fund I is targeted at African companies and African founders in Sub Saharan Africa.

As stated by Taiwo Kamson, Principal at EchoVC, “Our Eco Pilot Fund I is not just any fund but a strategic first step initiative designed to address the funding gap in specific impact focused sectors and the respective value chains. We believe that by focusing on these areas, we can make a lasting impact on the growth and development of innovative solutions around agriculture, climate, and energy.”

“Africa’s golden age of entrepreneurship, job creation and household lift will demand that mission-driven founders be backed by high-risk capital. Africa’s needs, while diverse, will not be solved only by investments in fintech,” said Eghosa Omoigui, Managing Partner, EchoVC.

“The objective of our eco pilot fund will be to back founders with first institutional checks and assist them in syndicating financing rounds to support their mission. As a pilot fund, we want to sponsor a pipeline of high quality founders that create high quality companies that can be supported later by the increasing number of climate and energy focused funds. We anticipate that our learnings from this vehicle will feed into our investments to be made from our larger 2024 Eco Fund,” Eghosa Omoigui stated.

“Our approach in coming to market with a relatively tiny pilot fund was to work out the kinks of backing founders in sectors that have historically been underfunded,” said Tsendai Chagwedera, Partner at EchoVC. “As one of the most experienced VC funds on the continent, we have constantly sought to develop innovative ways of financing startups that can create long-term positive financial and high-impact returns in a relatively immature venture capital market, and in today’s risk-off market, entrepreneurs benefit from investors that are ready, willing and able to initialize and maintain financing and company building support,” Omoigui continued.

Taiwo Kamson noted further that “As we see more mid-sized and large funds coming to market to back climate and energy startups, we have struggled to find any that are set up to take first money risk or do the company-building work required to help kickstart the companies that will later be candidates for investment by these funds. The continent needs these pre-seed stage companies to create and deploy the solutions necessary to meet market demand and enable climate-resilient economies.”

Key Features of Eco Pilot Fund I:

Our Eco Pilot Fund I will be focused on making up to ten pre-seed investments in founders and startups that span our specific areas of interest, as set out below.

The Fund will invest broadly in companies led by Africans in Sub Saharan Africa including a specific focus on companies in Nigeria and Kenya delivering particular solutions.

Initial Focus Impact Areas:

1.     Access to resources – New technologies focusing on energy provision or use for agriculture (energy for agriculture).

2.     Access to finance and insurance – Support intermediaries that can use digital technologies to unlock finance for farmers and mitigate their risks.

3.     Knowledge/Capacity Building - Focus on low-cost solutions to provide better market information and training for farming practices.

4.     Access to markets - Creating value chains connecting small holder farmers to larger supply chains thus increasing value to farmers.

Other areas of interest include, but not limited to, innovations in energy storage, cooling, and off-grid cooking, smart energy systems and mini-grids, affordable and reliable access to renewable energy, and new approaches to urban transportation including alt-powered two and three wheelers.

The Impact We Aim to Make:

Our goal is to contribute to the growth and success of the most innovative and promising ventures in the outlined impact areas and create jobs and uplift in income as well as expand the reach in customers served. We envision a future where ground-breaking ideas are not only funded but also nurtured to reach their full potential.

Join Us on this Journey:

We welcome visionary entrepreneurs & forward-thinking innovative founders in Africa to connect with us and, together, shape the future and unlock new climate-resilient possibilities.

The EchoVC team is incredibly grateful to our investors who have partnered with us and our founders on this exciting journey.

We look forward to making a lasting impact with EchoVC Eco Pilot Fund I and its successor funds.

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About EchoVC: EchoVC is a Black-led technology-focused seed and early-stage venture capital firm investing in underrepresented founders and underserved markets. With a mission to be the Sequoia Capital for underestimated founders and markets, the firm invests from offices in Lagos, Nairobi, New York and London, and currently has a portfolio of nearly seventy companies. Financing entrepreneurial inspiration in diverse founding teams, and backing bold ideas and business models that harness the power of technology to deliver value to mass markets, EchoVC invests in technology and technology-enabled startups serving markets across sectors and themes such as smart planet, healthcare and human services, education, agriculture, climate, energy, AI, financial services, mobility, commerce, media, and connectivity.

For more information, visit www.echovc.com

Follow us on Twitter | LinkedIn | 

About EchoVC Eco Pilot Fund I: EchoVC Eco (pronounced /iː.koʊ-/) is the climate, energy, sustainability, mobility and agriculture investing platform of EchoVC.

Announcing EchoVC Chain - Our Blockchain Seed Fund

Over the past few years at EchoVC, we have become intrigued with blockchains. The more we explored, and learned, the more excited we’ve become about the applications of blockchain and its functions in Africa.

We made our first investment in the blockchain segment in 2021, and have continued making further pre-seed and seed investments since then. For African markets, we believe blockchain functionality is more of a need, rather than a want, and our thesis is to leverage these functions to enable new leapfrogs, or unlock novel market opportunities, across the continent.

In keeping with our mission to support underrepresented founders and startups targeting underserved markets, we are excited to announce EchoVC Chain, an $8m ‘pilot’ seed fund focused on making investments in founders and startups that span our specific areas of interest, as set out below.

Fundamentally, we’ve been excited with two capabilities of blockchain: a) the ability to abstract / tokenize, and b) the ability to scale autonomously.

However, our perspective on the applications of blockchain in Africa traverses multiple layers. Our first layer of focus is on foundational fintech infrastructure. This includes infrastructure leveraging stablecoins to optimize payments, liquidity, and treasury; and also explores the unbundling and delivery of crypto/fintech building blocks, or “primitives” – which other companies can utilize to scale faster.

The second layer above this targets blockchain functionality. DeFi functionality can be leveraged in Africa for innovative financial products improving access to credit and savings, or perhaps powering new-age decentralized neobanks. NFTs can serve to foster the creator economy for the rising Gen-Z, enable games to provide new ways to earn, or even fractionalize real-world assets and portfolios to lower affordability barriers to investments.   

Thirdly, we are excited about the prospects of DAOs, not just for their ability to scale autonomously, but also to organize human networks. Examples in Africa are social collectives and informal markets, which are key strands of Africa’s offline economic fabric. DAOs can organize the offline and informal networks in a way that is beneficial for all participants. This should unlock labor liquidity and increase earning potential for the bottom-of-the-pyramid demographics. Other examples include decentralized agent networks, social networks, as well as gig networks.

Looking beyond this, we continue to explore other emerging blockchain aspects ranging from digital identity, privacy, decentralized infrastructure edge nodes and agile supply chains to a possible future intersection between AI/ML and DAOs.

On the regulatory side, we continue to observe the evolving landscape. Our view is that regulation is required and will have a positive impact to help guide innovation, improve stability, and remove frictions that still exist between decentralized and centralized worlds. One aspect that we are tremendously excited about is the advent of central bank digital currencies (CBDCs) as the digital version of cash – channeled through the banking system – to remove friction in access to financial products, streamline cross-border payments, and enable programmable local money.

Our current blockchain-related portfolio comprises 7 companies:

- Fonbnk (Aug’21): offers a wallet and marketplace that connects airtime to stablecoins enabling users and agents in Africa to easily on-ramp, off-ramp, and remit using airtime. We were excited with Fonbnk’s ability to tap into airtime – the most common digital commodity – and its ability to scale into other emerging markets

- Odum (Oct’21): runs automated market-making within cryptocoin and crypto-derivatives markets. We backed a promising founder, Ikenna Igboaka, formerly a trader at IMC. Odum’s market-making thrives with volatility, and crypto derivatives are an interesting market with trade volume roughly 2x that of crypto spot

- Ponto (Dec’21): provides regulated payment APIs connecting cryptocurrencies to mobile money and wallet products. We were thrilled with the potential for Ponto’s infrastructure to optimize payment channels into and out of Africa, and around the world

- Stakefair (May’22): has created a loss-less sports-wagering platform by leveraging DeFi functionality, however, what we were intrigued with is the founder’s acumen and vision to offer treasury services to enterprises and create a customized DeFi pool for African corporates to earn yield

- MUDA (Jul’22): conducts OTC exchange and payments for flows across Africa, as well as from Africa to Asia. We were impressed with the founder’s approach to building MUDA, his ability to leverage agent networks, and his ambition to provide MUDA’s platform as an API that can embed into other fintechs as well as into social channels  

- OneLiquidity (Aug’22): provides crypto and fiat liquidity-as-a-service to crypto startups, fintechs, and large enterprises in Africa. Liquidity has been a persistent problem in scaling a crypto or fintech startup on the continent and we were keen to back an extremely driven founder, highly adept at execution, and an avid learner who is deeply involved in the blockchain ecosystem in Africa

- FUHLStack (Dec’22): unbundles the components that are “undifferentiated heavy lifting” for crypto startups, fintechs, as well as enterprises that are digitizing. This enables clients to focus on getting to market faster and scaling more efficiently. The founder – one of the most impressive devs we have ever come across in Africa – is beginning with ledger-as-a-service as well as crypto wallet infrastructure, and has the potential to create interesting network effects within his ecosystem as he adds more services

The EchoVC team is incredibly grateful to our limited partners that have signed up to accompany our team and our founders on this exciting journey.

We welcome founders serving blockchain products and markets to reach out. EchoVC Chain is open for business.

Our Investment in Senga

EchoVC is excited to announce its seed investment into Senga, an innovative logistics startup in Kenya, and a first-mover in Africa, tackling a highly complex problem of "consolidation" logistics.

Senga uses a proprietary methodology that drastically cuts down delivery timelines for FMCG companies and other suppliers, using consolidation to deliver fragmented loads to large supermarkets across Kenya via continuous strings of trips. Senga has deconstructed traditional approaches used globally in consolidated delivery.

By tackling this complex problem, Senga is providing significant value to different participants in their ecosystem. Suppliers can send and receive inventory in a guaranteed time of less than 48hrs, as opposed to a typical time of 3-7 days. This is a critical issue as a delay in goods arriving at the supermarket means inventory spends more time in transit instead of on the shelf to sell – resulting in out-of-stock incidences, mismatched ordering and, ultimately, loss of sales.

We were intrigued by Senga’s differentiated approach toward an untapped space in African logistics. Additionally, we estimate Kenya's formal grocery retail market to be approximately $8bn per year of sales, and the transportation costs to move inventory to supermarkets and retailers as roughly $400m per year.

A key part of our investment thesis was to back June Odongo - one of the most driven, analytical, and ambitious founders we have come across.

June is attracted to difficult problems, and she views her approach to disrupting logistics as akin to "solving how data packets move in a network".

She was born in Kenya and graduated from high school at the age of 16, following which she moved to the United States and put herself through college - working full-time to raise money for her tuition.

She graduated with a Computer Science degree, magna cum laude, and worked at EMC for over 7 years, first as a back-end software engineer, and later as a tech lead where she oversaw the delivery of products that generated over $1bn in annual revenue. Later, she became a Snr. Product Manager at EMC, helping lead the execution of various products before leaving for Harvard Business School. Subsequently, following a role at Cisco Meraki as GM of its mobility software, June decided to create Senga.

Beyond her inspiring background, we've been extremely impressed with June's affinity for problem-solving, her highly driven personality, and her global perspective. Furthermore, we were excited with the path she has visualized for growing Senga, beyond consolidation logistics, into an ecosystem of adjacent software and financial services.

EchoVC, as the first institutional fund investing in Senga, joins existing shareholders in the company including two former C-suite executives from EMC and VMWare. We are tremendously excited to partner with June and support her on this journey as she builds Senga.

Our Investment in Ponto

EchoVC is pleased to announce its investment in Ponto – a global payments startup providing APIs and regulatory infrastructure to link the decentralized and centralized worlds such that neobanks, fintechs, and enterprises can harness crypto and DeFi for innovative and elastic banking and payment capabilities.

While linkages across different financial systems in the centralized world are still being built, the decentralized world suffers from difficult, slow, and inadequate connections into these centralized ecosystems of mobile money, bank money, bank cards, and cash.

Ponto is building the infrastructure layer to provide seamless connectivity between decentralized finance and centralized finance ecosystems, and with a regulatory-first approach – Ponto will also provide automated compliance and risk controls to support their infrastructure layer.

While we have not fully disclosed our blockchain-focused investment strategy quite yet, suffice to say, we have been actively developing our theses for quite a few years and one key element is what we are calling ‘translation infrastructure,’ which Ponto (and FonBnk) strongly illustrate. We consider companies building and deploying this infrastructure fundamentally important to ensuring that the Web3 economy serves, includes and empowers the 99%.

We are thrilled with the potential that Ponto brings, and their global ambition to optimize payment channels and enable the abstraction of DeFi functionality into the real world. From Africa’s perspective, we believe blockchains will unlock new opportunity sets on the continent ranging from innovative wallets, to efficient cross-border payments, treasury optimization, micro-credit, interest access, affordable investments through fractionalization, decentralized neobanks, new-age creator economies, and the emergence of social collectives built as DAOs. Africa represents fertile ground to develop a federated cross-border economy built on portable and fractionalized systems of identity, infrastructure, reputation, security and trust.

We look forward to partnering with Ponto on this exciting journey. This transaction represents EchoVC’s second publicly disclosed investment in the blockchain sector, following our investment in Fonbnk, a startup enabling users across Africa to access DeFi through airtime. We continue to seek and support the upside of blockchain in Africa, and look forward to welcoming more startups to our portfolio through our upcoming blockchain-and Web3-dedicated fund: EchoVC Chain.

'Fun with VC Math: Designing Funds in Africa' – Epilogue

We got a few questions from the 'Fun with VC Math: Designing Funds in Africa' podcast. We are sharing the responses below. 

Thanks to all those that took the time to listen to the podcast. I realize it can get a bit complex so apologies in advance. I have tried to simplify it as best as possible. Comments and questions welcome.

1) Why does it take $500M to 1X a $50M fund and $1.35-1.4B to 3x a $50M fund?

2) Why does it take 10 Paystacks to return a $50M fund?  

3) In the example when you introduce 50% failure rates, why is the average entry price $10M?

 ———————————————————————————————————————-

Answers:

1) These numbers represent aggregate enterprise value created. If you assume you own 10% of a startup at exit, then $500m of enterprise value created returns $50m.

So it's not solely a scenario where a company in the portfolio exits at $500m, but what percentage you own at the exit. By the time you reflect dilution, it gets harder to own 10% at exit.

2) It doesn’t. It takes 10 of those exits to put the fund manager in position to potentially generate a 3x return on a $50m fund.

With Paystack, assume the exit multiple was 14.4x and assume you invested $1m into it. That is a $14.4m return sans dilution. You'd need to do that 10 times to return ~3x the fund. 

 This is not impossible (more likely improbable) but assumptions about the entry price and the dilution that occurred during the path to exit mean that the Paystack example is unusual. If I recall correctly, it raised just a Seed (~$2m in SAFE notes at different caps ranging from $5m to $10m) and an $8m Series A ($20m pre, $28m post, give or take) prior to its ~$200m exit so the dilution was not too material to the early shareholders.

Note that Paystack was acquired by an existing shareholder so the net payout to other shareholders was closer to $171m.

What is important to keep in mind is that many venture-backed companies may raise 3 or 4 times and it is in this cycle where your starting ownership goes to die. I have seen quite a few Series Es and Fs. Series Gs and Hs exist. The metaphor is like a font size: you start at Arial Bold 72 and end with Arial Narrow 8. You can still read your line on the cap table but your outcome looks (and feels) quite different. 

3) The failure rates tie in to 2 above. 

A ten-year $50m Africa fund with a 2.5% fee and expenses may leave you ~$36m to actually invest (after netting out management fees, fund and investing expenses) but, for ease of understanding, let's use $35m of investable capital to illustrate. 

Note that the illustration is solely of money on invested capital (MOIC) and doesn’t address internal rates of return (IRR) thresholds, which on a risk-adjusted basis, should be closer to 30%.

Let's say your strategy is to invest $1m checks, and assume you reserve $10m to defend your pro rata in certain deals. Pro rata is your right to invest at the next round of financing to preserve your ownership stake. FWIW, a 20% reserve ratio ($10m ÷ 50m) is on the low side and it's more common to see 30-50% of the fund set aside for reserves. That said, I know of funds that are designed to not have pro rata but those are usually much smaller.

So you make 25 investments (25 * $1m = $25m), and your avg postmoney entry valuation is $10m so you buy 10% in 25 companies.

Then you apply your reserves to defend your pro rata at the Series A (which are usually $15m+ rounds but may drift lower as a result of the current contagion in the public markets) so your follow-on check size is say, $1.5m. That means you can do ~6 follow-ons to protect your initial 10% holding.

So if all 6 companies exit after that point so they don't raise again (almost statistically impossible), then you hold 10% of the aggregate exit value. You would have invested $2.5m ($1m initial check plus a $1.5m follow on) into each of the 6.

Assuming they are all Paystack type exits at $200m (sure, everyone thinks they will be unicorns but actual exit data belies that) then your gross return from the 6 companies is $120m (10% * $200m [enterprise value per company] * 6 companies). 

But remember we started off by investing in 25 companies. 

If ~50% of them fail to return 1x or better, (remember that batting .300 (3 in 10) in major league baseball likely gets you in the MLB Hall of Fame) then we are looking at ~13 companies to drive the fund returns. 

Of these 13, 6 based on our example (pro rata defense) will return $120m. Maybe the remaining 7, representing $7m of investments ($1m * 7 companies) return 3x (unlikely but let's say so just for shits and giggles).

Then the aggregate fund return is $120m + $21m = $141m.

On first read, that's a smashing success for a $50m fund and delivers the 20% carry (profit share) to the manager.

Some quick calcs to illustrate the return multiples.

$141m: dollars returned.

$35m: dollars invested by the GP (LP committed dollars less fees and expenses).

$50m: dollars invested by LPs.

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$141m/$35m = 4.02x $-at-work gross; 

$141m/$50m = 2.82x trued up gross;

$141m - $50m = [$91m] * 80% [$72.8m] + $50m = [$122.8m] ÷ $50m = 2.45x net to LPs. 

The LPs have to get the money they invested right off the top. That’s why their $50m is deducted first from the $141m total. The 20% profit share applies to the balance.

This example of course assumes no recycling i.e. the GP taking interim returns from early exits and reinvesting so that (s)he can get to invest the full $50m and not the $35m after fees. Doing so generally improves the odds for the fund as more dollars are working via startups and not just underwriting fees and expenses.

2.45x is still a great VC fund net return (that should put you in the top decile globally iirc) but don't get too excited as Thoma Bravo and Vista Equity (multi-$B PE funds) have exceeded this threshold, and with lower risk profiles too.

But to have six Paystack exits (and seven 3xrs) is quite the dream. I'd sleep in for that.

Which then leads us to the power law. That is, one company sets up to return the whole fund (or more). But for that to happen in a $50m fund, you have to have at least one $1b exit and own 5% of the company at exit (and after dilution). With the fundraising froth and (increased) round sizes, many companies would have raised 4-5 times before they become unicorns. That's at least 3-4 dilutive rounds.

Which brings us full circle to why the entry price always matters. Buying 10% for $1m makes it harder to own 5% at a billion dollar exit. Buy 20% and then you have a shot. 

But the entry prices are now so high (e.g. valuations for pre-seeds in the high single digits and seeds in the high teens or more) and the competition to invest is so excitably frothy (with price-insensitive investors committing hundreds of thousands of dollars after the first meeting), that $50m funds may actually need up to three unicorn exits to have a shot at returning 1x.

Rough play.

This business is like many others. It may seem easy from the outside looking in but it's really much harder than it appears and takes a long while to be successful. I am grateful to have found a career that I love and would do for free but make no mistake, it requires a ton of hard work, conviction, adaptability, and luck.

Go make it happen.

-Eghosa

Our Investment in Wapi Pay

We are pleased to announce that we have led an investment in Wapi Pay, a fintech startup founded by Paul Ndichu and Eddie Ndichu, that is powering a new Africa-Asia payment gateway to help bridge the exchange of economic value between the two continents.

Wapi Pay, based in Kenya and Singapore, operates across Africa and is enabling corporates, merchants, and individuals to easily send payments and remittances between Africa and Asia.

With an initial focus on the China-Africa corridor, Wapi Pay has also added coverage for other major Asia economies that are trading with the continent, including India, Indonesia, Japan, Thailand, Philippines, Malaysia, and Taiwan.

Africa's relationship with Asia, and in particular China, has deepened greatly over the past few years and has created an ecosystem of symbiotic flows between the two regions.

On one hand, payment flows from Africa to China are driven by African merchants and large corporates purchasing goods and services from China. This is an enormous stream of payments, estimated at $113 billion in 2019, supporting trade in items as diverse as clothing, consumer electronics, food, and telecom equipment.

Additionally, large Chinese corporates operating in Africa remit a portion of earnings back to their home country. Within Africa, it is estimated that more than 50% of infrastructure, mining, and energy projects are performed in partnership with Chinese corporates operating in Africa.

The inverse side of the relationship is the products that Africa provides to China resulting in payment flow from China to Africa for commodities, oil, and ore, as examples.[1] 

This inverse flow amounted to $96bn of exports from Africa to China in 2019; resulting in total bilateral trade between Africa and China of $209bn that year.[2] 

And yet the traditional payment channels between Africa and China are wrought with pain-points of slowness, high rates of transaction failure, and expensive transaction costs. A payment from Africa to China can take up to a week to process and costs up to 15% of the payment value due to fees and foreign exchange conversion to intermediaries along the traditional network path.

Wapi Pay’s founders started the company to help solve this, and enable a seamless, frictionless way to send money, for payments and remittances, between Africa and Asia, at a cheaper cost.

As a new payment gateway between the two continents, Wapi Pay brings an incredible value proposition to an enormous and untapped market opportunity.

Paul and Eddie are impressive founders with deep experience in African fintech and banking. We are very excited by their vision to evolve Wapi Pay, building up from payment rails, into a broader ecosystem of fintech services to merchants and corporates across Africa and Asia. 

As part of this pre-seed round which we helped syndicate, EchoVC was joined by MSA Capital, a leading venture and growth capital investment firm based in China, and by Kepple Africa Ventures, an Africa-focused early-stage VC firm based in Japan. We look forward to working closely with Paul, Eddie and our co-investors on this next phase of growth.

[1] https://www.tradersofafrica.com

[2] https://www.scmp.com/news/china/diplomacy/article/3046621/chinas-trade-africa-grows-22-cent-2019-us208-billion

Our Investment in KOSA

EchoVC is excited to announce its investment in KOSA.ai - an artificial intelligence startup that offers an automated responsible AI platform to support enterprises that build and deploy AI systems.

Artificial Intelligence (AI) will affect consumers and enterprises unlike any other technology we have seen before and has been described as the greatest economic opportunity of our lifetime - estimated to contribute roughly $16 trillion to the global economy through 2030 ($8.7 trillion excluding China) (1).

For enterprises, AI delivers automation and valuable insights that enable companies to scale more efficiently, and provide better services and products.

In 2020, a survey by IBM found that ~75% of enterprises across the United States, Europe, and China had either deployed AI or were ramping up their exploratory AI phases. IBM estimates this percentage will jump to 80-90% within the next 18 to 24 months (2).

However, a major headwind to enterprise AI adoption is the limited in-house expertise to build and develop AI models, and manage data complexities.

One consequence of this is AI bias - affecting large and small enterprises alike.

AI bias is the manifestation of systematic prejudice and unfairness in the results of artificial intelligence algorithms. This can arise from incorrect training or real-world data that is used to develop the AI; or from the conscious or subconscious bias of developers creating the AI. Such bias may not even be apparent until post-development once the AI model begins to "drift" when deployed into the real world.

Bias in AI creates error rates, failed transactions, as well as missed or under-served consumer pools - all of which result in lost revenue for the enterprise. Other consequences include a weaker value proposition to the enterprise's customers, lower competitive ability, as well as heightened regulatory risk and brand reputation risk.

Some past occurrences of AI bias have included:

Amazon: 

- In 2019, Amazon's facial recognition AI, Rekognition, was found to have bias-related errors in identifying women and darker-skinned individuals: it mistook women for men 19% of the time and mistook darker-skinned women for men 31% of the time. (3)

- Separately in 2015, Amazon realized that their hiring algorithm had incurred bias against women since it had been trained on résumés submitted over the prior 10 years - which were mostly male résumés. (4)

Facebook: 

- Was sued in 2019 by the United States government because its ad-targeting algorithms had developed gender and ethnic bias in how it chose which consumers to target for housing and job ads. (5) 

Self-Driving Algorithms

- Are also prone to bias-related errors, with a study finding that Black pedestrians, compared to white pedestrians, were 5% more likely to be hit by self-driving cars due to biased object detection models. (6)

UnitedHealth Group:

- A study published in Science in 2019 found that UnitedHealth’s Optum algorithm, which services over 200 million people and predicts which patients would likely need extra medical care, heavily favored white patients over Black patients - denying care to nearly 50% of Black patients in need (7)

Apart from lost revenue, lower competitive ability, and brand reputation risk, AI bias will soon expose enterprises to significant regulatory risk.

Earlier this year, the European Commission released legislative proposals on AI governance with contemplated fines of up to 4% of global annual revenue or €20m (whichever is higher), for non-compliance of AI use-cases.(8) 

In the United States, a bill was introduced in 2019 to the US Congress, titled "The Algorithmic Accountability Act", which sought to mandate companies to “conduct impact assessments and reasonably address in a timely manner any identified biases or security issues” in their AI algorithms.

We believe that bias in AI is now, and will become a materially more, crucial problem for enterprises, and society, in the future.

KOSA can help solve this. 

KOSA is a data analytics and algorithmic company that assists enterprises to detect, audit, and explain bias in their AI models - and then implement corrective steps to address or mitigate the bias. Additionally, KOSA can support the enterprise in monitoring their AI models post-deployment for any "drift" towards bias. Furthermore, KOSA enables enterprises to define both AI KPIs and "fairness" for their AI models.

We view KOSA as a multi-vertical, layered approach to participating in the AI sector. Our investment thesis is centered on backing two exceptional founders, tackling a difficult - yet inevitable - problem; in a massive opportunity set. 

Layla Li and Sonali Sanghrajka, the co-founders of KOSA, impressed us with their backgrounds, their agility and ambition; and their vision to scale KOSA into a global business - potentially becoming an industry-standard in "fair AI".

We are grateful to partner with KOSA on this exciting journey. As part of this pre-Seed round, and in conjunction with APX, EchoVC was joined by members of an EchoVC-led syndicate comprising Dale Mathias, TheContinent Venture Partners, Fine Day Ventures, and Arch Capital.

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(1) PWC: https://www.pwc.com/gx/en/issues/data-and-analytics/publications/artificial-intelligence-study.html

(2) IBM & Morning Consult: From Roadblock to Scale. The Global Sprint Towards AI. 2020.

(3) https://www.theverge.com/2019/1/25/18197137/amazon-rekognition-facial-recognition-bias-race-gender

(4) https://www.reuters.com/article/us-amazon-com-jobs-automation-insight-idUSKCN1MK08G

(5) https://www.wsj.com/articles/facebook-shows-men-and-women-different-job-ads-study-finds-11617969600

(6) https://scs.gatech.edu/news/620309/research-reveals-possibly-fatal-consequences-algorithmic-bias

(7) https://science.sciencemag.org/content/366/6464/447

(8) https://www.loc.gov/item/global-legal-monitor/2021-05-26/european-union-commission-publishes-proposal-to-regulate-artificial-intelligence/

An invite to the Extreme Tech Challenge (XTC) competition

The Extreme Tech Challenge (XTC) competition is the world’s largest startup competition for entrepreneurs addressing global challenges. Drawing from the United Nations Sustainable Development Goals, XTC connects innovators with a network of investors, corporations, and mentors to help them raise capital, launch corporate collaborations, and scale their world-changing startups.

EchoVC, in partnership with Atlantica Ventures, is hosting the first ever Africa competition.

APPLY NOW                                                  

Ten startups will be selected to pitch to leading VC’s and thought leaders on April 23, 2021.                                                                      

WHO CAN APPLY?

ABOUT  

ECHOVC- EchoVC Partners is an experienced seed, early stage & growth technology venture capital fund focused on financing and cross-pollinating leading technologies, teams and business models in Sub-Saharan Africa, Europe and North America. As stage-agnostic investors with a combined network of local and global connections, we bring a disruptive approach to investing at the technology intersection of consumer, media, data, & devices and leverage knowledge transfer from Silicon Valley as a driver to seed growth across borders.

ATLANTICA VENTURES- An early-stage venture capital fund that helps scale socially responsible startups in Sub-Saharan Africa. We believe technology companies can drive inclusive growth across the continent. Atlantica Ventures helps companies grow from Seed through Series B stages with active operational support, growth capital, and our global network of partners, entrepreneurs, and strategic and financial investors.

XTC- The XTC global startup competition aims to nurture the global  entrepreneurial ecosystem by supporting new business ventures with viable, commercial technology that can directly impact our most critical global challenges and connecting them with the corporations, investors, universities, media and NGOs who are our sponsoring partners.

Coming in from the cold: VC outreach and minority founders

This was a tough-to-swallow read. https://bit.ly/2W218ag 

The truth is, it was painful but not surprising. Grateful to Nerissa Zhang for sharing what so many of us in the Black tech community have to deal with every day, even after paying so many visible and invisible dues.

I shared the [lightly edited] thoughts below in an affinity group and it was suggested that I publish it to a broader audience.

The biggest takeaway is that it is important to recognize that warm intros will continue to be the best intros for the foreseeable future. We are trying to fix it but it will take a while. The sheer volume of entrepreneurs trying to raise VC means ALL investors have to figure out a way to quickly filter incoming deals and getting a referral from a trusted source puts that opportunity at the top of their evaluation list. 

LinkedIn can be your superpower. If you are connected to someone that knows the investor you are targeting, then absolutely use that link but honor your first degree connection's time & social credits by sending a request crafted to be forwardable with little to no effort and a bit of an editorial.

Social proof is crucial, in this world and others. Hate it if you must but understand why it exists and do what you can to make it work for you.We recently got cold pinged on LinkedIn by a Black founder. We responded and guided him re: how best to submit his opportunity to us AND how to pitch himself and his business. He came back with an unexpected response. He cold pinged 25 other people, many we know and some others that are currently doing #BLM ballet on social media. We were the only ones to respond. 

All that said, there are some cold email hacks that I have recommended to founders of any color or gender. Yes, it is tedious trying to customize outreach at scale but getting investors is brutal for all of us.

Right off the bat, PLEASE research your investors and get a clear sense of what types of deals they like to do. This is very true in the seed and early stage markets. Don't waste your time by wasting theirs. No one is happy and everyone is pissed. I'd also point out that quite a few investors we know, us included, have intake processes on their websites so founders can submit their opportunities. Rest assured that everything that is submitted is read.

Here are my 'cold outreach' suggestions.

1. Make the subject unusual and interesting. Keep the open warm but brief. Can state why you are pitching this fund in particular e.g. they invested in X and your startup is in an important adjacency.

2. What is the problem you have identified? Why is it interesting? How big is the space? SAMs vs TAMs pls.

3. What are you building? Or what have you built to address 2? Timeline and scope of traction, if any?

4. How much are you raising? How much have you raised? If you have any brand name investors or advisors, name drop here.

5. Team bios and recognizable school/job logos; Location of ops.

6. Attach a short prezo or link to a crisp no-reg docsend. Many investors don't like docsend so make sure to mention you can send them the deck if they prefer.

Many founders are upset because they don't get any feedback, even if they ask for it. Yes, it's quite distressing because you have no idea why the investor passed but understand that (1) investors are overwhelmed and (2) they want to maintain optionality just in case you later turn out to be interesting and they have to wend their way onto your cap table.

I know Alfred Lin and he is generally good with sending short feedback. It may not be as verbose as you want but it's just a no. Don't take it personally and keep moving.

Note that no matter how pro-BLM non-minority VCs may appear to be on social media, many are likely not when it really matters or it's not as much a priority for them. Don't take this personally. VCs are pattern matching creatures and when minoritized founders show up, these VCs have very little to anchor their matching 'skills' to, the latter being arguably calcified such that new 'experiences' are unwelcome. Yes, bias is real but always remember you are exceptional, not an exception. 

It takes one investor to get the ball rolling. Your quest is for that one, angel or VC. 

Open-Mic Session: Accessing Seed & Early Stage Finance for African Startups

It was great bringing together investors in African and Africa-focused companies to discuss insights, challenges, ideas, and thoughts about investing in the era of COVID-19. The webinar was hosted as an open-mic session and featured over 100 participants from first time Angel investors to Venture Capitalists, Private Equity professionals, and Fund Managers across the globe. With the view that a lot of the developed market investors will be focusing on local opportunities when they come out of portfolio management triage, we felt it was important to share and exchange thoughts on how to assemble post-COVID capital for the next generation of important seed and early-stage startups. 

Audio transcript

Slides

Video:

We are also putting a list of active Africa-focused investors together and would appreciate if you could fill out this form to get more information on your investment criteria.

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Questions & Answers (transcript edited for brevity):

• What is the biggest risk for an investor investing in Africa?

  • Founder integrity is a big problem. The willingness to cut corners for the benefit of themselves and to the detriment of investors is a big issue. There’s a much smaller and finite group of founders that you can count on. Dealing with this becomes a burden on the investor and presents a risk that may not be very visible to you in other markets.

  • The paucity of exit opportunities. This is something that comes up when we talk with LPs in other markets that they don’t see. The concept of getting dividends and payouts on cashflow is not traditional in VC because VC is set up for the exit; the big win; the power-law distribution across the portfolio. But the fact of the matter is there will be many companies that may never get to that exit but become really good operating businesses. One thing that investors always hope for is that there is going to be some exit at the end of the rainbow, but what happens when there isn’t one? How do you force that? Do you now start to think about getting dividends into this thing and so on and so forth? And it’s going to be much harder when you do this at the end versus the beginning. I don’t know whether there is a solution to that right now because I think the US market has always been very interesting in how to set the pace for all these terms. I’ve seen how the terms change when the market changes. The first time I saw a 5x liquidation preference was in the US. I’ve never seen it anywhere else. I’ve never seen it in Africa and never knew it existed! Hard ‘redeemable’ dividends, compounded – I’ve seen that in the US. These are all terms designed to ensure that there is a return and I think one of the things we should do as investors is to have open conversations with the founders about expectations. It feels like the founder just wants to get your money to go in and just do the work, and that is probably not a bad thing because one of the key lessons of being an investor is knowing how to get out of the way, but, there is an expectation for the return and I don’t know how many of us are having those conversations. That’s a thing I think people should talk more about.

• How do you not lose credibility with employees that have sacrificed so much for your startup? (Founders addressing layoffs as a result of COVID-19)

  • As investors, we have to be co-empathetic with the founders we’ve invested in to go through this process. I like to tell people that one of the hardest things I did was when I was Chief of Staff for Intel Capital, we had to participate in a companywide reduction in force and I remember it like it was yesterday. I hated every minute of it and I swore I was never going to be part of it directly ever again. So, I cannot even begin to imagine what it is like for people to go through that. We’ve talked about being able to help founders navigate through this process. Being available and empathetic with them to help them get to the strength they already had and to the strength they will need to make the hard decisions. You need to be able to get to people and relay to them that this is not the outcome I wanted but everybody is struggling and it’s not just us, it’s the whole world. For us to survive and give you the opportunity to potentially come back, we’re going to have to reduce our headcount. Investors have to be supportive of that process.

• How do we help facilitate consolidation?

  • All the startups in the world believe they are fantastic but I’ve been in this business long enough to see businesses releasing press releases of how great they were on Monday and sending shutdown emails on Friday. I get wanting to look bigger and better than you are but that suggests to me that you are not a pragmatic founder because what you have to be able to do is to sit down and say let’s figure this thing out. We created a corporate development element inside our fund to help startups to be better placed to get acquired or to acquire. You’ve got to go back to your startups and ask if they are better off doing this together with the competition and going out and raising money with a bigger opportunity and execution set than you are just doing this now and coming to a halt in 30 or 60 days? That’s going to be very important and I think all of us need to have those conversations with our startup founders because it needs to happen. There’s no way you’re going to get around it now, it’s super super important. 

Antifragility in the Africa-focused Entrepreneurial Ecosystem - March 2020 webinar

As we build and invest in high-impact tech and tech-enabled companies focused on serving various African sub-markets, we see a lot of current market participants that have never faced anything like the catastrophe that #covidー19 is shaping up to be. Many are clearly not equipped with the tools or knowledge to manage or mitigate the impact of an economic recession. The objective of this webinar is to share insights, best practices and recommendations for operators and investors and run a central line into the conviction and energy we collectively have to ensure we can continue to successfully serve our customers, employees, and ecosystems.

The panelists: Folabi Esan of Adlevo Capital, Rebecca Enonchong of AppsTech, Wim van der Beek of Goodwell Investments, Tokunboh Ishmael of Alitheia, Stephan Breban, Clive Butkow of Kalon Venture Partners, and Eghosa Omoigui of EchoVC Partners.

Audio transcript

Slides

Video:

Organization Updates

We have some exciting updates to share and also a bit of disappointing news.

Just over two years ago, we welcomed Uche to our team as our first Associate Principal, Investments and Portfolio Management. In the time since then, she has exceeded expectations and worked on quite a number of different transactions. More importantly, she displayed leadership in being an incredibly valued team member and mentor to our less experienced team members while making meaningful contributions to the portfolio, our founders and the ecosystem at large.

So when she voiced her interest in picking up operational experience, we were disappointed at the prospect of losing her but understood that going into the thick of things in a high-growth startup would only be beneficial to her long-term knowledgebase and the expectations for the evolution of her career.

We are sad to see her go but glad she will remain close to us as she will be joining our newest portfolio company (to be announced shortly) as their new COO. Our warmest congratulations on her new gig and we fully expect she will continue to make us proud.

Additionally, as some of you may have noticed, our team has grown quite a bit and we are thrilled to share more about our new team members and some slight modifications to our organization.

Legal, Compliance & Corporate Development:

As we have grown, and our full stack investing and portfolio management & development has dramatically increased, we identified the need to expand the internal legal group to incorporate these three activities. While possibly distinct, we believe it to be more efficient and valuable to have them coupled. In addition to beefing our in-house legal coverage (more on that later in the year), we are currently shortlisting talent that will help drive our corporate development activity. This will cover inbound and outbound M&A activity for portfolio companies as well as cross-border biz dev and transaction support.

Effective EOQ3, Dami will be Associate General Counsel and co-head of this group.

Research:

As many of you may be aware, we have been a thesis-driven firm from inception. Our theses have shaped our thinking re: market opportunities and we continue to highly value the approach. To augment our knowledge, and build out deeper insights into various sectors of interest, we saw a clear need to bring this capability in-house. We are thrilled to welcome Aima Nwafor-Ohiwerei to the firm to help drive this activity. She joins us from Singularity Investments and, prior to that, was at EY. Aima graduated from Bangor University, Wales.

Platform & Operations:

Following discussions we have had over the last year, we decided to crystallize some of our ongoing thinking re: how best to support each of our portfolio companies and, more importantly, help optimize their internal processes and operations while ensuring we could develop and deploy efficient line-of-sight infrastructure to obtain timely data and activity reporting.

We were incredibly fortunate to meet Deji Sasegbon who joins us as our new Director of Platform & Portfolio Operations. Deji previously worked at Total and has a doctorate in Engineering from Imperial College, London. He will be primarily responsible for building out the infrastructure to deliver high-octane support and empower portfolio company teams.

Investments & Portfolio Operations:

As we deliberately evolved into a more stage-agnostic VC firm, making investments that span seed-, early- and early growth-stage check sizes, we have experienced almost overwhelming deal flow. This has necessitated the urgent need to grow this side of the house.

Therefore, we are excited to welcome the following additional team members:

• Taiwo Kamson Ketiku, who joined us from United Capital, is our Vice President, Investment & Portfolio Operations. She graduated from the University of Aberdeen with a Masters degree in Finance and Investment Management.

• Tsendai Chagwedera, who joins us from TPG Growth as our Associate Principal, Investment & Portfolio Operations and Regional Head of East Africa. He will be based in Nairobi starting in the fall. Prior to TPG, Tsendai worked at ECP, H.I.G Capital and Blackstone. He has a BA in Computer Science from MIT.

• Tito Cookey-Gam, who joined us from ARM and Crasner Capital, is our Analyst, Investment & Portfolio Operations. He graduated with a Bachelors degree in Biochemical Engineering from University College, London.

• Saeed Seghosime, who joined us from Sahel Capital and Verod Partners, is our Analyst, Investment & Portfolio Operations. He has a Bachelors degree in Chemistry and Chemical Engineering from the University of Huddersfield.

Geographic Expansion:

As our portfolio blooms, it has become necessary to expand the firm's base of operations. With several new additions to the portfolio, we have now reached a point where distributed physical presence to better support existing investments has become necessary. Consequently, we plan to open our first offices outside Lagos. Later this year, London and Nairobi will become part of our office network. As mentioned, Tsendai will be based in Nairobi to oversee activity along that geographic axis and he will be supported by a rotating analyst.

We are incredibly excited for the future and looking forward to building it with the very best Africa-focused entrepreneurs.

Thank you for all your support.

The EchoVC Team

#WeAreEchoVC

Our Investment in PayJoy – Deepening Smartphone Penetration… Democratizing Access

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A lot has been said over the years about the importance of enabling people to participate in the growing digital economy that is enabled by the internet.  The value proposition is clear: give people cost effective and dependable access to the internet and they will have a good shot at significantly improving their lives. No wonder that in 2016, the United Nations declared access to the internet a basic human right.

Access to the internet cannot be overemphasized; in 2018, global internet-influenced retail sales rose to $2.84 trillion and is expected to rise to $3.45 trillion in 2019. An estimated 1.92 billion people are expected to carry out commerce online in 2019. However, more than 750 million Africans are currently excluded because they are not connected to the internet. These Africans are cut off from the opportunities that internet access enables to potentially earn an income, educate their families, and access digital goods and services to improve their lives and communities.

Almost half the world remains digitally unconnected. In Africa for example, internet penetration is at 37.3%, making it the lowest globally, significantly distant from its counterparts in Asia, Middle East and Latin America which have penetration rates of 51.8%, 67.2% and 67.5% respectively. With only 56.8% global internet penetration, it means that over 3.3 billion people do not have access to the internet, let alone access to affordable data.

In thinking about the challenge of internet connectivity in Africa, there are a number of factors that we believe are important. Firstly, gross under investment in most African countries over decades has meant that mobile connectivity will be the nearly exclusive way that Africans come online. Mobile telecommunication companies have invested billions of dollars in expanding and improving the quality of mobile connectivity to African – we estimate around 70-80% of all Africans now live in an area that is covered by a mobile network signal. In addition, data from Facebook and other popular online services show that internet connected Africans are predominantly accessing these services from a mobile phone.

Secondly, for those able to get online, the cost of getting online (as a percentage of per capita income) has been decreasing, rapidly. Data from the Alliance for Affordable Internet on mobile data costs shows that on average the cost of 1GB of mobile data has dropped from around 12.5% to 8.8% of GNI per capita from 2015 to 2017 and it continues to improve. In Egypt, Ethiopia, Kenya, Nigeria and South Africa, the affordability of mobile data over this period has improved by over 50%.     

Finally, the affordability of internet-capable mobile devices is a significant factor that limits the uptake of smart phones for access to the internet. A recent report by GSMA found the cost of the handset to be the highest perceived barrier to mobile phone ownership across many emerging markets. The cost (and hence affordability) of these phones has been improving – the same GSMA report found that the average selling price of a smartphone in Africa decreased by about 20% across Africa from 2008 to 2017. Nevertheless, the average smartphone still costs between $100 and $200 in many emerging markets, price levels that are still unaffordable for large segments of the population with limited to no access to asset financing products that are traditionally available in developed economies to support the purchase of these devices. Many people in developed economies are very surprised to learn that the typical African consumer has to pay the entire amount upfront to purchase a smartphone. Unlocking product financing has, in our view, been an integral first step to solving for several contiguous problems, viz, access to credit (finance), access to quality mobile devices, access to the internet, and most importantly, offering Africans optionality to improve their personal and professional lives. Africa cannot afford to be the dumping ground for feature compromised devices that worsen the total cost of ownership while luring users with the promise of a cheap device.

Payjoy enables people who lack credit (or credit history) to gain access to smartphone financing, thus improving [quality] smartphone penetration in emerging markets including Africa, India, Latin America and SE Asia. The company’s full-stack platform pulls together an ecosystem of OEMs, Resellers, Finance Companies and Telcos through partnerships that enable it to provide a seamless product. It currently has partnerships with Samsung (India), ITOCHU (Indonesia), Boabab (Cote d’Ivoire), MTN (Nigeria, Zambia) and a number of others including Apple, Verizon and Qualcomm. PayJoy’s locking technology embedded in the operating system also enables the smartphone to act as collateral for both phone financing and micro-lending thereby further democratizing access to smart phones and internet and opening up opportunities that were previously inaccessible to the middle to lower income segments of the relevant economy, thus assisting them to move out of poverty.

Doug Ricket, the CEO and co-founder of PayJoy, is one of those founders we adore. Since meeting him almost 5 years ago, we have been impressed by his relentless focus on unlocking product finance. He has gained a deep understanding and attachment to this problem through his work at Google, D.light and the Peace Corps. PayJoy for him is not just another bright idea, it is a problem he is deeply committed to solving. Payjoy believes the time is now and we strongly agree.

We have built, and continue to build, a portfolio of symbiotic investments in companies that support our investment theses of fragility, lift, lubricants and organizing the offline. To illustrate, our investment in Mines.io, an ethically responsible small-check lender focused on serving the underbanked and unbanked population in Africa and elsewhere by offering unsecured loans with loan decision underwriting in 60 seconds or less, is an example of how we looked to build a full-stack approach to financial inclusion in Africa. Our investment in Payjoy solves the consumer’s ability to access smartphone-secured credit that allows them to manage cashflow, build a credit history, and create life optionality by accessing internet services via better quality devices. Another [undisclosed] investment of ours is addressing inclusion by solving the fundamental issues around network access and elasticity through material cost reduction in service providers’ capex and opex.

As an Africa-focused VC firm, from inception we have been very thoughtful about how to invest to protect and empower the fragile African consumer and SME. Antifragility should underscore the pursuit of prosperity. We are of the view that, through syndicated educational content, our network of portfolio companies can foster financial wellness in an environment where there has been chatter about abusive consumer behavior AND predatory lending practices leading to debates as to whose role it is to ensure microloan borrowers responsibly use credit. For Payjoy, the platform ensures credit is specifically used to finance (new and preowned) smart phones which, in turn, we believe can significantly improve standards of living. The locking technology, which turns the smartphone into collateral, also ensures that microloan borrowers are disciplined in the size of loans they secure, in making timely repayments to avoid restricted access to their phones, and spiraling into a debt trap.

One important driver for us, in spreading financial wellness to populations that may never have access to credit otherwise, is to ensure that the feedback loop between access to credit, good repayment behavior and rewards, including but not limited to better financing terms, is relatively short. We are working with our portfolio companies to ensure empathy and enforcement are engineered into their platforms. This will benefit the many and concurrently ensure the abusive few are course-corrected in short order.

Making quality smartphones more affordable will be a major step towards improving internet penetration in Africa and emerging countries. This, in turn, will sponsor full access to the world of tech-enabled products and services leading to professional and personal lift and financial inclusion, amongst several other benefits. We look forward to working with an experienced and committed team and supportive co-investors to make this future a reality.

We are pleased to be participating in this financing with our co-investors including Greylock Partners, Union Square Ventures and Core Innovation Capital. We look forward to working with Doug, Mark, Gib and the Payjoy team to deepen smartphone penetration across emerging markets, unlock collateralized financing for the bottom and middle of the pyramid, and increase access to previously unreached communities while helping spread financial wellness.

Our Investment in WorldCover

Agriculture is a key economic sector in many countries around the world. In Sub Saharan Africa (SSA) for example, the sector contributes, on average, 15% to the GDP of the region. More importantly, agriculture’s contribution to GDP reaches as high as 50% in Chad and ranges from 20-40% in the most populated countries in the region such as Nigeria, DRC, and Ethiopia. The sector is also important for employment - more than half of the total labor force in SSA is engaged in agriculture on smallholder farms (less than 2 hectares in size) that constitute approximately 80% of all farms in the region. 

These smallholder farms are for the most part rain-fed and heavily exposed to the impact of adverse weather patterns, which can be significant. In Kenya alone, the 1998-2000 drought was estimated to have had economic costs of US$2.8 billion. More dramatically, the post disaster needs assessment for the extended 2008-2011 drought estimated the total damage and losses to the Kenyan economy at a staggering US$12.1 billion.

In more developed economies, there are established markets for the transfer of such risks from individuals and institutions facing such risks to counterparties that are better able to diversify and manage them. However, in Africa and across much of the emerging world, insurance and reinsurance companies have done a suboptimal job of identifying, capturing and transferring these risks to market players who are best able to underwrite them. 

WorldCover was founded to address the last-mile transfer of these kinds of risk by powering a climate risk marketplace initially targeted at the ag sector. In emerging markets (starting with SSA), WorldCover connects farmers (and ag parties exposed to climatic risks) with climate risk investors. Through its risk transfer platform, the company offers farmers protection against natural disasters and phenomena that negatively affect their crop yields, while giving risk investors the desired diversification of their risk portfolios and offering uncorrelated investment returns. For the farmers, insurance cover provided through WorldCover safeguards their livelihoods and, as studies have shown, gives farmers the confidence to further invest in their farms, unlocks access to credit and other services, and ultimately produces more income for them and their community.

While others are tackling the problem in a variety of ways, we are particularly excited about WorldCover’s approach using an ‘easily digestible’ and understandable product, distributed directly and through local partners, combined with simple and cost effective processes for claims and claims administration, all leveraging the Company’s proprietary technology. The platform is flexible yet robust and can be used all over the world for a wide variety of natural phenomenon that threaten agricultural yields such as drought, flood and typhoons.

Chris Sheehan is the type of Africa-focused entrepreneur we love to support. He has come at the problem with a distinct approach and, together with a highly experienced team, has developed the zero-cognitive-overload product and further demonstrated its fit with the needs of smallholder farmers in Uganda, Kenya and Ghana. These farmers have demonstrated trust in the company and signing up for, and repeatedly subscribing for, insurance cover over the last few planting seasons. 

We are pleased to announce our investment in the Series A round for WorldCover, in conjunction with our co-investors, MS&D, YCombinator, Savannah Fund, Greylock, Index, Venrock & a host of high-quality angels. We look forward to working with Chris and the team to drive adoption of climate risk protection for agriculture in Africa specifically, and emerging markets in general.

Congratulations to Riby on the EFinA Financial Inclusion Grant

Congratulations to our portfolio company Riby Finance Limited for being a recipient of the EFinA $2 million financial inclusion grant. This is a testament to the company’s ongoing hard work to drive the banked population significantly higher whilst building a strong and sustainable business.

At EchoVC, one of our investment theses is organizing the offline and then bringing the offline online. So we are always keen on partnering with businesses that can elegantly automate offline behavior. Group lending and savings is one of such behaviors. We had thought deeply about the best approaches to automating this and then we met Salami Abolore, the founder and CEO of Riby Finance Limited.

Salami has an unmistakable aura of passion, resilience and determination to solve the specific problems of the underbanked and unbanked using the existing group culture. Faced with a personal problem of financial management and access to loans himself, Salami created an offline group amongst his friends in a bid to encourage joint savings (and access to credit whenever the need arose), with the aim of promoting and digitizing savings, lending and investing amongst peers. This mission birthed Riby.

Riby distinctly operates in a highly fragmented marketplace of cooperative banking with the bulk of its target market being at the bottom of the pyramid. Starting with Nigeria, with less than 5% of adults having access to credit cards or bank loans, and 40 million people unbanked, Riby’s objective is to introduce and deploy the culture and practice of being banked to the millions of Nigerian adults currently financially excluded by allowing them to save, borrow and invest with ease.

Riby does this by strategically positioning itself as an aggregator platform where members of cooperative societies have a line of sight into their activities and can access short-to-medium term loans or grants from commercial banks, DFIs, development banks, not-for-profit organizations, etc, who, in the same vein, get high-value insights into disbursements of loans or grants to the final beneficiaries. As an example, one of Riby’s products has powered the group lending activities of a notable government entity enabling it to attain the status of being the second highest micro-lender in Africa.

According to EFinA research conducted in 2018, 75% of the adult population saved via informal structures (groups and cooperatives) and family and friends and 100% of the population borrowed from the same. While a lot has been done with regards to ensuring global financial inclusion, access to finance still remains a major inhibitor to economic growth. With at least 50 million adults in Nigeria being financially excluded, and a 4.3% credit penetration from banks in Nigeria, Riby has a large target market to which it can provide a viable alternative whilst championing the high-impact cause to increase financial inclusion.

We have always believed that in this nascent tech environment, industry winners in the near-term will be those who have chosen to first refactor rather than disrupt. Hence, by taking offline behaviour and replicating it online, Riby is not attempting change the decades-old tradition of communal savings but instead, optimizing and scaling it to ensure that its products are accessible and usable across the various age cadres and literacy levels.

We are incredibly excited to support Salami and the Riby team as they grow to become a centralised repository of financial data and a lending and savings platform for cooperatives and societies. We look forward to working together to onboard ten million unbanked Nigerians!

It’s a HIT: Office Hours

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INTRODUCTION

On the 4th of April, 2019, the EchoVC team had its first ‘Out of Office Hours’ where we met with founders of tech and tech-enabled businesses. This was done at Art Café (Victoria Island, Lagos) which was very cozy and seemed perfect for an out of office meeting.

During the three-hour window, the EchoVC team spoke to over 15 different tech businesses pursuing opportunities in diverse sectors such as PropTech, FinTech, Logistics, E-Commerce, etc. Honestly, we had hoped we would meet at least 1 good company, but we actually found a few really interesting companies.

We spoke with 2 categories of people:

The Entrepreneurs: Those who run businesses with some significant traction and were looking to raise, structure, expand or learn.

The Professionals: The bank guys, the lawyers and some curious cats who just wanted to know what this was all about.

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CONTEXT

As a reminder, EchoVC is a seed and early stage venture capital fund focused on tech and tech enabled businesses. We are sector agnostic and we love businesses solving major problems that are both realizable and scalable. 

We have been incredibly busy investing in secrets, and because we know that to find secrets we have to go treasure hunting, we thought what better way to meet great founders, share knowledge AND give back to the ecosystem than to pop our heads out for out-of-office hours.

Think about it!!!

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But, Don’t Overthink it

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It was just a conversation, we just wanted to have a chat to get to know you and your business. We had never done this before, so we were as nervous as our founders (though our founders were not aware). We wanted a relaxed environment so we could be free to have an honest conversation. It’s like that first blind date.

We also got some funny and serious questions too – below are a few:

1.    Q: Are you with the EchoVC team?

A: Depends on who is asking. And please ignore the t-shirt.

2.    Q: What inspired the team to hold office hours?

A: We realized that a number of founders and tech teams sometimes require an environment that is chilled to discuss business ideas on the surface and gauge if they are investment-material. This was the major inspiration to do this.

3.    Q: What are the major characteristics you look out for in a Tech business?

A: 5 T’s and they are:

·      Strong TEAM;

·      Great TECH (Product);

·      Large TARGET ADDRESSABLE MARKET;

·      Wide TRENCHES (MOAT); and

·      Decent TRACTION (Existing Users, Paying customers).

Also remember that personal details are not exchanged and it’s important to adhere to this so as not to come off as obnoxious (if you know what I mean) 

4.     Q: can I have your contact details?

             A: Submissions@echovc.com

             Q: I need your personal details, I need to have that personal touch

             A: NO!

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Please refrain from bringing that dry toasting line to an Investor meeting. While you think about this, notice the submission plug above? that’s where you send your pitch decks to. Come with your business cards and a crisp narrative about your business! 

Back to the point I was making earlier - we had a fantastic time meeting with the entrepreneurs who came in for the office hours. We ended up interested in 3 founders we met, and in our usual style we deliberated on these companies, bouncing ideas off each other, akin to a typically perfect day at the office. We like such meetings where we (investors) and the entrepreneurs are ending our conversations with a huge grin.

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This is the start of something new, and we would encourage you all to look forward to our next Office hours, and plan to drop in.

We are always excited to see what industries the founders are playing in and how they are thinking about solving big problems.

There is much more coming from the EchoVC team so sit tight..

From the team at EchoVC, we want to say thank you for coming out and spending the day with us.

Our Investment in SystemOne – The Digital Backbone for Infectious Disease Diagnostics

Across Nigeria and many parts of Africa, patients walk into public hospitals to get tested for infectious diseases such as HIV and TB. Once the test results are available, they are manually recorded on paper and a local government supervisor does the rounds to collate these results and funnel them to state and national levels. This allows national health officials to understand the disease burden and ensure follow up and treatment of patients that test positive. The traditional test-diagnose-collate-distribute process usually takes more than 30 days by which time some patients have lost their lives or have already infected others.

This state of affairs creates a very significant problem and health risk. We are excited to announce our Series A investment in SystemOne (through our partnership with TPG Growth and TPG Rise Fund). Simply put, SystemOne is an infectious disease diagnostics company. The company’s  GxAlert® and Aspect® platforms ensure that the time and knowledge gap between diagnosis and reporting is closed by disseminating test results in real-time to clinicians, health ministries, regional/global health funders and patients. By providing health officials with instant notifications and up-to-date dashboards, SystemOne delivers real-time understanding and decision support for disease trends, device functionality, error rates and more.

SystemOne’s platforms are multi-device (including RDTs) and multi-disease such that health officials and funders can have single line-of-sight into all diseases across every diagnostic device in a region. The company has connected over 2,000 diagnostic devices in 40+ countries and has automatically transmitted over 5 million diagnostic results.

We liked SystemOne for several reasons – one of which was that it was solving a very large problem. $25.7bn is being spent annually on TB and HIV. However, the detection rates in places like Nigeria are still as low as 17% for TB. Millions of dollars are wasted in consumables such as MTB/RIF ultra-cartridges because of the lack of insight into inventory levels. Diagnostic devices are left inoperative for periods of time with patients left untested, because there are no mechanisms to alert senior health officials or device manufacturers. SystemOne provides insight for, and into, all the constituencies thereby generating more value for money and arming funders and national health officials with the necessary real-time data. The excitement we heard when we spoke to some of the customers was palpable – “We have been waiting for a solution like this!” The product-market fit has led to significantly low churn with many customers renewing after the end of their contract period.

The SystemOne solution is the only solution in this space that is uniquely designed for developing markets to address issues around power, data shortage, connectivity, technical know-how and language. The on-the-ground support also provided makes implementation and operation easy. 

SystemOne’s co-founder and CEO, Chris Macek previously founded Relyon Solutions, a company that developed large-scale software applications for government projects, the World Bank and universities. Along with his co-founders – Nicolas Boillot and Stefan Baumgartner – they have immersed themselves in this problem set and, with this Series A financing, they will be working on not just detecting but linking every positive diagnosis to treatment to help move the world steps closer to the attainment of the UN’s 90-90-90 goal.

We are very excited to welcome Chris, Nicolas, Stefan and team to the portfolio and grateful to partner with an incredibly driven group as they deliver global impact!