Now while Tebogo acknowledges that the idea in itself isn’t novel, after all it is very common to borrow items from our friends or neighbours, she didn’t know of any scheme in existence such as Just Float. “Think of it as Airbnb for anything you might need, offering a super convenient means of accessing something for a short while quickly and safely”, she added.
Just Float’s initial market research in South Africa showed that people were very open to the idea of making money out of so-called ‘lazy assets’; those items we all have lying around that we bought to serve a purpose and then file away in a corner of a room never to be touched again.
Essentially it works by the borrower paying for the item it wants to use and agrees to ensure it comes back in more or less the same condition as when it received it. The transaction is insured for the short term it is active for and therefore Just Float needed an insurance partner that was innovative and willing to provide this type of cover, and luckily South Africa seems to be emerging as an insurtech hub in its own right. Additionally, Just Float had to figure out how to do social vetting of users of the platform, both lenders and borrowers. It needs a way to protect participants from potential fraud or loss and the only way to really do this is to implement an insurance element.
The startup found that there was no insurance product like this in South Africa and are currently in talks with an insurance startup on the best way to implement this element of the platform. While existing social media platforms like Facebook and LinkedIn could provide some degree of social vetting, neither is a foolproof way to insure this novel approach to peer to peer lending.
Tebogo further added: “For a product like this to work, it shouldn’t create new problems. It should supplement and add to what people are doing and improve or enhance it. We are at the MVP stage and are focussing entirely on South Africa as a market. In terms of the logistics of exchange of goods, one option is for the borrower and owner to exchange messages regarding the product then meet to exchange. We have a built-in safety element to the program to mitigate any issues that may arise from this process. Another option is for a collections company to pick up then drop the item at a well-known outlet like supermarkets and then the borrower can go and pick it up. This is to ensure safety at all times and is an option we are continuing to explore.”
No doubt Just Float is disrupting this space in a way it never intended. Tebogo acknowledges that additional use cases of this platform could be travel, short-term car loans and generally solving other uniquely African insurance problems. The startup would consider Ghana as a potential market for expansion due to the largely English-speaking population who are also generally quite tech savvy. The team recognised that one of the challenges in the South African market include slow penetration in the use of mobile money, while in Ghana, mobile money has a much higher level of usage. But first, it needs to establish its offering in South Africa and grow its customer base, which so far shows a positive trend in take up.
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Unlike many other parts of the world, we’re finding that in African there is much more of an “operator” turned “investor” story happening. In Europe, the number currently stands at 70% of investors have no startup Founding experience. In the UK, only 8% of investors have ever worked in a startup.
In Africa, we are seeing changes to the demographic breakdown of the teams deciding the funding our startups receive. With the development of funds like Hummingbird Impact and others, we are seeing that more and more African founders are seeking opportunities to formalise their passion for the next generation of startups by forming funds. As Muthoni says, there is a level of entrepreneurialism aligned with building a fund and we’re seeing African founders take up this new challenge to innovate in this area as well.
Muthoni Wachira says there is a key benefit to her experience as a former founder: “I come with a lot of empathy. I can understand their challenges and the decisions they’re always having to make. Sometimes it can feel like you’re firefighting every single day, but it's a journey that’s worth taking.”
Hummingbird Impact was announced on the 12th of March 2020, a day before most of the world went into Covid-19 related lockdown. It's times like these in which previous experience of being a founder is worthwhile. The dynamism that must be brought to the table. To get through and continue building the mechanisms that are needed in this changing landscape is what entrepreneurship is all about.
In Africa’s tech ecosystem, founders are often dealing with infrastructural, regulatory and other situations founders in other ecosystems are never going to have to consider as they build their innovations. Hence, in Africa, founders are building their startups in a way that doesn’t necessarily follow the methodology that we are seeing take root in silicon valley. Growth in Africa is typically much more realistic, with most startups inadvertently following the camel rather than unicorn methodology. In 2018, Founders like Kola Aina and Jason Njoku have pushed for ecosystem builders across Africa to consider new models, particularly those from somewhat similar emerging markets such as India for inspiration, rather than seeing the US model as the only answer to startup success. This is one of the many reasons we’re so excited about the development of a vehicle like Hummingbird Impact.
Over her 15 year career, Muthoni has sought to engage international investors to put millions of dollars into areas that create an impact as well as make a profit on the African continent. She has championed locally educated founders and female founders and looked outside of the typical sectors to find standout startups in areas that get less TechCrunch shine. Her explanation of the way Hummingbird went about developing their investment thesis is testament to her commitment to the long-term growth and success of the African tech ecosystem as a whole.
In case you missed it, Orange Digital Ventures released a report in July 2019 that showed that the majority of startups funded on the African continent were led by ex-pats, most of whom went to 1 of 7 universities and had over 5 years of work experience in either the UK, the US or France. This was one of the things that drove us to create AfriTech XYZ because we know that the systemic exclusion of a group of people will lead to the downfall of the entire group in time. So we created a mechanism whereby locally educated founders and female founders forming early-stage tech startups could receive the tools and resources they need to leapfrog some of the key challenges they may experience, thereby making it easier for them to access funding and eventually startup success.
The African tech ecosystem as it stands, “has created disparity for women and local founders and we think that is an injustice that needs to be rectified and you can’t rectify an injustice without being intentional about it. That’s why we’ve chosen to only invest in ventures that have at least 1 local founder and to employ a gender lens holistically; from the founding team to the beneficiaries and ultimately to the board level. I think women need to play a bigger role than they have if we’re going to grow truly inclusive and integrated societies” - Muthoni Wachira
To ensure that the future of the African tech ecosystem is representative of the needs of the African population, in the next five years, we’re going to need to see more female founders as well as more female fund managers. This is something that Muthoni is particularly interested in helping bring to light. Only 8% of VC investors are women. Fewer than 1% are black. “I believe that representation matters. And if you don't get women at the fund manager level, then you won't see them significantly represented at the founder level or the beneficiary level” - Muthoni Wachira.
How do you address a lack of diversity within the African tech investment community? Well, Muthoni has co-founded the Africa Venture Partner Network. A community of aspiring women fund managers with different skills, diverse backgrounds and deep networks in Africa’s tech ecosystems. By collaborating on track-record investments, Muthoni seeks to provide pertinent exposure that will accelerate these women to decision-making positions within venture funds, thereby unlocking the diversity dividend for venture capital on the continent.
Another way Muthoni is tackling this lack of diversity is in the way she is building her fund’s team. She is bringing together people from different professional and educational backgrounds to ensure that founders have a representative they can effectively engage with throughout the investment process. As for bias, Muthoni says, “that’s a personal responsibility that we each must take”
Importantly, Muthoni also sees the need for opportunities to encourage active mentorship for female founders. Through the fund manager network she is building, she will empower the female founders turned fund managers to become active mentors of female founders across the continent who are dealing with the social and cultural associations with womanhood in Africa while also trying to build enterprises that grow and scale effectively. Something she has found works for female founders who have the responsibility of family and children is to “start thinking about succession early on”.
“If you’re a founder, one of the hires I would make early on is a Chief of Staff; someone who can ensure operational efficiencies is there, that there is operational consistency and that will allow you to be at a strategic level, so if you needed to take maternity leave, the operations can continue in your absence and you can continue to contribute with less time capacity, to the strategic vision and direction of the organisation” - Muthoni Wachira.
In this discussion Bayo and Muthoni touch on the need for truly Pan-African funds that engage startup ecosystems across the continent and not just in the Anglophone countries, as is typically the case. At Hummingbird Impact, they are also aware of the disparity of opportunity afforded to startups in Francophone Africa and are addressing that in the development of their fund and the representation within their team. For example, the fund has a French-speaking investor who has experience in Francophone Africa.
According to Muthoni, one of the reasons VCs aren’t focusing on Francophone Africa is because the startups they produce are not often seen as meeting the investment readiness standards those VC have set. To ensure the growth of the startup ecosystem in Francophone Africa, but across Africa as a whole, VCs will have to spend the time engaging the ecosystem actors to help them define and enact movement towards investment readiness.
We’ll end this post with Muthoni’s hope for the future of the Africa, “there needs to be more collaboration between incubators and accelerators with the investment community. Beyond that, we do need to be intentional about the change we want to see and put our money where our mouth is.”
COVID-19 and Black Communities
Tech in COVID-19 Times:
A few things to keep you busy: