Gender Lens Investing in the African tech ecosystem | Muthoni Wachira is Afritech Verified

​​Starting with an undergraduate degree in actuarial science, Muthoni Wachira first discovered her passion for African tech as an investment banker turned fintech entrepreneur. Along with her brother in Kenya, she co-founded a startup called “Kash-Kilo” that was looking at ways to innovate in the microfinance space. ​

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.”