Having invested in the likes of Rwanda’s ARED, Nigeria’s Farmcrowdy and Ghana’s AgroCenta, the Germany-headquartered GreenTec Capital Partners is quietly establishing itself as a force to be reckoned with in the African tech startup scene.
So far, GreenTec has backed more than 10 startups in five different countries – Uganda, Rwanda, Ghana, Nigeria, and Cameroon.
The company is headed up by Erick Yong, the Germany-born son of a Cameroonian diplomat, who launched GreenTec with former Deutsche Bank director Thomas Festerling in 2014.
“I have always been an entrepreneur and have created companies for me and for others,” Yong told Disrupt Africa.
“I have had a good career with a lot of international experience in management and business development, and have learnt the challenge of being an entrepreneurs, even more so when you are an African entrepreneur.”
He said he believes entrepreneurship is the key to the development of the continent.
“It is not only a necessity but also a unique opportunity. The economy as we know it is on the way to change, and for entrepreneurs and investors it is a great chance to participate in the growth of the economy and be in position to discover the industry leaders of tomorrow in Africa,” Yong said.
“More than that I felt I could give back a bit of the chance I had by supporting other African entrepreneurs like me to succeed and to impact positively the face of Africa.”
GreenTec focuses on impact-oriented activities, having invested in sectors such as renewable energy and agri-tech thus far.
“Most of our investments in these sectors have a strong and measurable impact on their local community. We help them extend the reach of their local solutions and improve the lives of people,” said Yong.
“We are looking at businesses that improve the lives of the population and respond to a need. They also have to be scalable at a Pan-African level. New technology is a recurrent component in our investments, as you can combine with almost all sectors.”
Yong said the company has a rigorous risk management approach that applies a number of macroeconomic factors and publicly available data – on things like political stability, corruption levels, and ease of doing business – to assess a country’s suitability for investment prospects.
“We rank each of the African states by these metrics and focus on the most relevant. We have at the moment a strong interest in Nigeria, which is a huge market>”
He said the tech space in Africa right now is a treasure trove of opportunity.
“The needs are so big, the informal sector so dense, that the creativity of techies can really express itself. Today we find that technology is more and more at the service of the “African way of doing things”, and I found it great,” Yong said.
African startups, however, lack structure.
“We are focused on the early-stage startup where you can find all kinds of great ideas, but unfortunately at this stage they are hardly attractive to qualitative people or partners. In addition to that the access to the right technology is also a problem,” he said.
“They most likely have a very good understanding of the problem but lack of access to the appropriate tools to solve these problems slows their development and the trust of external partners in their business.”
The private sector, rather than government, is best placed to address these issues, according to Yong.
“I believe that the policymaker cannot really help startups. I think startups should help policymakers, as they open new avenues that bring the policymakers to question themselves on the rightness of the existing law,” he said.
“Of course the fact that a lot of governments have simplified the process of creating companies has facilitated the creation of some startups, but how can they help something that is constantly recreating the environment?”
Yong believes investor interest in Africa is increasing, but says the lack of bankable startups is a challenge.
“We have noticed a trend from the different funds in Africa to look for solutions to reduce their ticket sizes in order to access smaller projects,” he said.
“The sourcing of good project is an issue, and investors are investigating more and more ways to invest closer to the so-called “Valley of Death” – early-stage startups. This area represents the most fragile stage for a startup, but is also the most dense in terms of number of startups.”