Last month, Ethiopian ed-tech startup Beblocky, Zimbabwean AI-based health platform Dr Cadx, Kenyan insurtech startup Kakbima, Nigerian payments platform GladePay, and Ghanaian digital bank Pennysmart secured US$25,000 each from The Baobab Network after participating in its accelerator programme.
Not much new there, you may think. Yet this accelerator programme has no cohorts, no fixed location, and no end date. And it is different for every company that takes part. In short, The Baobab Network is doing its best to reinvent how acceleration works in the African tech space.
Formed in 2016 and initially known as New Venture Africa, The Baobab Network began life running intensive, one-week consulting programmes for tech startups across Africa, bringing top talent from its global partner network to work on the ground with local founders. It has broadened its horizons since, after rebranding and raising funding, as it looks to provide additional support for founders, but never intended to build an accelerator programme.
In fact, we actively tried to avoid doing so because of negative connotations with the accelerator model that we’d encountered across the continent,” head of ventures Richard Sears told Disrupt Africa.
“We investigated a number of different models, including joint ventures or licensing deals to help startups internationalise their tech. Ultimately though, the biggest challenge facing founders we worked with was accessing early-stage capital, so that’s where we decided to focus our efforts.”
Its first innovation was in doing away with a set duration for the programme. Once a start-up joins The Baobab Network, they are always a part of The Baobab Network.
“The idea that a startup can graduate from a three, six or even 12-month programme, pitch at a demo day and raise a US$1 million or more seed round generally doesn’t fly in nascent tech ecosystems,” Sears explains.
“Where our startups operate, it generally takes founders longer to get to the stage where they can attract this level of funding, and we wanted to ensure we supported them throughout this journey.”
That’s not all. Rather than have startups relocate for any period of time, as per most programmes, The Baobab Network decided to let founders stay with their businesses, with programmes mainly remote and the accelerator’s team travelling to the startups rather than the other way round.
“We really didn’t want to take founders away from their businesses for extended periods of time, and we wanted to ensure we could work with startups across the whole continent, so we also decided to make our accelerator largely remote,” said Sears.
Finally, the feedback the company received from its consulting projects suggested their value was largely derived from their bespoke nature.
“Every project we ran was different because it was tailored to the needs of a particular startup, at a particular time. As a result we also decided to do away with cohorts,” Sears said.
“In fact, we even decided not to have a set accelerator programme at all. Instead, just as we did with our consulting projects, we decided to create a tailor-made accelerator programme for each individual startup we work with.”
So, in summary – no set duration, non-residential, no cohorts, no set programme. Not much like an accelerator at all, really.
“We had no preconceptions about what an accelerator should look like and we started from scratch when creating our programme. Our aim was to build something that adequately addressed the myriad needs of startups operating across totally different sectors, technologies, business models and geographies,” said Sears.
How does it all work in practice? The Baobab Network’s programme always starts with a one-week consulting project, where a handful of expert consultants travel to where a startup is based to work with founders on their businesses and the challenges they are facing.
“While the week is about getting as much done as possible – and it’s incredible just how much we can achieve in such a short space of time – it’s also a chance for us to build a relationship with founders, which is critical as our work with startups after this initial week is largely remote,” Sears said.
After the project, The Baobab Network injects US$25,000 into startups in return for a 10 per cent equity stake, and assigns a “Baobab Venture Partner” to each startup. For 24 months, this Venture Partner will provide hands-on support to startups on a remote basis.
“They are responsible for building out the bespoke acceleration programme for the business – they do so by working with founders to set milestones and identify challenges to the business, then by building a tailor-made programme around these to help overcome the challenges and achieve the milestones,” said Sears.
“And they act as a primary point of contact for startups at The Baobab Network, responsible for leveraging the skills and experience of our wider team, our corporate partners and our investment network to accelerate businesses and help secure funding to unlock their next phase of growth.”
“Funding to unlock the next phase of growth” is what The Baobab Network is all about. The aim of the programme is to help founders raise a seed round of US$1 million or over from institutional investors.
“A great deal of work involves preparing founders and their businesses for follow-on investment. For some startups this may only take a few months, for others it could be a few years. Our aim is to stay flexible and ensure we’re best meeting the needs of our founders as they evolve through the early phases of their startup’s growth,” Sears said.
Over the last few years The Baobab Network has built out a strong investor network of family offices, foundations and funds looking to invest across the continent, while Sears said it has also invested in growing its own angel network of retail investors and high net worth individuals, which it will leverage to help bridge the funding gap founders face.
Other kinds of support is offered as well, almost entirely focused on the business side. This support is quite broad, ranging from setting up a company in the right way, through achieving product-market fit, to fundraising. Sears said the company’s challenge is to customise this support and deliver it at the right time, ensuring everything it does is relevant and that it is not distracting its founders in any way.
For The Baobab Network, corporate partners are key to this, and larger organisations are brought into the fold to engage with its startups in a number of different ways.
“We have partners like Accenture and L’Oréal who send top talent from around the world to work on consulting projects with our start-ups. Partners like ?What If! Innovation provide support on the ground, but also offer branding, design and product development support on a remote basis,” said Sears.
“Then partners like Standard Chartered, Johnson & Johnson, Sanofi and Engie are more interested in running pilots with startups and exploring partnership and strategic investment opportunities with them. We also have a range of partners – including AWS, Twilio, Segment and Stripe Atlas – who offer credits and discounts to help get startups up and running.”
So what is next for The Baobab Network off the back of investing in its first five startups? Sears said it is about to finalise terms with another three companies, and is striving for more continental coverage.
“We are proud to go into countries that are more challenging for international investors and to develop structures to help de-risk these investments for others,” he said.
“Most of the work we have done with startups is to ensure they have strong foundations in place from which they can scale; this has involved a lot of work on positioning, messaging and unit economics. We have also had some real success across business development, one of our real strengths, even at this early stage. We’re now starting our first fundraising efforts with these businesses, who are looking to secure between US$150,000 and US$500,000 in pre-seed funding over the coming months.”