Meet the Investor: Muthoni Wachira, EWB Ventures

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A recovering banker, Muthoni Wachira is now part of one of the most active impact investment organisations in Africa, providing capital and other types of support to startups across various sectors.

A Kenyan, Wachira started her career in investment banking in London, but decided after a couple of years that she needed a change. 

“As prestigious and exciting as it was, it wasn’t fulfilling. I chose to move back to Kenya and join as a co-founder in a startup that was innovating in the microfinance space,” she told Disrupt Africa.

From there, she joined afb, helping launch two business units serving MSMEs in East and West Africa. 

“This journey is what ultimately led me to impact investing, which uniquely combines my entrepreneurial flair, investment thinking in tackling major socioeconomic, and gender issues, with my leadership and governance experience,” Wachira said.

She became investment director for Africa at EWB Ventures, the impact investment arm of NGO Engineers Without Borders (EWB) Canada, in 2017. The NGO itself formed nearly 20 years ago, but it only began exploring impact investing in 2011, resulting in the eventual launch of EWB Ventures.

“Over the years we’ve refined our investment approach and grown the portfolio and now we’re looking to scale it further in the coming years,” said Wachira.

To date, EWB Ventures has made 10 investments across five countries in Sub-Saharan Africa, including Kenyan agri-tech startups LishaBora and FarmDrive, Zambian asset financing business Rent to Own, Ghanaian mobile engagement platform Viamo, and Ugandan credit provider Numida.

“Our investees operate in the agriculture sector, financial services, affordable housing, and education, but have a shared focus on building technology-enabled solutions to unlock opportunities for marginalised populations at the lowest income levels,” Wachira said. 

“With nearly 10 years of investing under our belts, we’ve learned a great deal. We always aim to be agile and are open to taking different roles in fundraising rounds and use the investment instrument that makes sense for the stage and growth trajectory of the business.” 

With this in mind EWB has been strengthening its post-investment support offering, has rolled out an innovative gender lens investing strategy, and has incorporated impact measurement principles derived from transformative evaluation, Made in Africa evaluation, and IRIS metrics. 

“As a catalytic investor, we continue to push ourselves to identify where and how we can have the highest impact in fostering the social entrepreneurship and impact investing ecosystem in Sub-Saharan Africa,” Wachira said.

Because it invests in companies from the idea stage to Series A, the achievements and milestones it gets excited about are different for every company. 

“For example, in the case of Viamo, we invested in 2013 when the company was just starting up and it is now in over 25 countries and has performed really impressively along both business and impact indicators,” said Wachira. 

“For our investee GreenPath, it was a major accomplishment for them to reach a Series A less than two years after EWB first invested, and to bring in a high calibre investor like Novastar Ventures. Our experience has shown us that the milestone of a Series A is immensely difficult for startups in Sub-Saharan Africa.”

EWB’s current markets of interest are Ghana, Ivory Coast, Kenya and Uganda. While it has previously invested outside of these four markets, it has since decided to focus its geographic interest.

“In the coming years however, we expect to expand our footprint to cover Rwanda, Nigeria, Ethiopia and Senegal,” said Wachira.

Wherever it invests, EWB looks to act as a “catalytic investor”. Through deployment of financial capital at an early stage, it de-risks the ventures, allowing them to reach new investor audiences. Over time, it is honing its approach.

“Historically, EWB has also employed a high touch portfolio management model that deploys human capital in the form of highly skilled Canadian fellows to support investees in reaching product-market fit, operational efficiencies, revenue growth and gender inclusion at all levels,” said Wachira. 

“Given the success of the fellowship approach, combined with our focus on investing in local talent, we are in the process of redesigning this support to catalyse professionals from the markets where we invest to play similar roles in our companies.”

Since it started investing in 2011, EWB has noticed a substantial improvement in the quality of its pipeline. 

“This is in good part due to stronger and more mature ecosystems having their early-successes with the likes of Lori, MyDawa, Flutterwave, SafeBoda, Andela and others. These entrepreneurs are trailblazers, inspiring new entrepreneurs and demonstrating that you can successfully build a tech company in Sub-Saharan Africa. As an impact investor, we’re excited to see a growing representation of local and women founders within the latest cohorts of entrepreneurs, and fund managers,” said Wachira.

“Obviously, lack of startup capital, the struggle to access top-tier talent and the unclear path to liquidity remain barriers to a fully thriving ecosystem. However, the growing interest in the secondary market is encouraging. Finally, the diversification in technologies deployed and markets tackled, beyond financial inclusion,agriculture and clean energy, gives us confidence that the momentum of Africa’s tech space will only grow.”

Others are becoming increasingly confident, too. Though Sub-Saharan Africa remains a largely underserved market on the venture funding front, Wachira said investors’ interest is definitely growing. However, she said there remains a gap at the seed stage. 

“Angel networks are nascent and too many fund managers are still based outside the continent, creating significant distortions in the market and signals that the investment community is still hesitant about the opportunities in Africa,” she said. 

“There exists therefore an opportunity for local angels and local LPs to play a catalytic role. Additionally, we have a responsibility as investors to take action against the underrepresentation of locally-founded and women-led startups within VC-backed companies in Africa.”

Finally, she said the liquidity issue is yet to be solved. 

“If fund managers can’t generate financial returns for their own investors, the emergence of Africa’s tech scene will be short lived. For now, we still see a lot of capital flowing into larger rounds,” said Wachira.

What, then, does EWB have planned to address these outstanding issues. Wachira said it had spent the better part of this year developing and piloting its gender investing strategy, which takes a holistic approach to the inclusion of women and girls. 

“We have also spent a great deal of time and thought in the design and creation of a blended capital VC fund that will catalyse the market for seed-stage ventures by proving the business case for early-stage gender lens investing,” she said. 

“We are set to launch this fund in February 2020 with a first close anticipated in Q1 2021. Our fund will build off 20 years of on the ground experience and eight years of investing experience on the continent, and fill an existing funding gap for locally-owned and woman-led startups.”

About Author

Passionate about the vibrant tech startups scene in Africa, Tom can usually be found sniffing out the continent's most exciting new companies and entrepreneurs, funding rounds and any other developments within the growing ecosystem.

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