How tech investors in Africa coped with the changes enforced by COVID-19


COVID-19 has changed everything, everywhere, not least how tech investors in Africa operate.

Last week’s virtual Africa Tech Summit Connects event brought together a host of African tech investors to discuss trends, challenges and opportunities in the wake of COVID-19, and all agreed that the way they do business has been altered by the pandemic.

“The pandemic has changed the way people do business, it has changed the way people look at opportunities, and fundamentally it has changed the way investors are evaluating opportunities,” said Dotun Olowoporoku, associate director at Novastar Ventures.

At the beginning of the crisis, the focus of all investment firms was on ensuring their portfolio companies were equipped to deal with the effects of the pandemic.

“We wanted to figure out who would be in trouble, how we could help. We spent more time than was probably useful figuring out the best way to provide bridges during this time; we thought a lot of our companies would need money,” said Lauren Cochran, managing director at Blue Haven Ventures.

“And we had lots of internal debates about how rigid we would be at times like this.  You don’t want to be seen to be taking advantage of the situation a company is in and getting great terms, but at the same time the world seems to have changed so valuations are different, revenue projections are different, and everything else. I was pleasantly surprised that most of that never got out of the iteration phase.”

Blue Haven, she said, went quite quickly from “emergency pre-triage” to what kind of strategies make sense for each company at this time, but they could still not think about making new investments. This changed around July, and the company is now back doing on-the-ground due diligence.

Ido Sum, partner at TLcom Capital, said his company also took time early on to help its existing portfolio.

“Cash is king in such periods, so we made sure everyone had enough cashflows and enough runway,” he said.

TLcom started going back to its pipeline in April and May, and found that companies had analysed implications and refocused their businesses accordingly.

“These became very interesting deals for us and we have since entered into new deals,” he said.

“It was an interesting time to do due diligence, and there were some hurdles in how to manage it. The fact that we had people on the ground and part of the team in Nairobi and Lagos was a huge help, and the fact that international investors were taking a step back created a lot of opportunity for people who knew the local ecosystem and knew the impact of COVID on the local ecosystem.”

For those that wanted to continue investing throughout and could not carry out physical due diligence, there was a need to adapt. Ashley Lewis, senior investment officer focused on the Africa region with Accion Venture Lab, said her organisation did its first fully digital due diligence process in May.

“When I say that I mean we had never met the founding team in person. And this is a big step out on faith, to say that we can do the pattern matching, we understand the business model, we know the market, and we’re willing to have a digital coffee with the founders and try to build those relationships that you do on the ground,” she said.

Accion has now done this with three deals in three markets, and Lewis said she was proud of her team’s response to the crisis. 

“I think it was a great signal to the market, that these businesses still need capital and we are still going to do it,” she said.

Accion leaned on a few things to reduce risk, including bringing in its whole investment team to assess startups, both on the tech and operational sides. It was also never a lead investor, so worked closely with lead investors to ensure alignment on pricing.

“To be honest there were some contentious conversations and it wasn’t always simple and straightforward. We’ve seen some occasions during some of our deals where lead investors changed because they couldn’t align with founders on what was fair,” Lewis said, adding that Accion had always tried to be fair and founder-friendly, and also documented the changes to their due diligence process to make it transparent.


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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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