S2E1: Co-Building The Future – High-Touch Venture Investing

In this episode, we explore high-touch venture investing models – in particular, venture development and talent investing, as well as peer-selected investment.

2:16 – an introduction to accelerator programs and their objectives, with Catalyst Fund’s Aaron Fu.
3:47 – a discussion with Adedana Ashebir on Village Capital’s peer-selected investment model.
6:16 – Founders Factory Africa’s Lwazi Wali and Sam Sturm on venture building and the merits of a human capital intensive investment model.
10:20 – GreenTec Capital Partners takes their venture building model one step further. We hear from Erick Yong on GreenTec’s Results for Equity model.
16:07 – Then, Catalyst Fund takes their venture building model yet another step further. As Maelis Carraro explains, their program offers venture building as a grant and does not take any equity in the startups in their portfolio.
22:55 – While the aforementioned programs support existing startups, Antler’s startup generator investment model brings individuals into a cohort to co-found startups with other participants in the program. We hear from Selam Kebede on the merits of this model for African markets.
27:59 – The Flip’s founder, Justin Norman and executive producer, Sayo Folawiyo, discuss their takeaways episode, and Sayo shares his experience, from a founder’s perspective, as a participant in startup programs.

Lwazi: I mean, advice is great, but we’re not fans of advice because it just doesn’t build businesses. 

Justin: That’s Lwazi Wali, the head of Venture at Founders Factory Africa, a cohort-based venture development program that offers cash investment and in-kind co-building services to startups across the continent. 

Lwazi: I think it’s critical at certain points, but there’s a lot of advice based accelerators and support structures here. Whereas what startups actually need is just somebody to help them build a credit model or build an app. Ours is very much about co-building. 

Justin: At the end of Season One, our three-part series on venture investing in Africa asked what early-stage investment models work well for the dynamics and realities on the ground. In this episode, we take that conversation one step further, and hear from those who are experimenting with and implementing innovative and alternative capacity building, support and investment models here on the continent. We’ll explore three models in particular – peer-selection, venture building and talent investing, and discuss why these models may have greater impact in Africa. What is it that entrepreneurs on the continent need, and how do these models better support said entrepreneurs? How might we de-risk investment in startups and better foster the opportunity for startups to raise later-stage funding? And why should entrepreneurs consider these models in the first place? Let’s explore… 

VO: You’re listening to The Flip – the podcast, exploring more contextually relevant stories from entrepreneurs around Africa.

Justin: Welcome back to The Flip, I’m your host Justin Norman. I’m really interested in the entrepreneur support organizations and venture investors we’re exploring in today’s episode; those who are taking innovative approaches to venture investing and startup building on the continent. If we are to agree that entrepreneurship is hard, perhaps even more so in Africa, it follows that these organizations play a valuable role in the entrepreneur’s journey. But, as the models and levels of intervention vary widely, let us start with some definitions. First, we must distinguish between an accelerator program and venture building initiatives like the ones discussed in this episode. Let’s start with accelerator programs. 

Aaron: I think programs are ridiculously similar to graduate school, right?

Justin: That’s Aaron Fu, the Head of Growth at Catalyst Fund, and formerly the MD of the entrepreneurship training program MEST.

Aaron: I think it’s also important to recognize that a lot of programs are very much there to be a badge of consistency. To me, one of their primary value propositions is their selection process. The fact that you got through their regular selection process and made it to the cohort on day one. I think a lot of investors want to see that you’ve been through someone else’s rigorous election process and made it through that.

Justin: These accelerator programs include the likes of Startupbootcamp, Seedstars, Co-creation Hub and many other sector-specific programs on the continent, as well as the global behemoths Y Combinator, 500 Startups, Techstars and others, who have increasingly taken an interest in startups in Africa. 

Aaron: I think also a lot of programs are designed with maybe two or three very specific outcomes. And very often one of those two or three is to be able to find follow on investment for their cohort, right? And again, to me, super similar to grad school as well, whereby a KPI is certainly how many of the grads actually get placed.

Justin: As we have seen, admission to a program like YC almost guarantees a high level of interest from venture capitalists on demo day, and for that, YC and other accelerators offer a fixed investment amount – both cash and in-kind – in exchange for a fixed amount of equity in the companies in their cohort. 

One such venture-investor focused on Africa is Village Capital.

Adedana: My name is Adedana Ashebir and I’m the regional manager for Sub-Saharan Africa at Village Capital. 

Justin: But Village Capital’s program and investment structure turns the traditional model on its head. 

Adedana: Village Capital is an organization looking to address the power dynamics between investors and entrepreneurs. So what we’re most known for is our investment readiness program, and really the heart of it is peer due diligence and peer-selection. 

Justin: As we see venture investors relying on their existing networks – which may perpetuate certain biases, prevent diversity and stifle opportunity, especially for underrepresented founders – Village Capital set out to explore what would happen if the entrepreneurs in their program make the investment decisions for them. 

Adedana: So there isn’t an investment committee as such.  The entrepreneurs in the program are the investment committee. They’re the ones making the decision and we find that they actually do a pretty good job. So if you ask, you know, can entrepreneurs actually make a successful investment decision and can they do so in a way that increases diversity? Then the short answer is yes. Peer-selected investment leads to more inclusive early-stage investment decisions and it does it without sacrificing commercial objectives.

Justin: And at the same time, Village Capital’s design of their programs – specifically in building sector-specific programs – further ensures the efficacy of their peer investment model. 

Adedana: And I think what was surprising to us was the fact that entrepreneurs could pretty quickly pick up on the success of their peers. And it makes sense because entrepreneurs are building businesses themselves, and the fact that these programs are sector-specific -so it’s fintech businesses looking at other fintech businesses – so they have a really good lens with which to view and to probe their fellow entrepreneurs.

Justin: Though of course, Village Capital’s programs also provide value for those who are not selected by their peers – with the ultimate goal of advancing the investment readiness of their startups. And this is where we see programs get more hands-on with entrepreneurs in Africa. 

Adedana: There’s more to the program than just the funding. So we provide access to mentors. We have investment analysts that work diligently with our companies on a one-on-one basis to work on their financial narratives and to support them on term sheets, helping them with those negotiations.  So the funding is a part of the program, of course, but we offer so much more than that. I think that’s also important. And that’s one of the reasons that, you know, companies still sign up for the program knowing that funding is not a given and also why they keep applying and keep coming back.

Justin: From here, we start to see models that are increasingly hands-on. In particular, venture building models. While their investment terms may be similar to accelerators – venture builders provide even more resources in terms of human capital to co-build alongside their portfolio companies, almost like a co-founder. 

Sam: We are a venture development company. 

Justin: That’s Sam Sturm – the Chief Venture Architect of Founders Factory Africa. He’s a colleague of Lwazi’s, who we heard from in the opener of this episode.

Sam: And we do two things. We both grow and scale existing startups, and then we build our own from the ground up.

Justin: And in particular, Founders Factory leverages strategic corporate investors to fund their co-building model. Here’s Lwazi again.

Lwazi: We are corporate-backed, but the paradigm behind that is not necessarily one of just generic investment. We took the point of view of raising more strategic or smart capital rather than just going out to market and raising a fund towards this work. 

Justin: And for Founders Factory, having corporates as strategic investors is crucial in backing and building high-growth, venture scale startups. 

Lwazi: When you need to scale, what you typically need from startup is you’re needing access to distribution channels, you’re needing access to expertise, regulatory issues. So we found that those were really the bottlenecks to scale. And so when you think about who’s actually solved scale – it’s corporates, right? And so in our paradigm, we’re saying if we’re going to actually solve and scale businesses, you need to partner with people who can actually enable that and allow for that. 

Justin: But Founders Factory’s corporate-funded venture building initiatives are distinctly different from corporate innovation – where outside teams build innovations within a corporate.  

Lwazi: Although these corporates are our investors, we by no means exist to build businesses for a Standard Bank. We use them as very intentional data points to say, if this is a problem for a Standard Bank, could it be a problem for FNB, Capitec, and a wider market.

Justin: And with these insights in tow, Founders Factory leverages their team of venture builders to test hypotheses and ultimately, build and scale businesses.

Sam: If you look at how our resources, how our capital is allocated, the vast majority of it is on the team that helps to build things. Engineers, data scientists, product designers – we are a team of technical experts and makers and builders and designers. 

Lwazi: And so we often joke and say, you know, that headcount, you as a startup coming in, you kind of grow your headcount by like 40 or 50 people. Because it’s six months of a very specific bespoke co-building support, depending on what you need. 

Justin: And again, it’s all a function of the unique nature of their startups and the problems they are solving. 

Sam: Our program isn’t six months, cookie-cutter, one size fits all, color by numbers. It really is focused on specific problems. Most startups, what they need at this stage is that a mentor is not someone telling them like here is what one hypothetically ought to do with their financial model at this point in their journey. But as we’ve said, every business’s financial model is different, every business’s product needs are different, right? And so like mentorship and advice is lovely, but it doesn’t, it’s not what most businesses need to be successful and to grow and to solve their problems. And so we don’t advise. We don’t mentor. We co-build and we co-design.

Justin: As we’ve said – startups are hard, and perhaps even more so on the continent. Founders Factory believes that their model – while not guaranteeing success – makes it a little less hard for their entrepreneurs.

Sam: I think for us, the idea is that, you know, look, you can’t de-risk, like you can’t de-risk entrepreneurship. You can’t de-risk a startup. But we believe that given the resources we have, we can help overcome some of the initial barriers more quickly and in co-building we’re even better equipped to do that.

Justin: Now, Founders Factory has a pretty straight forward investment model – which includes both cash investment and in-kind venture building services in exchange for a fixed amount of equity. Another Africa-focused venture-investor, GreenTec Capital Partners, employs a similar human capital intensive, venture building model, but takes their business model  even one step further. 

Erick: My name is Erick Yong. I’m a CEO and co-founder of GreenTec Capital.

Justin: GreenTec Capital employs a Results for Equity model.

Erick: In the environment of entrepreneurs and startups, the way they integrate value and the way they work, it’s basically that they try to identify people that are qualified and because they don’t have money, they will ask them to achieve certain performance and they will give them equity as partners. And that’s where came the idea of results for equity. It was a way to translate this way of doing things of the startup and to modelize it so that we could have a trade of value with a startup in an environment that is known to the entrepreneur. 

Justin: This model was born out of the fact that GreenTec Capital is a startup too. 

Erick: We started with also like startups, and what we did is that our first investment we were basically offering ourselves, our skills, our network to startup and say, let us show you that we can create value for you. And we were taking the risk. We were taking ourselves to finance or risk. The result for equity that we have set up and the venture building is only a model that is based on performance. If you don’t perform, you don’t get paid, which is actually the life of the entrepreneur. 

Justin: And then the question became, how do they do that at scale? For GreenTec, they leveraged their experience supporting startups to win consulting work with development agencies, and ultimately use their balance sheet to grow the team.

Erick:  We also have shared the experience of operational support to the startup to some development agency. And that was kind of a consulting work that we were doing and they were using the money that we were doing for the consulting work to then reinvest to hire people that will be doing the same thing. So kind of investing on the balance sheet. So working on the side, development activity, there’ll be revenue and reinvesting those revenues to people and resources for the startups. That’s how we’ve been funding and how we did grow. We always have reinvested that money into people, into competencies that we saw could make a difference for startups in Africa.

Justin: Erick believes that their team of 40 venture builders is a more sustainable model than just direct venture investments.

Erick: What we see is that when we have those people, and with this expertise – they can work with one startup, they can give access to a lot of things that money cannot give. And they can also aggregate that experience and also use it for other startups and other companies. The way we saw it was that, okay, let’s pay someone that a startup will not be able to afford in this team, but will have so much competencies and network that you will be able to anticipate the different challenge that the startup is supposed to have, and we’ll give solutions and give experience to guide and to operate the startup so that it gets to a stage where the startup is more independent.

Justin: It comes down to a startup’s needs and how they value this type of bespoke support.

Erick: Sometimes if you’re an entrepreneur, if you don’t have to raise money, you better not raise money because later you’ll have to manage on the equity that is available. And that’s what we’re trying to convey to entrepreneur. We say, okay, what we try to do is to agree on the value that is needed at the stage of the company. And sometimes it will be to raise money and sometimes it will be to say we don’t raise money. We figured out a way to integrate a sort of technology to develop our business so that we become more attractive, our value becomes more interesting, and then we have money coming rather than you going after the money.

Justin: And then, this is where GreenTec Capital’s results for equity model comes into play – where the organization and its startup mutually agree on KPIs they want to achieve together that trigger the equity earnings.

Erick: Usually the contract that we have with the startup is in three to five years. We look at the business, we assess the business, and then we say to the startup, okay, this is a strategy that we see for you to develop.  And then we need to find an agreement on the way the strategy has to be implemented. And if we find this agreement and we say, okay, we’re both comfortable with the strategy, let’s do that together after one year normally we hope that we have achieved the KPI and from the moment we get the KPI, we get rewarded with equity. 

Justin: From there, the focus is scale.

Erick: Then the second year for us is to focus on how can we scale, how can we duplicate the value. And that’s why the second year of KPI is often to help them scale and develop the attractiveness to other markets. And also this is the moment where they will normally raise more money. 

Justin: At the end of the day, it’s a model that is unique and custom to the environment in which African startups find themselves in. 

Erick: The entrepreneurship ecosystem in Africa is pretty young. And I’ve seen that as investment organizations, we need to renew ourselves, to serve better our partners. The direct different direction that GreenTec has taken so far were based on new ideas, testing new solutions, looking at what the market needs, and not saying that, okay, nobody’s going that way, it’s not possible. It was more like, we feel like there’s a need in that space, let’s see how we can try to fill it and address this gap. And  I think that we want to continue to be in those shoes of an organization whose innovating for the benefit of the entrepreneur.

Justin: So while Founders Factory has a more traditional commercial model and GreenTec Capital Partners employs a performance-based Results for Equity model, another venture builder, again, takes things another step further. 

Maelis: My name is Maelis Carraro and I’m the director of the Catalyst Fund, managed by BFA global. Our mission at Catalyst Fund is to help early-stage entrepreneurs across emerging markets build fintech solutions that improve the lives of the 3 billion people around the world that are currently underserved by the global financial system.

Justin: Maelis and Catalyst Fund, much like Lwazi, Sam and Erick, strongly believe in the merits of the venture building model. For Maelis, it was born out of her own entrepreneurial experience.  

Maelis: So when I launched my own startup, actually back in 2013 now, I went through a couple of incubation programs and they all have a bit of a, you know, one size fits all generalized approach to acceleration and they didn’t end up being that helpful for us as a company. And all of the startups in the room, frankly, were at different starting points. And this is why when we started Catalyst, I wanted me to be extremely focused on individual entrepreneurs’ challenges and tailored support in a way that makes sense in the specific context to the company and can take them closer to product-market fit. So the methodology that works best we found is a venture building methodology.

Justin: And it’s a methodology that works for emerging markets, in particular.

Maelis: So when we started Catalyst Fund,  we were very clear that capital is only one side of the equation for startups to succeed. But actually what’s really lacking even more in emerging markets is the deep and technical support and know-how that is equally important. That in the context of really building solutions that are fit for purpose and fit for the context of emerging markets, so supporting these companies has to be done in a way that really meets entrepreneurs’ needs and aspirations and matches their local circumstances. It takes longer. That’s true. It takes a lot of investment in terms of time and in expertise that you put in, but the result that comes out of it I think is much more impactful for the business. 

Justin: One of the initial differences between Catalyst Fund and other venture builders is that they don’t have open applications. It’s a function of the role Catalyst Fund plays in the early-stage ecosystem, and the relationship they have with early-stage investors. 

Maelis: So a group of investors came together, now four years ago, leading fintech investors in emerging markets and they were saying, ‘You know, we see oftentimes entrepreneurs knocking on our door, but they’re just not quite ready for us to make an investment at this point. And it would be great if they could, you know, get a little bit more traction, improve their models a bit more and then once that is done, we can come in.’

Justin: So Catalyst Fund takes these startups and co-builds with them until such a point as investors are ready to invest. 

Maelis: So that’s why we thought that we would, instead of sourcing through open applications, actually focus on accelerating really high-quality companies that are pre-vetted by investors – so investors already believe in them -and create this investor advisory committee that would essentially spend their time, you know, sourcing companies, for us, which they do anyway, and then sending those companies to us for consideration in the program, knowing that they can therefore develop a close relationship with them as a company is accelerated. And then after the program when the company’s de-risked they can make an investment. So, there are 60 investors in our investor advisor committee which means, again, that we think the companies have a higher chance of securing that follow on capital after the program.

Justin: And then, where Catalyst Fund takes things one step further is that they don’t actually take any equity in the startups they work with. 

Maelis: We help the companies by providing what we call catalytic grant capital early on in the journey. We started about four years ago with support by JP Morgan Chase Foundation and the Bill & Melinda Gates Foundation and today we’re supported by the UK Department of International Development. 

Justin: And Catalyst Fund’s reliance on philanthropic capital – though obviously incredibly friendly for entrepreneurs they support – brings to question the sustainability of their model. 

Maelis: This sustainability question is certainly top of mind for us all the time. And I think for many programs like ours that do rely either on blended finance mechanism or fully on philanthropic capital it’s a question that we do, yeah, we do pose and worry about. Luckily in our case, I have to say that we’ve had very strong committed and mission-aligned supporters from the beginning, like the JP Morgan Chase Foundation that truly believe in that R&D and the growth of innovation.

Justin: But it’s important to acknowledge the role that philanthropic capital and catalytic grant capital plays – not just in Africa, but all over the globe. 

Maelis: If you look at even what happened with the internet when it was built, and it’s subsidized by public funding, so there’s a role when you’re creating innovations and filling market gaps for this capital to be there at the very early stage in that continuum of funding all the time. So it feels important to work with the right funders that do have this fundamental belief and will continue, you know, to support as long as you can prove results. 

Justin: But even with that being said, it doesn’t mean that Maelis isn’t thinking about other funding mechanisms and strategies.  

Maelis: We’re building the basis to be able to monetize. But first we have to prove there’s value, that we’re really providing something that others are not. So we don’t want to duplicate efforts. We’ve always thought collaboratively like that.

Justin: And for Catalyst Fund, in particular, they believe in the opportunity for fintech to be applied more broadly across sectors, which – just like the startups they are supporting – presents an expansion opportunity, as well. 

Maelis: Then we also have to be agile and adapt that growth trajectory. When I think about how we could be more sustainable, we’re certainly thinking, for example, about expanding across various sectors. We’ve historically been focused on fintech but now we have other verticals where fintech can be deployed as an embedded tool to make these business models work at the base of a pyramid. And that allows you to expand the breadth of supporters that you can access and also cover more geographies potentially. 

Justin: That being said, Maelis remains a firm believer in the role that philanthropic capital ought to play in the development of innovation ecosystems. 

Maelis: I do think that philanthropic capital in our model – because we’re funding this type of innovation so early – will continue to have a role to play and should have a role to play. And I hope that especially in a time of crisis like this, donors don’t forget it. Cause this is when we need more innovation. We need more entrepreneurs to take risks and reinvent what the world could look like.

Justin: While Founders Factory, GreenTec Capital, and Catalyst Fund all employ a venture building model to support entrepreneurs and startups – we must, one last time, take a step even further in the discussion. This time, it’s a step further in the journey of an entrepreneur – all the way to the beginning. 

Selam: My name is Selam Kebede. I am a Director at Antler East Africa.

Justin: While the other venture investors discussed in this episode support companies that already exist, Antler employs what they call a startup generator model.

Selam: So we’re essentially a VC firm, but instead of going out there, investing in existing startups, we build the startups together with the founders, and then we invest.

Justin: And in Antler’s case, they begin working with entrepreneurs pre-company, and even in some cases pre-idea.

Selam: We look for extremely exceptional, very experienced, talented individuals from all over the world who are looking to build a business. But these people don’t have either a team or an idea yet or something that hasn’t developed yet, but they’re just maybe thinking about this or have built companies before and are now thinking of building a new one. We bring them together into a cohort where they can first find a co-founder for each other, or a team of co-founders, and then decide on the business idea that they’re going to work on together. And then after 11 weeks, they present these ideas to our internal investment committee and they have an opportunity to get an investment of $100,000.

Justin: In markets and environments that are typically dominated by corporate, and where startups have a tough time competing with corporates for talent, Antler hopes that their model can compel more experienced people to pursue careers in entrepreneurship.

Selam: As an investor, and this is mostly my personal experience as well, having worked across the continent for the past six years, it becomes so clear that the idea of building a company itself is so new and it requires a lot of preexisting conditions for you to be successful. So the investment space, a lot of people from the investment ecosystem are complaining that, ‘Oh, there are not enough startups to invest in. There is a big gap in talent.’ So, for us, what we’re really excited about it – we took the challenge of like, no, there are some people that could do this. We just have to find them. 

Justin: Key to facilitating their entrepreneurial journey, as well, is in how Antler designs their program, including a program stipend to de-risk their pursuit of their entrepreneurial endeavors. 

Selam: The biggest challenge has been if you leave your job and try to pursue entrepreneurship, again, they’re a bit older, and most of them have families, children, so would they be risking it if they’re not getting an income that’s guaranteed? So the fact that we provide the stipend for the first 11 weeks has been a good incentive for a lot of people to just try it out. And if they do end up building a company that is investible, then after 11 weeks they have a company, a co-founder, and $100,000. If not, they can also either go back to looking for a job or some people, especially the ones that are not really sure about leaving their jobs, have taken unpaid leave to join us. So, you know, we’ve tried to make it risk-free or make it a bit easier for them to jump into this world of entrepreneurship.

Justin: And Antler further facilitates the process and entrepreneurial journey through their program selection process.

Selam: Our two major profiles are tech profiles and business profiles. And the tech profiles are people who know how to build tech. You know, these are not your fresh grads from college, or these are not people with no experience. We’ve had people who’ve built, for example, products at Google for 10 years. So from day one, they already come in with a wealth of knowledge and experience that can help them leverage in such an intense, high-paced environment.

Same with the business profiles. These are people who built businesses before or these are people who’ve run banks before or insurance companies So essentially they understand and have a very deep industry knowledge, they have such strong networks, they have a quick understanding of where the gaps are in those industries. And they come in with a very strong awareness of what they know and they can bring to the table and what they’re looking for from a co-founder. 

Justin: And then, during the program, they implement a lot of activities to facilitate the co-founder matching and idea generation process.

Selam: So we don’t manually match people, but we have a lot of design sprints and hackathons and group exercises. So you can really fast track this interaction by making sure that they work with each other as much as possible. And then those guys eventually track out and then say, ‘Okay, we actually think this team is solid. We like each other. We have good chemistry, we have complementary skillsets. We like that idea we’re working on, we’re going to do this.’ 

Justin: At the end of the day, it’s all about facilitating the process for their entrepreneurs.

Selam: And you make it easy for them to build this, by either by opening up your global network, which Antler has, by giving them access to advisors, experts in the field and financing, as well. Even those stipends for those 11 weeks really matter because a lot of people appreciate that because they don’t actually have to think about paying rent for those two and a half months if you know, they were leaving their jobs or they were in between jobs. We’re making it easier for people to focus on this for another week and give it all they have and then see what happens. And when you do that is when you see the results. 

Justin: As always, my b-mic Sayo and I sat down to discuss this topic, and in particular, we’re very interested in the decisions high-potential entrepreneurs make to participate in these programs; in what entrepreneurs are looking for, what they need help with, and in their perceived value of programs like the ones discussed in this episode. Take a listen…

Justin:  I’m interested in the venture building model because I think it has merits but there’s a larger question about values and what the entrepreneurs need. I know that this is a little bit of a generalization, but do we believe in the merits of the venture building model here in particular, because of the specific set of challenges that entrepreneurs are faced with in building businesses in Africa?

Sayo: That’s a very good question, man. My answer would be a couple of things. I think one, they might be more relevant. A lot of what we talk about on this podcast is just the ability to bring as many people into the problem as possible. Cause it’s hard problems and they’re multifaceted, million businesses in one business kind of problems. So I think it’s good from that perspective and there’s a lot more space, I believe, for more active investors. So I think in theory it’s certainly a lot of room for it. In practice, I think it’s hard, I’ll start with that. It’s new, so there’s going to be a lot of learning. People are working it out, trying to work out what works best. I really like this episode and the way that it shows all the different ways of doing it. And it definitely sparked some food for thoughts as an investor. As an entrepreneur, I’m way less optimistic.

Justin:  Maybe that’s the point though, is that the, should the ecosystem just be looking at alternative options? And here’s a set of alternative options that people believe have merits for specific reasons. And, it remains to be seen, you know, which is the best, or whether any of them are the best, relative, I suppose to the quote-unquote incumbents or more traditional venture investing.

Sayo: Justin, you know something? I hate to do this cause it’s a different world altogether, but like Y Combinator just needs to just start saying names of startups. That’s what their version of this interview would be, and the proof is in the pudding. And yeah, I don’t know, from an entrepreneurial perspective, I think there’s not enough proof yet.

Justin: But that’s not necessarily, that’s not necessarily an indictment on the people or on their models. 

 Sayo: Not at all.

Justin: That’s more so just timing.

Sayo: Yeah.

Justin: Yeah. I guess, also, the other question that’s sort of like an elephant in the room, and I don’t mean to insinuate that any of these people are bad at what they do, but it is also, it is interesting, the dynamics of YC being for the most part, successfully exited entrepreneurs versus the lack of that. It goes to the question about the qualification of being a venture builder.

Sayo: Yeah. I one-hundred percent agree. I’m always interested in the level or quality of the expertise or technical knowhow that parties are bringing to entrepreneurs. Cause it’s just so hard to, number one, have a one size fits all, but it’s also like really difficult to find true experts that are going to be interested and passionate enough about the problem to come in and just do it like on demand. It’s a really hard problem. It’s tough to, sometimes entrepreneurs just need cash to do the fuck they do. And it’s like, actually, you’re better off leaving them alone. And then also, man, another that’s really important is like fit, right? Like sometimes someone else’s idea of what they believe is correct or the way to go about things or whatever might just be a function of their own experiences, who they are,  and derail an entrepreneur that’s actually on the right path. Right? Like, I imagine, like I’m a bit of cynic, so I’d imagine that if I was going into a lot of businesses, I’d be like ‘don’t do that… don’t do that’, and if you’re kind of trusting me with that, I don’t know. That fit question is so important. There’s gotta be a real alignment with the partners that you’re working with.

Justin: Yeah. But by the way, to that end, the thing that I like more than anything else by far is that they are taking an entrepreneurial approach to this and testing and experimenting rather than just like implementing the same models and expecting different outcomes.

Sayo: As they must. The road or whatever the journey is a worthy one. Both from the sense of building up an ecosystem and from the sense of building, cool, strong businesses or funds. I think whoever cracks this or whatever the people are that crack it consistently will be heralded, and rightly so. 

Justin: Yeah. I also think that that goes to the larger conversation about the role that individual entities play within an ecosystem, right? Like we’re building an ecosystem and there requires collaboration, and one of the things that I love about Catalyst Fund, in particular, is that they are sort of like a, you know, a selfless, philanthropic entity that plays a larger role for the benefit of others in the ecosystem. And that’s great. Right? And maybe all of these models ought to exist and play, you know, their own role in the ecosystem. And we just need more of this.

Sayo: Yeah, for sure. And I think that’s what’s going to happen. And that’s what I say from two sides, as an investor, I think I can see how necessary it is. But as an entrepreneur, I know from a lot of personal experience how draining it is to be in an incubator, accelerator program – just like you fit into the model or you don’t. And I never personally have so I understand it from both sides. And with everything, it’s a journey. It’s a journey that will hopefully end up somewhere good.

VO: Thanks for listening to this episode of The Flip. Did you know that we’ve also launched a weekly newsletter? Subscribe at theflip.africa/newsletter for thoughtful analysis on the work being done by the entrepreneurs you hear here on our show – those that are building a future inspired by Africa. That’s theflip.africa/newsletter. And as always, we’d love for you to join the conversation on social media, as well. You can find us @theflipafrica. Thanks again for listening, and we’ll see you next time.

Lwazi Wali – Head of Venture, Founders Factory Africa
Aaron Fu – Head of Growth, Catalyst Fund
Adedana Ashebir – Regional Manager, Africa, Village Capital
Sam Sturm – Chief Venture Architect, Founders Factory Africa
Erick Yong – Co-founder & CEO, GreenTec Capital Partners
Maelis Carraro – Director, Catalyst Fund, BFA Global
Selam Kebede – Director, Antler East Africa
Sayo Folawiyo – Co-founder & CEO, Kandua
Justin Norman – Founder & Host, The Flip
Audio Production by ZVUK Studio
Episode Artwork by Chileshe Tembo – The Zig

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