The news broke today that Andela, one of Africa’s leading technology companies, has raised a Series C investment of $40M. The company, with African hubs in Lagos, Nairobi and Kampala, is no stranger to securing double-digit investment having last year attracted $24M Series B, led by the Chan Zuckerberg Initiative.
Today’s Series C announcement has been led by pan-African venture firm CRE Venture Capital, with participation from DBL Partners, Amplo, Salesforce Ventures, and Africa-focused TLcom Capital. It marks one of the largest investments ever led by an African venture firm into an Africa-based technology company, and brings Andela’s total venture funding to just over $80m.
Founded by Pule Taukobong and Pardon Makumbe, CRE Venture Capital is a pan-African leader, investing in category-defining tech-driven startup companies in Africa. Together, they have an impressive track record of working with and investing in the likes of Rensource, Flutterwave and SweepSouth, to name just a few.
Both Co-Founders have impressive track records, with Pule a recognized Kauffman fellow and Pardon an Ivy League alumnus, having graduated from Princeton University and the Wharton School of Business. Their attention has been laser focussed on the Africa market in recent years, and they have carved out a niche for being a pure-play pan-African VC that is building a striking portfolio, collaborating with the continent’s new wave of technology companies.
I spoke to Pule Taukobong, co-founder of CRE Venture Capital, about the firm’s historic investment into Andela as well as the future of Venture Capital and the tech ecosystem in Sub-Saharan Africa.
CRE Venture Capital has been working with entrepreneurs in Sub-Saharan Africa for the last four years. Tell us a little more about the vision behind CRE Venture Capital and what you do.
CRE invests in and partners with visionary entrepreneurs building category-defining tech-driven startup companies in Africa. We bring the full arsenal of our capital, global relationships, and experience to position the teams we work with for outsized success. Our vision is to be the Venture Capital partner of choice to the best in class Africa tech companies.
How do you differentiate yourself from other Venture Capital funds in Sub-Saharan Africa?
The entrepreneurs we work with and the limited partners who have backed us are probably best positioned to give an objective answer on this. We think we are differentiated by two things. One is our DNA-level intentional and total commitment to adding value to our investees. This is so deeply a part of us that from day zero, we approach due diligence not only as a way to learn about a prospective investee, but also as an opportunity to share experiences and insights that can help catapult said company forward whether we end up investing or not. Where we do invest, we engage deeply in ever more significant ways not just in the first month or year, but really throughout the lifecycle of the company. Secondly, we are able to draw upon insights and linkages not only from within our ever-growing portfolio of companies in Africa, but also from our global experiences and relationships in Asia, the Americas and Europe.
Why have you led on this Series C round of investment for Andela?
We were Andela’s first institutional investor, and have in fact grown side-by-side with the company for over three years now. Our strong relationships and experience across Africa uniquely position us to be a meaningful catalyst for the company’s growth going forward.
This investment has been heralded as one of the largest made by an African Venture Capital firm into an African-based technology company. Why is this so significant?
Africa’s tech ecosystem remains nascent by many standards, but we think a major milestone like this underscores that Africa means business, and anyone who takes the future seriously should start paying very close attention to this space.
What needs to be done for more Venture Capital funds to firstly, take the leap and launch on the continent, and secondly, actually invest in Africa’s start-up ecosystem?
The right things are already starting to happen; you are seeing companies like Andela and others grow at an exceptionally fast rate in a short amount of time. The local talent to help companies like Andela scale also exists, together with the technical infrastructure. Furthermore, exits are happening. Because of this, more VCs in the region are indeed forming, which improves overall capitalization and sets everyone up for success.
Having invested in a number of successful ventures across the continent, outside of Andela (Flutterwave, YOCO, Rensource for example), what do you look for when choosing to invest in a startup?
We look for companies whose co-founders’ combined professional experiences, insights, relationships and access uniquely position them to execute and deliver on seemingly impossible business plans. We want to see founders who are hyper-competent and passionate, and take integrity and governance very seriously. We look for companies whose products or services are a lock-and-key fit with their target markets, and where said markets are huge. Their business models should offer compelling unit economics, and can be sustainably defended. We take a long-term view and partner only with companies that we think can be of meaningful local and/or global relevance not just today but for a very long time to come.
What do you hope to see in terms of capital and investment culture on the continent over the next 5 years? Why Africa, why now?
We hope to see a continued influx of high quality investment firms investing in the region. This will primarily be driven by Sub Saharan Africa’s combination of (i) strong economic growth (6% for ’14-’19F), rapid urbanization (450m urbanites by 2020), rapidly growing young population (60%+ of population is under the age of 35), rising household incomes, and (ii) improved governance. Already this has led to a 6x surge in FDI inflows from $7bn in 2000 to $42bn in 2015.