This past weekend I attended Diaspora Demo Day, the inaugural startup competition organized by the people at TipHub and held at the World Bank in Washington, D.C.. The day was not without its hiccups but for a first-time event really exceeded my expectations.
As the name implies, Diaspora Demo Day is an event where the best companies founded by Africans or targeting Africa are invited to pitch their concepts to an audience of attendees and esteemed judges (which included myself). Oddly, the judges didn’t judge anything, the audience choose the ‘winners’, we were there just to offer our opinion’s and advice on each companies presentation and business model. However, as the founder of The Appfrica Fund, the trip helped me survey new investment opportunities.
Overall, I was impressed by the quality of pitches but three really stood out when rated on three criteria: the organization of the deck, their ability to succinctly explain their business, and the viability of their business. Here they are in no particular order:
1. Hello Tractor
Description – A company that combines software with hardware to build affordable ‘smart tractors’ that they sell to small scale farmers in rural parts of Nigeria (and later the rest of Africa). I like to call them ‘the Tesla of tractors’.
Opportunity – As pointed out in the majority of the African continent is touched by the agricultural sector. This is huge market and getting even bigger as more of the world comes to depend upon Africa’s exports.
Risks – What business are these guys in? Are they making and selling hardware or software? Are they in the business of financing farming equipment or selling to third-parties who can handle distribution? I think the fact that they (seemingly) are trying to do it all is a huge potential risk for the company.
2. Tastemakers Africa*
Description – TSTMKRS Africa is like Jetsetter.com meets Lonely Planet meets Conde Nast. It focuses on style and exclusivity. Travel in Africa has been done to death, but a focus on luxury experiences and hip nightlife in Africa (Sub-Saharan Africa, specifically) feels fresh and timely.
Opportunity – The African continent has some 300 million people rapidly ascending into the middle class which means expendable income and free time. Where will they spend that money? They increasingly don’t want to live like their parents and grandparents who came from rural parts, rather they want to live the lives portrayed in shows like An African City or any number of Western pop culture shows and music videos. Likewise, millennials around the world do not travel like their parents. They want to meet people, have a great time clubbing (no matter where they are on the planet), and enjoy the finer things. My prediction is that African countries become the home of the world’s next *must* visit travel destinations…because, well, have you been to Europe lately?
Risks – Although travel trends are rapidly changing, public perception and bias against the African continent (and its people) is a much tougher enemy to conquer. Tastemakers biggest risk is that it’s too early to market and that the world may not be ready for that penthouse vacation suite in Kenya for another 20 years.
Description – Like Scottrade for the Nigerian stock market. Buy, sell, and manage a portfolio of listed Nigerian companies.
Opportunity – Of the 22 stock exchanges on the continent, the Nigerian Stock Exchange is one of the most vibrant and attractive. By focusing on Nigeria first, Afritrade have ensured that they have both demand for their product and a healthy supply of inventory (attractive stocks) to sell.
Risks – Afritrade is in a great space. Africa’s private equity markets are screaming for more efficiency, transparency and accessibility. However, it’s going to be a long haul to get there. Right now users of their product have to essentially be savvy investors in the NSE already. They need a broker, they need to do their own due-diligence, they need to have navigated the countries regulatory framework etc. If AfriTrade can figure out how to make all of this “push button” simple then they are a clear winner with a huge advantage. If they can’t there’s still an opportunity to be a niche product for savvy investors.
* I’m currently an advisor to, and a potential investor in, Tastemakers Africa. Other portfolio companies in attendance were Market Atlas (via my other fund) and Upstream Analytics (which couldn’t make the event).