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Why Silicon Valley-Style VCs Will Work In Africa – Barbara Iyayi

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Investors in African start-ups have often taken a short-term look to investments on the continent, due to the uncertainty surrounding their longevity. There are also myths that, due to the fact that the African market is big, investors hope to cash out before the customary three-year life for African startups expire.

In this interview with Barbara Iyayi on the sidelines of the African 2018 Forum held in Sharm El Sheikh, Egypt in December 2018, Ventures Africa gains an insight into many issues surrounding the African startup ecosystem- venture capitals, Silicon Valley investors, government policies on tech entrepreneurship in Africa, Africa’s readiness for Artificial Intelligence.

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Barbara Iyayi is the Chief Growth Officer and Managing Director, Africa for Element, Inc. She also serves in an advisory capacity within the venture capital and tech ecosystem in Nigeria.

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What does Africa For Element, Inc. do?

Barbara: The Element, Inc. is an artificial intelligence company. We deploy mobile biometrics, essentially capturing biometrics on the mobile device using artificial intelligence.

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What does your role at the company entail?

Barbara: I’m the Chief Growth Officer so my job is to expand the business globally. I am also a Managing Director for Africa so I’m focused on also building Element, Inc. in Africa. But everything from investing in our growth through our partners, fundraising and just product development; building our products for our partners, we work with every type of company that has a digital platform so anything from healthcare, banking, national databases. We basically want to help our customers grow their digital revenue.

From an investment perspective, I’ve always felt that startups have not been able to show scalability as much in Africa and for us to build unicorns in Africa, we need scalable companies. The biggest distribution network is the mobile device and if you are able to capture customers and identify customers on your mobile device, you can scale very well and that’s what I’m trying to do.

In Lagos, Nigeria, have you been successful with acquiring customers?

Barbara: We are working with partners in Lagos right now.

Can you give names?

Barbara: No.

Looking at the session on whether Silicon Valley-style venture capital will work in Africa (at the African 2018 Forum), do you think Silicon Valley-style VCs will work in Africa?

Barbara: The answer is yes and no to me. I find it very annoying and hurtful when people say we shouldn’t be trying to get startups in Africa to become unicorns. Why shouldn’t African entrepreneurs be great? We need unicorns in Africa, I want to build and invest in unicorns so for me yes it works. And the more we invest in unicorns, then we can attract a lot more capital than the VC world is attracting. So yes, Silicon Valley holds the notion of building unicorns and big companies that actually affect the social economy, yes it could happen. But this is one of the reasons I’m working for this AI company; it’s because I want to make sure the ecosystem can grow, people can really leverage this mobile device to capture customers and build a digital customer base.

On the No side, we cannot look at these companies and expect them to grow overnight. You know companies in America are growing very quickly, in two years they become a billion-dollar company, we can’t expect that from African companies. African entrepreneurs have a lot more challenges to face from physical infrastructure, digital infrastructure issues, less capital, no policy and a lot more. There are just a lot more challenges that the African entrepreneurs face than the US entrepreneurs. If I was in the US and I built a company that a lot of our entrepreneurs are building in Africa, my company would be a billion-dollar within two years. The reality is that you cannot expect that, so silicon valley investors expect high growth from tech companies on day one, you can’t expect that from African entrepreneurs. The other thing I would say is that the silicon valley investors penalize African entrepreneurs, they expect them to deliver so much more, they expect them to be profitable on day one, they expect them to be able to scale to other countries on day one. These are things that are very difficult to do as a startup, and companies in America are not doing that. Most of the really high-valued companies in America aren’t really profitable.

So why do you think they have bigger expectations from African entrepreneurs?

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Barbara: They have bigger expectations because they don’t understand the market, they also want to see so much growth and they really want to see that companies have been able to achieve a lot more than the US entrepreneurs, they don’t get this market. So fundamentally, there is a big disconnect there and the African entrepreneur has a lot more hurdles to face and a lot of this is very important because pretty much the entire VC investment that comes into Africa is foreign capital. So, essentially African entrepreneurs are just on the way of whatever foreign investors want. We need to change that dynamic, we need more local investors to play into space and explain the local challenges in Africa and why the African needs something to be able to grow.

Looking at the future of AI in Nigeria, do you believe Nigeria and Africa is ready for AI disruption?

Barbara: Africa is ready for any disruption whether it’s AI, IoT, Blockchain, Robotics.

Analysts say it’s going to phase out a lot of jobs. For example, looking at the bots that have been integrated into many websites and front-ends, there might not be any need for a front desk officer because of the use of robots. That’s why I ask if you think Africa is ready?

Barbara: Absolutely, Africa is ready. In fact, to me, the technology opportunities are actually about being smart, it’s about making sure our people are trained to use them. Africa has the opportunity to create a very well-trained workforce that knows how to use technology and there are many aspects in this technology stack. It’s not necessarily about being an AI engineer, you could do things like daily announcers, you know just software management. The job descriptions across the technology stack are immense.

Even though we don’t have a front-desk receptionist, the point is anybody who is building technology right now should be thinking how can I train African employees to have all the skills that they need for the future of all the technologies. I just spoke with someone with who is getting some money to train 1,000 blockchain engineers in Africa, that is what we should be doing. So there are actually going to be a lot more jobs being created if we do things properly. And I would rather us to create jobs around all these smart technologies that would allow Africans to be really well positioned for the future than for us to be stuck in this mindset of saving the front-desk jobs. We need to start thinking of how to get that front-desk person to be trained to do more things that would help the economy.

If you were in government now, what would you do?

Barbara: Nigerian government is seemingly wasting its time right now because Nigeria has the opportunity to do some amazing things, we have the smartest people in the world. If we have an ounce of policy, just a little bit of policy that just allows the government to encourage more of these opportunities, whether it is investing in more trained engineers, more trained data scientists, more trained analysts. If we did that with all the people looking for jobs right now, that would make so much difference, that little thing can do so much for the entire digital ecosystem and for the entire digital economy in Nigeria. Just that little investment, all these young people roaming the streets who need jobs, get them to sit, give them some money, teach them some basic skills that I’ve mentioned, get them working. And these jobs are not just jobs in Nigeria, they are jobs that they can do for the rest of their lives in the rest of the world. If the government just did that little thing, it can make a huge difference for the Nigerian economy but the government is focused on a whole bunch of things not making sense.

That’s why we need people like you to speak up…

Barbara: Unfortunately, we have a lot of people speaking up. I’m really not doing much right now, there are so many people speaking up. The issue is less about that and more about until the right people are in place in government, the right leaders who get this whole thing, we would always be talking.

So, as a private investor, what do you think we can do to skill up the African youths?

Barbara: As a private investor, my thesis has nothing to do with the government. If I focus my thesis on the government, I won’t invest in Nigeria. My thesis is about the people, about the private sector and I think Nigeria’s private sector is why we are still running, why we are still moving.

It is a very strong private sector, my job is to digitalize that private sector, make sure that all the companies I work with can build digital platforms, to get more people digitally on their platforms to transact on their platforms and grow the digital economy. That’s what I can do, that’s all I can do and I think the more we build our private sector, I’m sure how vibrant it is, the more we can influence the government because they would see that Nigeria is being built by the private sector. All that stuff happening in the government, all the leakages, the no-transparency, they are doing little to address unemployment. And hopefully, the right person comes into power, would see that and implement.

Source: Ventures Africa

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