Rethinking Venture Capital In Africa – Laura Davis

What sectors are most of the companies you're looking at operating in? So you know, yes, they're tech businesses, but do they lean towards sort of FinTech? Or are you looking at anything that's tech enabled?

Yeah, well, I like to say that we're broadly sector agnostic in tech.

I think people, as they have conversations with us, they often immediately jump to, oh, you're fintech investors.

I understand why people jump to that.

Much of what we are doing right now is fintech or adjacent to fintech.

But our hope is as we work on our current thesis of finding companies with great data sets and helping them learn to be lenders or partner with lenders, that field will widen greater and greater and we'll be able to work in many of the tech sectors.

But right now, I would say we are looking pretty closely at fintech and then just adjacent.

Yeah.

Okay.

I just want to talk about that point.

You know, you're looking at companies with particular data sets, trying to teach them to be lenders.

What does that mean in practice? What does that look like? What's going on there?

Yeah, so looking at the missing middle and the problem and that thesis that it's both a huge problem and it's a huge opportunity for people like us who are looking at it.

We like to say at Renew Capital that Africa doesn't have a technology problem.

It has a distribution of capital problem.

And as we look at many of the startups, They have built products, B2B SaaS products, and a whole range of things that are servicing small and mid-sized enterprises.

And so they're accumulating larger and larger sets of data.

Also, there's readily available data from other sources that can be added on into that.

And I think the combination of all of those things and AI It's presenting an opportunity to address the capital distribution problem in Africa.

Roughly, as we look at SMEs on the continent, SMEs account for about 90% of businesses and most of them have very little access on the continent to Financial services.

So that presents a giant financing gap that's estimated at more than 330 billion annually.

So all of these things, you know, software companies, they're building trusted relationships with thousands of businesses.

They see transactions, they see inventory levels.

They see payment behaviors and cash flows every day.

And in many cases, they know a lot more about their customers than any of the traditional lenders do.