In the 5 years working on my edtech startup M-Shule in Kenya, I asked myself a lot of questions about investment trends and who supports innovation. VC has a diversity problem – in Kenya, 70% of startups that raised $1M or more were led by white foreign founders.
As a white foreign founder myself, I benefited from privilege that made it easier for me to meet investors – an American passport that didn’t need a visa to international conferences, a name-brand undergraduate degree, an accent. As I started the MBA at Oxford, I wanted to understand more about how investors think about African startup opportunities, and what kinds of things need to change to make sure founders with lived experience get the right support.
I had significant exposure to learn – beyond the opportunities provided by the Skoll Centre, I sat on investor side at the Oxford Seed Fund, co-chaired the Oxford chapter of the MIINT (MBA Impact Investing Network & Training) competition, took Impact Investing with Aunnie Patton-Power, attended the Oxford Africa Business Forum, and participated in VCIC (Venture Capital Investment Competition). Most usefully, I spoke with my classmates from the Global South who ran startups and had faced these challenges themselves.
From all of these opportunities, I found few answers, but many more questions.
1) Overcoming Discomfort with the Unknown
Early-stage investors evaluate opportunities based on their own sector knowledge, built from working in companies or extensive research in the space. By contrast, most of the prominent startup investors into East Africa are not from the region and/or do not have operational experience.
During my time with the Oxford Seed Fund, I met with a healthtech startup from South Africa that impressed me with its smart product, market position, and leadership team. Some of my colleagues were hesitant purely because they did not understand the market; I told them that this was a platform that I wished existed in Kenya, because it would solve problems for my startup. My personal understanding is what convinced them, and we ended up investing.
How can investors get more comfortable building sector expertise, and understanding how they can add value – without placing undue burden on busy individual entrepreneurs to educate them? Is there a way to expand peer review or peer networking models, where investors work with (and compensate) operators in-market to understand an idea’s potential for success?
2) Moving Past Pattern-Matching
In the face of risky (or, rather, “unproven”) markets, I’ve seen many investors rely on “pattern-matching” as a first step in screening potential investees. In fact, when I launched my startup, a mentor told me that my and my cofounder’s profile would “look good” to funders. “You’re a white American woman on the business side and he’s a Kenyan man who’s a software engineer. It matches a pattern that investors like to see.” This pattern-matching extends to types of businesses that get investment, too. If business trend is heating up elsewhere, those same businesses (but for “Africa”) are funded before other models that may be equally, or more, lucrative.
How can investors reframe which patterns they pay attention to in early stages, looking at how digital adoption or online behavior or the emerging middle class will drive market growth as opposed to just looking at what worked around the world?
3) Investing in an Enabling Environment for Women Entrepreneurs
Whenever I attended startup events or pitch competitions, I was often one of a few women founders in the room. In environments where women are expected to be primary caretakers of children and family, it is incredibly challenging for women to live the all-encompassing martyr-entrepreneur life that many investors still expect to see. Women with great ideas often have to choose the full-time job with health insurance and a pension to make sure their family members are taken care of. They have to leave the investment pipeline before they can even fully enter.
How can investors support building the enabling environment for women entrepreneurs while investing in their businesses? For example, many investments come with accelerator program courses or startup platform perks – can these benefits include mental health support, child care coupons, or focused mentoring networks?
My time in the Oxford MBA gave me a significant opportunity to see what life looks like on the other side of table, and gain greater insight into the systemic challenges that we have to overcome to reach equitable innovation. I hope the coming years and working with alumni and incoming students will help us move from questions to more answers.
