It can be argued that most of the progress made in the African startup space has been concentrated in one part of the continent.
One legacy of colonialism in Africa is language, with the United Kingdom and France colonising most of the continent. As a result, English and French are two of the continent’s most widely spoken languages.
That difference is also seen in the developmental gap between Francophone and Anglophone African countries, with the latter significantly ahead of the former. However, the gap has gradually closed as more startups have sprung up in this region in recent years.
In 2019, the World Bank predicted that Francophone Africa would have 62.5% of Africa’s fastest-growing economies, and this year, Wave, a Senegalese startup, became Francophone Africa’s first Unicorn and Africa’s sixth.
Much of this growth has been aided by investors who have bet on startups in the region when investing in startups in English-speaking Africa would have represented a more promising option. One such investor is Saviu Ventures, an early-stage investor with a focus on Francophone Africa.
Last week, Techpoint Africa sat down for a chat with Co-founder and Managing Partner, Arthur Thuet. He shared how the firm has evolved from a startup studio into an institutional investor and why most of its investments have been in startups from Francophone Africa.
In February 2018, Thuet and his Co-founder Benoit Delestre started Kamtar, a logistics marketplace that connects SMEs and corporate bodies that want to move goods. The Ivory Coast-based startup was only part of a bigger plan to close what the two founders had identified as a funding gap for startups in the region.
“Instead of just launching that startup and developing it as a standalone business, we actually pictured ourselves as an investment vehicle, a startup studio, or a seed fund in which Kamtar was only one project.”
While building Kamtar, they came across many founders who were looking to raise money for their startups. With this deal flow, they decided to raise some money for these startups, and this led to the formation of Saviu Ventures.
Today, the firm has 12 portfolio companies, including Kamtar, and writes checks between €400,000 and €1,000,000 each for three to five startups every year.
Apart from the co-founders, the Saviu team is made up of two other members of staff — an investment manager and an analyst. With a small team, the firm has built a network of over 30 entrepreneurs and corporate executives who advise about sectors where the team has little or no experience.
Areas of interest
Like most investors, Saviu Ventures is sector-agnostic, having invested in startups in logistics, fintech, eCommerce, and recruitment. However, Thuet revealed that they have a bias for the fintech and logistics sectors owing to their experience building Kamtar and Delestre’s experience in fintech.
A look at their portfolio companies also suggests a geographical bias, with most of them based in Francophone Africa.
“We are probably the most active investors in Francophone Africa; we are not very big, but this is not an area that attracts a lot of capital. We strongly believe in the potential of companies in this region.
“Because of the scarcity of investors, we can spot the right companies who have no other choice than to generate revenue to make any money because it’s tough to raise any money in Ivory Coast, Cameroon, or Senegal.”
That focus on profitability is a key differentiator, and Thuet disclosed that they try not to raise more money until they have become profitable based on previous investments. The firm also invests in startups at the seed or pre-seed stages as it allows them to impact how the startups are run.
“When we invest in the companies, usually, they are in their first year or first two years of activity. We are the first structured investor to join the cap table, so there’s a lot to be built, and I guess that’s why we focus on that stage. That’s why we don’t look at Series A or later.”
While the firm has mainly invested in startups in Francophone Africa, there have been a few investments in startups outside the region. Wallets Africa is one such startup. Thuet believes that Francophone startups can learn from their English counterparts and, with the right execution and access to capital, build faster than them.
Biggest success story
With 12 startups in its portfolio, Thuet identified Afrikrea as the firm’s biggest success story. The startup provides an eCommerce platform for Africans who want to sell their products to a broad audience. Most of the sales on the platform reportedly happen outside Africa, and a partnership with logistics giant DHL ensures that merchants on the platform do not have to worry about logistics.
On hiring as an early-stage founder
Having built a startup and now investing in startups, Thuet believes that some of the most important decisions a founder can make are in the team they hire, mainly because, at the early stages, investors have very little to look at besides the team.
“You’re probably going to make mistakes. It’s hard to know who is going to make a good employee, but the moment you discover that someone is not a good fit, you need to be very quick and decide how you want to get rid of them. You also need to work on how you want to incentivise the top talents you hire in a way that benefits everyone.”
On missed opportunities and bad investments
The average investor gets numerous pitches daily but with limited funds, says no more often than they say yes. Consequently, there is a chance that they miss out on a company that goes on to become huge. Thuet believes that that is a part of an investor’s journey.
“I have passed on a few companies that raised a lot of money later, but I don’t regret it. When we pass on an opportunity to invest in a startup, it is usually for a good reason. Maybe if I pass on a company for not very strong reasons and they go on to IPO in 5 years, I might have regrets.”
Ninety percent of startups fail, and investors typically bear the brunt of the financial fallout, and Thuet accepts that it comes with the territory.
“As an investor, you know that you’re going to pick some companies that are not going to go well, and it’s a bit your fault because maybe you didn’t give good advice or the founder didn’t make the right choices. I guess the worst thing is not to try. If you try your best, then you can live with that.”
Apart from logistics and fintech, Thuet disclosed that the firm is excited about startups playing in the electric mobility and recruitment industries. Founders can reach him at email@example.com.