Africa’s Venture Capital Evolution

African’s Venture Capital Evolution

With Dara Owoyemi and Michelle Essome of the African Private Equity and Venture Capital Association

David Snow, Privcap:

We are joined today by Dara Owoyemi and Michelle Essome of the African Private Equity and Venture Capital Association. Ladies, welcome to Privcap and thanks for being here.

Dara Owoyemi and Michelle Essome, African Private Equity and Venture Capital Association: 

Thank you.

Snow: AVCA, as it’s called, is about two years old. How have you grown in the past couple of years and what comes next? Michelle, you lead AVCA. How have the past two years been? Has it progressed as you have hoped?

Essome: Thank you for having us. Actually, AVCA has been around for 10–12 years. However, Dara and I joined two years ago—it is almost our anniversary. In the past two years, we have had a new board, new governance and new leadership. The past two years have been fantastic. We started as a team of two; we are six now. We have done a number of conferences on the continent. We have released several research studies that have been widely received and appreciated, and we have done a number of training programs for fund managers and investors. We have been humbly growing from strength to strength.

Snow: Dara, what do you think some of the most important achievements have been over the past couple of years? What comes next? What are AVCA’s priorities as it continues to grow?

Owoyemi: At AVCA, we focus on four main pillars: research, networking opportunities, training and advocacy. In the time since Michelle and I joined, we have spent time trying to deepen those four key pillars. So, in the last two years, we have produced research pieces such as the EY exit study, value creation via exits; we have produced a benchmark with Cambridge associates. We have had two conferences, one in Ghana and one this year in Cape Town. Finally, we have also done quite a bit of work around training institutions and vessels across the African continent.

Snow: What are some other key developments over the past few years? What comes next? What are your priorities over the next year or two?

Owoyemi: At AVCA, we went out to all our members and we did a survey to find out what our members really wanted. The key thing that came of that was the fact that our members wanted to see more research and more networking opportunities. This was fantastic for us, because those two things fall within our four key pillars of research, networking, training and advocacy. Over the next year, and in the coming years, we look to spend more time focusing on producing research pieces. We see ourselves as the industry association for Africa and we want to be the go-to place for anything Africa private equity related. Research is key for us and, as we discussed with you earlier, doing a second installation of the Ian White study in private equity exits in Africa; we need to do an LP survey. Also, in the coming year, we are doing a piece with KPMG, mapping out the African investment activity, and doing an African investment activity survey. We need to produce more bespoke research for members as well. We will have a conference in Lagos next year: the African Private Equity Conference. We try to do it in a different African country each year. 2014 will be in Lagos and we look to bring more institutional investors.

Snow: Dara, can limited partners be members of AVCA and, if so, how is AVCA a resource for them?

Owoyemi: Absolutely. Our membership base includes DFI’s, institutional investors and commercial-institutional investors, from the funds. We welcome all such investors to be members of AVCA. Over the past two years, since Michelle and I joined, we have spent a lot of time deepening our research base. So, for institutional investors looking to the African continent as an interesting or another frontier market where they can put their capital to work, we focus on making sure we have the information and we have research for them to use toward making such a decision. We have launched the first-ever private-equity performance benchmarks, benchmarking Africa versus other emerging markets in the world. We have produced a study on private-equity exits in Africa and we are looking to do an LP confidence survey as well, just to have a barometer over time that shows us the interest that LP’s have on the continent.

Snow: What are some of AVCA goals as far as bringing capital into Africa for private investment?

Essome: We believe the LP’s in Africa PE are still predominantly DFI’s and that they make up, let’s say, 65–75%. We want to play our part as an independent, unbiased trade association in widening the LP base. So, we do a lot to connect with African LP’s, an emerging class of LP’s, to connect with North American foundations, family offices, endowments. We get a lot of reverse inquiries from the Middle East and Asia, looking for information about Africa. So, in addition to a fund manager selling his track record, our role also is to add to that research bucket to give LP’s tools.

Snow: Final question for both of you: if someone stopped you in the hall and said, “Why should I become a member of AVCA?” what would be your strongest argument?

Essome: If you are investing on the continent of Africa, whether directly or through a fund structure, we are representing you, we are selling you—that is our only goal. We are the only one doing it with passion, dedication and commitment, so help us to help you further.

Owoyemi: Just to add on to what Michelle said (help us to help you), help us to build an association that can provide and deepen the research base we have so that when you go to fundraise, you have tools. Help us to help you in terms of providing training so that we can compare you as a fund manager to any other fund manager across the world.