Ep #07: Pioneering Venture Capital in Africa and Embracing Global Opportunity with Andrea Böhmert
Andrea Böhmert is a seasoned investor and High-Growth Enthusiast who has reshaped the narrative of venture capital in Africa. In this episode, Andrea shares her unconventional journey and the challenges she faced in establishing venture capital as a viable asset class in South Africa.
From overcoming local investor reluctance to embracing failure as a catalyst for growth, Andrea shares lessons learned from her experiences navigating the dynamic funding landscape. With a keen eye for identifying opportunities and a steadfast belief in African businesses' global competitiveness, she emphasizes the importance of authenticity and resilience in the entrepreneurial journey.
Listen to the Full Episode:
What You'll Learn In Today's Episode:
How Andrea got started investing in venture in South Africa. (2:00)
Why local investors were less interested than overseas investors. (8:00)
The importance of remembering how far we’ve come in the venture capital realm. (11:45)
The biggest gaps in the local funding landscape. (16:55)
Why failure isn’t the worst thing to happen. (22:00)
Whether Andrea believes we will see bigger exits moving forward. (28:00)
Why African businesses need to find their spot in the market. (37:00)
The challenges of scaling in Africa across countries. (39:45)
What spurred Andrea’s move to Germany. (47:15)
The lessons she is taking from Africa and bringing to Germany. (52:45)
Ideas Worth Sharing:
“Nobody questions anymore that venture capital is a valid asset class.” - Andrea Böhmert
“Most companies fail early and the success comes later.” - Andrea Böhmert
“We should not think that African companies cannot compete globally because they can if they want to.” - Andrea Böhmert
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Episode Transcript
Andrea Böhmert: This whole unicorn kind of story, of course, that's all fantastic and great. But I have seen entrepreneurs who really had the $10-15 million kind of exits that still changed their lives and the way that they have, from there on, contributed to the ecosystem and what they have done is really not to be underestimated.
Nicole Dunn: Welcome to the Next Frontier. I'm Nicole Dunn, co-founder and COO at a venture-backed African Startup. I'm a VC investor turned startup operator, passionate about unlocking untapped entrepreneurial potential in Africa.
Brian Kearney: And I am Brian Kearney, a three-time entrepreneur, nonprofit founder, and angel investor based in the U.S. I'm excited about connecting capital to entrepreneurs solving the world's toughest problems.
Nicole Dunn: Join us as we change the narrative on startup investing in emerging markets and help bring the yearly African VC inflows to 20 billion dollars.
Andrea Böhmert: This whole unicorn kind of story, of course, that's all fantastic and great. But I have seen entrepreneurs who really had the $10-15 million kind of exits that still changed their lives and the way that they have, from there on, contributed to the ecosystem and what they have done is really not to be underestimated.
Nicole Dunn: Welcome to the next frontier. I'm Nicole Dunn, co-founder and COO at a venture-backed African startup. I'm a VC investor turned startup operator, passionate about unlocking untapped entrepreneurial potential in Africa.
Brian Kearney: And I am Brian Kearney, a three-time entrepreneur, nonprofit founder, and angel investor based in the U.S. I am excited about connecting capital to entrepreneurs solving the world's toughest problems.
Nicole Dunn: Join us as we change the narrative on startup investing in emerging markets and help bring the yearly African VC inflows to 20 billion dollars.
Brian Kearney: Welcome to the show. Thanks for taking some time to meet with us.
Andrea Böhmert: No, well, thank you. Always a pleasure. Always quite nerve-wracking because I don't know what questions you're going to ask.
Brian Kearney: We don't know all the questions we'll ask either so it works out. But this is actually a pretty good day to record because Nicole and I actually just officially launched the Next Frontier brand about three hours ago.
Andrea Böhmert: Whoa, whoa! Congratulations.
Brian Kearney: So it's the first interview - thank you! It's the first interview since we've launched. I think it's a good one because you have a lot of experience in the African VC market. You're one of the early movers and that's kind of where I want to start. I just want to learn a little bit about how you got started in investing in venture in South Africa.
Andrea Böhmert: Sure, sure. So once upon a time, no - I think you have to go back 15 years, in 2007. In 2007, I was one of the partners of a tech consulting company, Cape Venture Partners, who really worked with early-stage, mostly IT entrepreneurs, and some of the companies were not really taking off and needed venture capital.
And we said, well, there is hardly any venture capital around Africa. So let's kind of go and start raise venture capital funds and went to so many financial institutions, banks to everybody. And everybody took the meeting but told us categorically, “Venture capital in South Africa will never work. Venture capital only works in Silicon Valley - in Africa, absolutely not, particularly if you want to kind of go and invest in tech. So you're wasting your time. Don't do it. It's not going to work. Absolutely not.”
So I kind of sat around one week and was like, well, if I can't raise the money in South Africa, then I need to raise it from somewhere else. And being German by origin, I kind of thought, well, who do I know? Who do I know of who likes South Africa? Because I knew if I still have to convince you of South Africa, it will take years. So who likes South Africa, who has money, and who likes venture capital?
And there's this great tool called Google. And so you kind of go and start kind of doing a bit of a search. And I found out that Hasso Plattner, the co-founder of SAP, that he owned Fancourt and George. So, therefore, he liked South Africa. I think at that point of time he was the 110th, 115th richest man in the world.
So he had a bit of money and he had just started a VC fund in Potsdam, which is quite close to Berlin. So quite naively, I was like, well, then I have to kind of go and ask him. So I went into LinkedIn and I found out if you want to kind of go and contact somebody at SAP, it's first name dot surname at sap.com.
And so I wrote a long email in German, and at that point of time already writing in English was much, much easier for me than writing in German. So it actually took me like 5, 6 hours to go and write this long email where I said, “Dear Professor Plattner, we admire what you're doing and love your passion for South Africa and everything and for venture capital. And wouldn't you mind kind of go and support a VC fund in South Africa?”
And I know my husband just looked at me and said, “Why are you doing this? You know that he's not reading this email. And even if he read it, you will never, ever get a response. I mean, you know that.” And I'm like, yeah, kind of. So send it up on a Sunday evening. On the Tuesday, I got a response saying, “Thank you very much for your email. Can you please resend in English?”
I mean, it could have been so much easier. Good. So that was very quickly. Boom! We sent it in English and it was then, yeah, just transferred the email to the head of the VC fund in Potsdam who didn't speak German. That's why it needed to be in English. But I mean, short story, he gave me €25 million euro and that's how I started my first VC fund.
So that's how I kind of got into venture capital, and just to kind of go and make one thing clear, I tried that email again, didn't work. So it's not that I have the magic touch when it comes to those kinds of emails. I wish, but no - second lesson learned. Just because the likelihood of something is very, very low. What did I have to lose? I lost five hours potentially, but I mean, that was all that I kind of learned. So just go and try it. So yeah, so that's how I kind of go and got into venture capital. Yeah. It was very, very interesting, particularly if one thinks about how difficult it is nowadays to kind of go and raise a VC fund.
Everybody always talks about the entrepreneurs and how difficult it is for them to raise money. But let me tell you, raising a VC fund is as painful and as terrible. So while we sometimes pretend we don't know, we actually have some sympathy for entrepreneurs because we know how difficult it is. And we also kind of go and know what it feels like to go and get a no. But yes, that's how I kind of go and got into venture capital. So the fund was officially launched on Valentine's day in 2008, 14th of February. So, yeah, that was my entry into venture capital.
Nicole Dunn: That's an amazing story. And I mean, the resilience, as you say, is just palpable, certainly something we see in a lot of entrepreneurs. I'm curious, one of the themes we've been exploring in some of our other conversations is how international investors don't always appreciate the opportunity that exists around startups in Africa.
The story you've just told is you actually had to go internationally because local investors didn't believe in African ventures. What was their reasoning behind that? Was it just they hadn't seen it in the local markets, so they didn't believe it was possible? Did they give any explanation behind, “It will never work.”?
Andrea Böhmert: So, yes, they did. I must actually say, while they all said no, they were very friendly no's and they actually did give explanations. I mean, the biggest reason, and remember, this is not 2007, and think about it, there was no Silicon Cape or there was like the South African ecosystem. And definitely African ecosystem wasn't a totally different place than it is nowadays.
I think there was simply no real success stories of a South African tech company that was a startup and kind of made it–to some extent you can kind of go and say, “What was Vodacom and Discovery,” and so and so. But I think people just didn't see it like that. Then there was simply no other venture capital and no financial investor, no bank had heard that they could make money out of this.
And I mean, some of them were actually quite open. They said, “You know what, we've spent now 45 minutes with you. In those 45 minutes, if we would give you money and you would be successful, we make more money on the change in the kind of share price of some of the big companies than you could make in five, seven years time. So, to be honest, Andrea, it's not going to move the needle. And there was a perception that there were no startups. And definitely, no tech startups that could go and generate VC-required returns.” So I think it was just simply a lack of knowledge and why bother even trying? Like why? And I think in markets like Europe and the U.S. because they were familiar with this kind of venture capital, they just had a totally different approach to it.
Brian Kearney: Have you seen that changing since that time? Is there more buy-in locally or more buy-in internationally as well? And what does that kind of looked like over the past years?
Andrea Böhmert: Absolutely. I mean, I think it's chalk and cheese. I think a lot has happened. And while we are always critical about our ecosystem and critical and say, well, it's taken so long and we still have so little money in comparison to other markets and so on - for someone like me, who has seen what it looked like 15 years ago, if I kind of go and compare it to now, I think when I started Hasso Plattner Ventures Africa, it was kind of at the same time that Invention started, For the Eyes [1] started about two years later, but one and a half years later. But, and then of course there was the HBD, Mark Shuttleworth‘s fund. But we were like five, six players in the market within the next two, three years. I mean, nowadays there are of course a hell of a lot more South African funds.
And then of course, there's now a lot more happening across Africa. And there's now a lot of more cooperation between Africa and South African funds. I mean, for the first five years, to be honest, you didn't even think about, is there a fund actually in Kenya, or is there a fund in Nigeria? It was really a very clear lens purely on South Africa.
Now I think we have more of a continent view, which I think is absolutely great. In terms of investors, it has been a very long and hard and lonely journey, but I think we are finally at a point - and there's still a long way to go, but where we have institutional investors now backing the asset class, we now have–we haven't yet established the angel networks kind of ecosystem.
We have seed funds. We have series A funds. We are starting to kind of go and get into funds. We can actually just have international funds coming in. We have corporates playing it. The ecosystem is definitely maturing. It's not mature, but it's maturing. And I think with that, there's more, more money coming in.
And I think nobody questions anymore that venture capital is a valid asset class. Which 15 years ago was, we were told, is an absolute, absolute no-go and it's great to kind of go and see some of the banks now investing into funds and international organizations, national DFIs and real institutional investors. So it really, it's a significant difference.
Nicole Dunn: You've spoken there a lot about the ecosystem and all the different role players who all specifically contribute to various stages of the venture lifecycle, which I'd love to come back to in a second, but I'm just imagining you 15 years ago, you've raised these €25 million and you've started a fund without an ecosystem.
You don't have the accelerators and the angels who have created that pipeline of entrepreneurs supposedly. You don't necessarily know what the liquidity is on the other side of your investments. How did you even go about finding the first few entrepreneurs you invested in?
Andrea Böhmert: I think, remember, there were also not many VCs. So to be honest, if you just have a nice little press release that says, “Hello, here's money, don't worry, the entrepreneurs find you.” So I think that wasn't the big issue, wasn't a problem at all. Pipeline has never been a problem. But I do recall, I mean we had the bandwidth bond, for example, as an incubator, kind of that was it.
Nowadays there's a lot of coworking. There were no coworking spaces. I said the bandwidth bond was the closer that kind of going in Cape Town. But there were no events. I remember when the first Silicon Cape event happened, we were amazed that I think about 400 entrepreneurs came - and we were like, we didn't know that there were 400 entrepreneurs in Cape Town.
I mean, really? And after a while there were like a thousand and then all of a sudden you started having events. I mean, the first Silicon Cape events, I think, were twice a year. I mean, nowadays you can have, if you want to, you can have an event, whatever every day of the week, or at least four times a week.
I mean, so all of this has changed so, so drastically. And I mean, in the beginning, we tried to find a law firm that can do a due diligence on a tech startup. No, didn't like, didn't kind of exist. Nowadays, they all have the only little division that kind of go and does it. There's law firms that specialize on this.
So I think the ecosystem has changed so much. And I think once in a while, we should kind of go and give ourselves credit to it. I mean, while on the one hand, 15 years sounds like a long time, even Silicon Valley wasn't made in a year. I mean, it took them years and years and years to kind of go and get to where they are now.
So from that point of view, I think, I know it's going to go and go strongly from here onwards. And I think that's the important thing is to not kind of go and lose sight of where we came from and how much actually is happening. And as long as there's progress all the time, I think that's the most important thing.
Nicole Dunn: For sure. I think it's a great example. And as you say, there was this perception that there were no entrepreneurs, but this may be one of the very few examples of if you build it, they will come. You start a VC fund, there's entrepreneurs, you didn't have to really - I mean.
Andrea Böhmert: It was quite funny because, so I launched the fund, but I didn't have, or when the first announcement was about the fund, I had signed the rental agreement for an office. But I didn't have a landline and a number. So someone published my cell phone number.
Nicole Dunn: Oh, no.
Andrea Böhmert: Never, ever, ever again. I mean, it's just one of those interesting kind of things when all of a sudden the phone started ringing and everybody does a pitch and you're like trying to go and get to a meeting. It was a wild time. Absolutely was.
Nicole Dunn: That's amazing. I mean, when you look at it today, as you say, the ecosystems developed significantly. We now have a lot more events. We've got accelerators. You were part of starting one of the more prominent accelerators in South Africa. We've got angel networks. You've also sat in organizations like SAVCA, which is the venture capital and private equity association.
And I think Wesgro as well, which is the local trade body for entrepreneurship in the Western Cape part of South Africa. Where do you see the biggest gaps persisting in the funding landscape locally?
Andrea Böhmert: So first of all, of course, we still don't have enough money. It's gotten better, sure, but we still need more. And we still need to understand the different phases. We need pre-seed money. We need seed money. Then series A, series B. And if you really kind of go and follow a lot of the success stories in the U.S. or so, we kind of go and see that some of them are on the series F and it's like they have walked that journey.
And I think the biggest thing was that, for example, if you as an angel investor supported a company, assuming let's assume the company is good because if the company is bad, of course, there shouldn't be further or follow on funding. But assuming the company is good, you could actually be pretty sure that the next round would come and there would be another investor that you didn't have to kind of go and carry the company to exit or to profitability.
Now, even our fund, I'm not talking about kind of Knife Capital for a long, long time, we had to assume that if we invest in a company, we will be the only investor and we needed to go and take them to the end. So, for example, if we can't go and look at a business plan and said, “Well, this company actually will require 10 million,” for like to really kind of go and live up to its potential. And we knew that we could only go and put in three. We couldn't do the investment because we didn't know where the next money would kind of go and come from. And I think the syndication between funds is starting to happen now in South Africa.
In earlier years, they happened once in a while. HBD was quite, quite good at it, but there were still, there was not enough syndication. So people didn't kind of go and say, “Well, if the company needs, now let's say even beginning 20 million rand, I give five, you give five, you give five, and we can kind of go and do this.
It was always like one person had to go and give the full 20 million rand and the fund sizes were often not big enough to do this. So I think in the past, we were very, very limited by the amount of money and therefore, if I was a seed investor and I didn't know where the rest of the money would come, it would absolutely could have gone impact who I would invest in.
If I was an angel investor and I wouldn't know who else kind of go and followed, why would I kind of go and risk my money? So it also had a huge impact on business models, which business models we supported. And I think the biggest impact it had is, I think, the exits that happened in South Africa very often happens too early because there was no follow-on funding.
So you kind of go and got a company to a certain point and there were two choices. Either they needed now a 10 million, 15 million injection, just wasn't to be found in South Africa, or you needed to exit. Quite often we exited the companies, whereas in a more mature environment that would have been the next round funding and we potentially would have taken the companies now to the next level.
I think things have gotten better, but living now, we might get to it now in back in Germany and I see the ecosystem here. In other markets, it is not that difficult to go and get a 20 million investment or 20 million euro investment when you are still close to pre revenue. It's just, there are different amounts that are possible.
And I think if you're kind of looking at the South African investment or the whole ecosystem and look at it from a global perspective and not just look at it from how things—everything. We actually, our companies are competing globally. Then, of course, there's still a gap because we don't have the firepower.
We don't have the money to really kind of go and compete quite often on that level, which means we need to kind of go and approach things differently and support different kinds of companies. And I think that is where the biggest difference in some type of–but the gap is.
Brian Kearney: That's so interesting. And I know that Nicole wants to dive into the competing globally thread. So I'm going to write that down so we can all come back to it. But if we kind of go back a little bit and I want to continue down this thread, but when you were having those initial conversations, there was not this infrastructure built.
So how did you make the case? And I guess a better way to put this is if you're talking to like a family office, how do you make the case that a sliver of their VC investment should be in South Africa or Africa as a whole, that it can help their overall portfolio? Is that a case you were making at that time? Or was that not even possible and they just had to trust?
Andrea Böhmert: I think in the early years, the biggest problem that we had is that we didn't have enough success stories. And success stories take time. And I think the biggest problem with venture capital entrepreneur development is if you look at this kind of life cycle of a company, most companies fail earlier and the success comes later.
So you start with a portfolio and failures come first and everybody gets totally disillusioned and then all of a sudden you kind of go and start the success stories to kind of go and count. So I think there was a time where this ecosystem was at a stage that we didn't have the great success stories yet, but you would hear about a failure here or failure–or the companies, let's say, not making it, having to go and close office. And it was difficult, it's difficult to kind of go and sell hope all the time. Like they will make it, we are confident it looks good. The narrative is simply different when you kind of go and have the first examples of, “Look at it. Here, this actually is worse.”
And I think that is why, and I think that's one part of what I love about the, actually what the African ecosystem is. Every fund success, every entrepreneur success is the success of the ecosystem because we all benefit. So if one fund has a great exit because the company is really well, it's like a high five for everybody because we all now have another success example that we can kind of go and put into our pitch deck and say, “Here, you see, it kind of works.”
So I think that right in the beginning, honest, what you did is you sold a vision, you sold hope, you sold a story and you really managed in some cases to get people to get up, go and listen to you and say, “Okay, I can see it.” And quite often, as you said, the family, it is a tiny sliver of their kind of their wealth.
So they were like, you know what, quite often I've made it because I've done it. I once kind of got support. It's now my time to kind of go and pay forward. So I'll kind of go and do this. And yeah, it really came up. It was a lot about individuals. Nowadays, if we can kind of go and talk about successors, if we have this, it becomes much, much easier.
But we had to go through this. So this journey, we had to kind of go and it takes time. Unfortunately, entrepreneurial success stories are not built in a day. You cannot go and invest today and three months later, you say, “Here, there is a return.” Unfortunately, it does take time. And I think that's the nice thing because when I think about all the funds started in the last 15, 10 years, now their portfolio companies are coming to the point that they're actually getting really ready for exit. So I think we are actually at an interesting point in time and I think we'll see a lot of these kinds of success stories coming through very, very soon, which will then also just go and strengthen our business case.
Nicole Dunn: That's a really exciting thought. I think what really resonated with me that you were describing earlier was exits and the kind of exits that we've had, particularly in South Africa. And it's the question everyone poses around funding in Africa, right? Where are the exits? We're not going to put more venture capital into the continent until we see some exits.
What would an exit even look like in South Africa or in Africa? There have been some exits and I guess that's your point, I mean, I look at your all Knife Capital’s websites. You've got a tab called exits, and there's some really interesting companies on there: Order talk, a restaurant ordering software that exited to Uber Eats—radar software that exited to Garmin now powers the Garmin bicycle radar system. CSense exited to general electric. These are not at the very least the acquirers, are not Mickey Mouse acquirers, right? These are global significant companies, but it's almost as if these aren't appreciated in the ecosystem because the quantum was maybe smaller, because as you say, there was no growth capital available.
And so the only option was acquisition. And so somehow they aren't recognized or celebrated as maybe examples of how businesses could build towards a global exit. And it's interesting to sort of play out what might have happened if there had been growth capital available to these companies. Could they have grown to global scale?
Could they have ultimately listed on an international stock exchange? And would we think differently about the kind of businesses that Africa can produce? And I'd love to hear your thoughts on that, on the kind of exits we're going to see. Do you think we are going to see bigger exits and do you think we're ready to shift our perception of what an African business could look like?
Andrea Böhmert: So I think when it comes, I always get asked, particularly by non African investors about the investment options in Africa. And I always say, “Africa has three big buckets of kind of companies.” So you have African companies that are solving Africa's problems. So their markets are very different.
It's very unlikely ever going to be New York or whatever. So they really, they're solving Africa's problems. And there's huge markets for it as we know, and that's what they're focusing on. Now, naturally they have a different exit environment than a African company that solves a global problem and it's just by pure chance based in Africa.
Again, you play on a different stage. There are different opportunities and challenges that kind of going to come with it. So one needs to go and look at it. And then there is a third kind of companies. And these are the real impact companies who are not necessarily purely focused on financial returns, but really on the most social impact that they're going to go and provide and all of them have their, all of them are needed and all of them have specific investors to kind of go and focus on them and all of them have, let's say, an exit, a different kind of exit target.
So if I'm a African company solving an African problem, then one needs to think about who is interested in acquiring this because we are still in a place where most exits are going to be M&As. And I mean, the IPO, it will happen. It will happen more and more, but absolute majority is going to be kind of acquisitions.
So who is going to go and buy this and it is simply–and for what reasons, so it is a different target market. It might quite often far more be a local, a local acquirer who wants to kind of go and do this. Now, most local acquisitions just simply happen at a slightly lower valuation. And even if that wasn't the case, they are not as much celebrated as the moment you kind of go and have a big international name.
It's just a different kind of, it's a perception. It's just something that I think we all are. I think we all may be a little bit too much in awe of the Uber Eats name, the Garmin name, the Google name, the Visa name, all those kind of things. And rightly and wrongly, but I think just something we need to kind of look at it.
Those African solutions that really kind of go and target international markets and therefore could get onto the radar of any kind of global big corporates. They happen a lot, but quite often in this journey of establishing yourself, they get forced to become less African. They kind of go as part of their next funding, one of the funding rounds, they need to kind of go and move their IP somewhere else.
They need to, management quite often has to kind of go and move. And depending on how long this journey is, they might have originated from like Africa, South Africa, but quite often they become far more of a U.S. company or something like this. So when hosting is going to go and and just look at all of this, but I do want to kind of go and get back into what you said about people maybe don't think that those exits were big enough.
If you kind of go and think about an exit of 10 million, 15 million in the global scheme of things, you are right. These are tiny little exits. I mean, they're not going to go and make the big news somewhere in the U.S. or somewhere else. But if you as the entrepreneur still own 50 percent of that company, you are going to go and have a good life in South Africa, and you are most likely going to go and help a lot of fellow entrepreneurs because you will be most likely become an angel investor or do something.
So I don't think we should, this whole unicorn kind of story, of course, that's all fantastic and great. But I have seen entrepreneurs who really had the 10, 15 million dollar kind of exits that still changed their lives and the way that they have from there on contributed to the ecosystem and what they have done is really not to be underestimated.
So I personally believe we shouldn't kind of go and get too hung up on the size of the exit, on the amounts. I mean, right at the end, there is an entrepreneur who maybe put five, six, seven years of his life into a business and as a result is now, first of all, rich on when it comes to experience, but also kind of has created wealth for himself, his family, and enough to kind of go and start sharing this investing in others.
And I think that is if you really kind of go, I mean, a lot of people talk about the PayPal mafia and so on. So some of those big companies in the U.S. where a lot of the initial entrepreneurs actually all of a sudden they created wealth and then started kind of go and creating one successful company after the other.
And I sometimes wish we would be better in tracking exactly this, like how many of the entrepreneurs that we had that have done well in South African terms, but actually maybe not in global terms, but what they seeded here in South Africa. And I think we just need more and more of those. And I think the more of those that we have, the more we will kind of go and yeah, and just see this ecosystem and this ecosystem of success growing because they all learned their lesson.
They all, when they do it the second time around, they do it with a totally different kind of view and they normally share their experience. And I think that is so, so important.
Nicole Dunn: Yeah, absolutely. And I think if you look at the global venture capital landscape at the moment and some of the market correction of last year, I think we are going to see more and more of those types of entrepreneurs who largely bootstrap or taken selected capital from investors that are genuinely value additive and build out not to a unicorn exit, but to a business that has long term value for customers for their team.
And it just brings up this theme for me of perception in almost every part of this journey, right? So what is success, what is structural and what is perception in answering that question, right? So we've spoken here about for an entrepreneur, sometimes exiting at a billion dollars might not be personally successful for them because they've diluted so much by that point that they don't even really see the upside or would have done as well or better much earlier on in the journey.
There's perception in Africa, Africa acquisition. We've seen some fantastic acquisitive behavior from players like MFS Africa. We've seen some great deals come through that are complimentary. They create more value for both companies involved. They create more value for customers. They're doing things that the market demands.
And so that also feels like a perception problem rather than there's a structural cap, or there should be a structural cap on local exits, right? If there's market creating innovation in theory the size of those deals should be uncapped when you think of the potential for enterprise value.
And then this kind of perception of what is a good enough global exit. And I wonder if as time goes on, we're going to start to see changes in some of these dynamics as our perceptions change because it sounds a lot like that is largely how we're characterizing these deals rather than it being a structural constraint around the kinds of outcomes that can be achieved.
Andrea Böhmert: Yeah, no, I mean, and I think it's valid for both investors as well as for entrepreneurs. I mean, I always made this joke when certain entrepreneurs, when they came and I kind of said they read too much of TechCrunch, it's like, we need to understand sure where our ecosystem is, what we want to really kind of go and achieve what is real value and what is possible within our ecosystem. And again, we are not yet Silicon Valley. I'm actually not sure whether we ever should be Silicon Valley, but as an ecosystem, we have come so far and I think it should be celebrated more and acknowledged more. And if I kind of go and look at not just the amount of entrepreneurs, but also the quality of entrepreneurs and compare them, what I see today versus what there was 15 years ago, and I'm not saying that 15 years ago they were bad, but the quantity of good ones was definitely much, much, much smaller. And therefore I think we're just going to go and grow from strength to strength and also understand where's our place. There's nothing wrong with an African company solving African problems and not caring about the market in the U.S.
That's actually absolutely fine because I mean, what is it all about? I mean, technology should be solving problems. I shouldn't be there just for the sake of technology. If this is our market, if we can kind of go and make a not just profitable, but also a meaningful company out of that, that is actually fantastic.
But the other way also counts. We should not think that African country, African tech companies and technologies cannot compete globally because they can if they want to. So, but we actually, we do have those two options and I think that is just so amazing. I mean, I don't hear a company in Europe kind of go and saying, “Well, I have to kind of go and choose.” That they are always in this international kind of competition kind of thing.
And without actually having this identity, I think we actually have a different identity as African investors and as African entrepreneurs than some other kind of ecosystems have all over the world.
Brian Kearney: So interesting. I have a couple questions on that as well, but when you're talking about the African ecosystem, I think it'll be important for the listeners, particularly the listeners from Europe and the U.S. to understand that it's not the same everywhere in Africa.
It's not the same market economics. It's not the same environment. So what environments in Africa, besides maybe South Africa, ‘cause we know you're excited about that market, but the other markets. What other markets are you interested in? What other markets do you see really big things coming out of down the road?
Andrea Böhmert: I mean, as we know, Africa is not one country. It consists of many, many countries. It consists of many different languages. It consists of many different legal systems, many different cultures and just because you can do business in Ghana doesn't mean that you can automatically just go and apply everything into Kenya and so on.
And I think that is unfortunately one of the challenges that we have is in scaling in Africa across countries. Because it's not just about going across a border, it is quite often going really into a totally different framework, into totally different, yeah, is it from language to legal from everything and you need to really kind of go and understand this.
I think in the past, I would have kind of go and said that each region, whether it's now East Africa, West Africa, Southern Africa, North Africa, that they had very, very specifics, but I think that's also slowly changing, slowly changing over time. I would have said at some stage that when it comes to, let's say, the more e-commerce related things that there were more around. Nigeria at some stage, Kenya was the hub when it comes, when it came to mobile apps.
Then of course, in general kind of financial solutions, fintech solutions were far more in other areas of the continent, but I've seen this changing a lot. Things, you can see every kind of kind of solution happening now everywhere. And I think that's good. I find that our entrepreneurs have become far more aware of not just localized solutions that are fitting for their country, but actually far more for the continent of a certain part of the continent and actually kind of building their companies for that, also mindful of the challenges that are going to come with that.
And there's always a few countries within Africa that are more similar to your kind of environment. That's why you try to kind of go and grow there first before you really kind of go and do the big jump kind of somewhere else. Yeah, I think just the fact that Africa is, as a continent, so fragmented makes it far more difficult to find an African success story.
What I mean by that, you quite often find a Nigerian success story, a Kenyan success story, a South African success story. They might do business in some countries in Africa, but you hardly ever find one that actually really kind of goes as we have captured Africa. And I think that will kind of go and come over time, but it really is also a matter of learning how much, how to kind of closer work together.
And the one thing that I find encouraging now is we now find more and more co-investment between VCs from different regions because that of course means is that if a VC that's based in West Africa is now investing in a business in East Africa, then they will kind of go and open up their network to them and kind of go and help.
And I think that's where a lot of the opportunities also kind of go and come together. It's simply about sharing the network and the experience that you have in a certain region to kind of go and deal with the challenges and open up doors.
Brian Kearney: That makes sense. So are there specific countries that you almost see being a hub of each region? Or is that not at all the right way to look at it?
Andrea Böhmert: To be honest, they come and go and no, actually they come and then they don't necessarily go, somebody somewhere else, something else comes up and becomes a bit more of the hub. If I kind of think about what Norsken and their latest investment into Africa has really done for Africa, I think that's absolutely fantastic.
And it's definitely put kind of new places on the map. And hopefully in a year's time, there will be something else. It's somebody else who kind of go and invest in a certain region and it does, it does take a trigger. The trigger could be the building of a great innovation hub. It could be a big corporate who kind of says, “We'll start an innovation center there,”—can take a lot of different things, but normally it requires a trigger.
That all of a sudden then just kind of go and starts just getting bigger and bigger and bigger. And what I just have seen is that there's such an entrepreneurial momentum on this continent that when you get the trigger, when something kind of does kind of go and change, if you think about the amount of startup acts that we are now starting to see across Africa, that where even though governments are now saying, “Well, we really are now appreciating and acknowledging the fact that actually, employment and innovation comes from startups rather from the corporates,” and just the way that these kind of small, seemingly small things start triggering more and more activities, confidence in the content, confidence in investing, but also I think confidence for individuals to say, “Well, I can actually kind of go and maybe get out of corporate employment and take that leap into, into the unknown of entrepreneurship.”
And I think that's why I really don't want to kind of go and, well, I can't really answer the question about what are the hubs because I feel that there's a hell of a lot of little pockets of excellence and some get more attention than others, but it doesn't mean that they don't exist. And I think maybe it would be very interesting to one day do a podcast around the small little pockets of excellence that we have across the continent that are not so well known, and like where you find companies that all of a sudden maybe focus on biotech or this and that and figuring out what was the little trigger.
Because I think we could actually learn a hell of a lot if you would know what these trigger events were that started little clusters of excellence.
Brian Kearney: That's really interesting. I love that idea of pockets of excellence a lot. I'm gonna have to do a lot more thinking on that, but I guess one question I have, you still are saying we, not they, when you're talking about investing in Africa and being one of the first movers in the ecosystem, it has to be just like a part of who you are at this point. So what spurred that the movement to Germany? And are you done investing in Africa? Are you done for right now?
Andrea Böhmert: I lived more of my life in South Africa than I lived in Germany. 29 years, you can't just kind of go and take out of your system. And I'm not planning to take it out of my system. So I think the reason for leaving wasn't one reason. There's a lot of family. I mean, my daughter lives here, father who is now of course quite old lives here. So there was a lot of, a bit of family responsibilities and family things.
A little bit of a sparkle of adventure because it's one thing to kind of go and start something in South Africa and do this, but there is a little bit of, can I do it in Europe as well? And the jury is still out whether I can or whether I can't. Interesting opportunities. We can talk about South Africa as a country and some of the challenges that of course come with that.
I think so the point was there was not one reason. I think there were just a lot of things happening and some of my partners called it midlife crisis, a little bit of this, a bit of a niggle for change and wanting to kind of go and just try something, try something new. And I think when sometimes, at Knife Capital, we always talk about exit-centric business building.
And all it means is that you need to kind of go, you don't want to exit, but when exit, when the opportunity knocks, you need to be ready to kind of go and take this. And I've once given a presentation to a whole room of women about an exit-centric life where I spoke more about you should go into a marriage, absolutely thinking about that. This is going to be the marriage for the rest of your life, but. It shouldn't be at a point that you can't leave if things are really, really bad. You need to be exit ready, and I think, to be honest, I kind of go and got to a point where I felt I needed to kind of go and change.
And when the opportunity knocked, I didn't go looking for the opportunity. But when the opportunity knocked, I had to kind of go and make a decision very, very quickly. And I must say thanks also to my amazing partners at Knife who were not particularly happy with me at the initial moment, but could have understood the opportunity. And then we were exit ready. I mean, it wasn't such a kind of such a big thing. And Knife is doing brilliantly without me, unfortunately so, but no, no, no. So I think it really is one of those things. Am I done with investing in Africa? For sure, I will, I'm not going to go and come in and compete for deals or something like this.
Absolutely not. What I have said, and I really mean it is I'm now sitting in Berlin, which is one of, it's like the entrepreneurial hub of Germany for sure. One of the in Europe. I have no, I'm not building up a network here of investors, of corporates. So I personally would love to kind of go and support African entrepreneurs who want to kind of go and get into Europe.
And it was actually quite interesting how many coffees I've already had here in Berlin of meetings with African entrepreneurs to kind of go and said, “Contact me,”and say, “Andrea Böhmert, I'm in Berlin. Can we kind of go and meet?” So I'll see myself more as the kind of extended support now in Europe instead of now going back to kind of go and invest in Africa.
I'm not saying that I would never ever kind of go and do this, but this is not what I'm currently planning to do for me. It's more for those entrepreneurs that want to kind of go and do something in Europe. Yeah, how can I help. And maybe at some stage, if they need a European co-investor, that might well be me, but it would really kind of go then to go and support European expansion.
Nicole Dunn: Yeah, you can provide that growth capital you were always looking for when you were at Knife. I want to read you a line that stood out for me from your LinkedIn bio, which says, “After living 29 years in South Africa where out-of-the-box thinking was a necessity, I'm now looking forward to applying my learnings back in Germany.”
And I found that really interesting because you hear a lot at conferences about people bringing lessons from the global North, places like Germany to Africa and sort of imparting that wisdom on local entrepreneurs in the region. And I've always found it frustrating how it's positioned as one sided, you know, the great global North has come to Africa to impart their wisdom on us.
And I would love to hear from you. What are some of the lessons that you're taking from South Africa and applying to Germany?
Andrea Böhmert: So I'm not saying that I'm now imparting my wisdom on European. I'm not there yet, but it's very clear to me just after the meetings that I had over the last four months that doing venture capital in South Africa has taught me many, many lessons that a lot of the VCs here in Germany haven't learned.
And therefore I personally believe that I have a different level of empathy and understanding when it comes to working with entrepreneurs because I just understand certain challenges in a different way. And I mean, there's this song,If You Can Make It Here, You Can Make It Anywhere, which in this case talks about New York.
ButI actually personally think if you can make it in venture capital in Africa, you can make it anywhere because the hurdles that have been thrown at us, the lack of money available, and we still needed to kind of go and make a company successful, the perception hurdle that we had to kind of go and overcome every time, when we then started working with entrepreneurs, how to kind of go and really grow them, scale them with much limited resources than quite often their international competitors.
The fact that we needed to kind of go and think out of the box. I personally believe that in many places of the world, there's cookie cutter thinking and cookie cutter thinking would have not taken us anywhere in South Africa. And I honestly believe that the world can learn a lot from thinking, having a slightly different frame of reference.
I always call it that. I think the frame of reference that you had, that you, for example, knew that you couldn't rely on a government or on other next level on a kind of investor, you couldn't rely, you needed to make it yourself, whereas I think in other more established ecosystems, you rely on somebody else coming in and picking you up.
I think the fact that we didn't have this has taught us a certain kind of thinking, and I really believe that this is something that, yeah, means a lot. If you think about the companies, for example, in Africa, who make it become World Economic Forum tech pioneers or are getting really acknowledgement from global brands.
And the thing is we are sitting a little bit at the end of the world in this dark continent that a lot of parts of the world really think can't really kind of go and produce good, that world class tech. For a company from Africa to kind of go and get as a recognition has been a hundred times harder than if you are sitting in the middle of New York or if you're sitting in the middle of another things.
And if we can produce this, if we can kind of go and take companies with all the constraints that we have and make them successful and build them and create employment and build brands and really have the success stories, well, then what could we do if we are kind of somewhere else? And I think we have learned a few tools that others just don't have, and therefore honestly believe that the things that I've learned in South Africa would have never, ever, ever learned.
If I would have stayed in Germany, and I do believe that they make me a better investor here in Germany, I'm not saying better than anybody else, but I'm better with, because of what I've learned in South Africa than if I wouldn't have done, if I wouldn't have had the experience.
Brian Kearney: Wow. That has been just an incredible conversation. I want to be cognizant of your time. We appreciate you jumping on. What would you say is the biggest piece of advice you would give to kind of two different constituencies? So the one side is the person who is listening to this and thinking, “Maybe I want some exposure to venture in Africa.” And then on the other side, the founder who is trying to grind to make it work in Africa. What advice would you give to both of those sides?
Andrea Böhmert: So to the non-African potential investor who wants to do something in Africa, my biggest advice would be partner with somebody local. We have seen those so called investor tourists kind of coming in and they think money alone is the answer.
It's not. It just simply is not. There is more needed. And I think it's very, very difficult if you are thousands and thousands of kilometers away for you to kind of go and at that value, you understand what you're really investing in. So if you are passionate about Africa and if you see the opportunity and the opportunity is absolutely there, go find somebody trusted in this environment to at least advice, at least maybe sit as an observer on the board or something like this.
Do those kind of things because I think that is just so, so, so important. Don't try to kind of go and do it all yourself. I think that would be the thing, but do it because the opportunities are great. Yeah. I would just kind of go and find a local pair of eyes and pair of hands. I think that would be my advice to an international investor wanting to invest in Africa to the entrepreneurs.
First of all, I think as an entrepreneur, understand what really, really motivates you. Understand who like a little bit like who you are and who you are not. So if you are someone who is trying to kind of go and solve an African problem, then don't be discouraged by all the words that you hear about Silicon Valley and this and that or whatever.
Understand the frame that you are kind of operating in and concentrate on this and really do this. If you believe you have a solution that is globally applicable, don't let anybody tell you that you can't. It's not true. It's like what is stopping you is if ever is the prices of flights to to other kind of markets and the frequency of flights and particularly for everybody who lives in Cape Town. The fact that you could often see level stop over in Johannesburg. But no, but I think we should not ever doubt ourselves as an ecosystem. I can say this from what people say here in Europe. We have been recognized as an ecosystem. That's for sure. People are watching and people are interested. And I do think that, and I'm not, definitely not blind when it comes to the hurdles there and the challenges.
If you're going to go and walk into a different market and kind of go and say, “I'm from South Africa.” And tell you, yeah, show you a solution, do this, you are on par, you can do this. And I really just want people to not be blinded by what's perceived to be kind of other markets. The opportunities are there. I think of entrepreneurs in general, it is a hard journey and I'm not belittling that. It really is a hard journey. But the opportunities are just amazing. And I think the time for Africa has come.
Brian Kearney: Well, that's awesome. Again, thank you. This has been just an incredible conversation. Hopefully we'll have many more down the road.
Andrea Böhmert: Well, thank you so much for having me. I'm now a little bit sad. I mean, I've spoken too much about Africa.
Nicole Dunn: Nostalgia.
Andrea Böhmert: Nostalgia, yeah, exactly.
Nicole Dunn: It was awesome. Great to learn more about your story, Andrea, and hear the transition over the last 15 years. I think you're one of the very few people in the world who can really speak to the evolution of a time. So it's been amazing to hear that perspective from you.
Andrea Böhmert: Thank you. It was an absolute pleasure.
That's it for today. Do you want to learn more about investment opportunities in Africa? Go to nextfrontierpod.com for more episodes, new insights, and the latest trends in the African startup world.