Shawn Flynn  01:17

Nicole, can you tell us a little bit about your background up to this point?

Nichole Yembra  01:22

Yeah. So I always joke around that my background is, you know, I’ve been a problem solver. So how I kind of ended up here, you know, investing in companies and building companies, just as a result of my desire to solve problems. So when I graduated from UNC Chapel Hill, I joined Ernst & Young in the risk advisory practice. And our job was basically saying, here’s all the issues you have now, here’s where you want to go. And here’s how you get there.

So setting a lot about people and processes, a little bit of technology.  And then I kind of had the spine I was like, I’m going to live in Brazil, and I live somewhere in Asia, and then I’m going to go on a continent somewhere. And so I did. I lived in Brazil. I lived in Thailand. Then I decided I was going to move to a continent and thought it would be South Africa. I was still staying with EY. I’m going to keep building, keep working on companies but doing it back home where my family’s from, just in the continent, in general.

But then I met my former partners, and they were saying, “Okay, we’re about to raise money growing this FinTech. Come join us.” I joined them and became CFO of this FinTech company. We went and raised $6.5 million, started growing that out, you know, data to cash and all these different industries. And while we’re doing that, we’re saying, there’s not a lot of founders that have gotten this milestone in Africa. That’s nothing in the US.

But in Africa, you know, especially Nigeria, raising $6.5 million like what we did in 2015 was a big deal.  And so, we set up a little corporate investment arm if you will, and took some somebody with some *inaudible* and we’re like, “Oh, yeah, I want to put some money in companies. I don’t know what to do.” And we deployed that; we created an investment vehicle called Greenhouse Capital. We now took that money and put it into 14 different companies and they…

So that is about $4 million but that value now is over $20 million, just three and a half years later. So but it’s companies like Flutterwave and Helium Health and Sherman Med. And all these *inaudible* have gone to Y Combinator 500 and have raised crazy amounts of money since then. And so that was kind of the beginning part of this and just really invested in companies that were focused in Africa.

Shawn Flynn  03:18

So when I was doing research for this episode today, I realized that Africa, 54 countries plus or minus two, the landmass is bigger than North America, Canada, Mexico, everything combined. But most of us kind of lump it all into one category. So what is the kind of the startup ecosystem like in Africa now? And is there areas or countries that are really developing that we should look at?

Nichole Yembra  03:43

Yeah, absolutely. So it’s a common sentiment, people are just like, “Oh, I love Africa. Africa is cool.” And then there’s always these thoughts of what it is supposed to be. Like is it all safaris and dictators or like, what is this continent like? And it is 54 different countries that are truly, truly different. Even you know, Nigeria and Ghana, we argue with each other all the time, they are our next door neighbors.

So when you look at in terms of where money goes to in these tech ecosystems, it’s really four countries: Nigeria, Kenya, South Africa, and Egypt. So those four countries combined get almost 80%, or just over 80% of all of the funding on the continent. Period.

And now you have the other 50 countries vying for the remaining balance. And when you look at it, there’s reasons why it makes sense, right? South Africa, just being a bit more, you know, developed in terms of like foreign and European influences in South Africa. And that just kind of like history there. And so that’s what you look at what SA has done.  When you look at Nigeria, obviously it is the most populous country on the continent, is the fifth most populous in the world. It has 200 million people. And so pretty much think about what you can sell to 200 million people like that is a huge market for anything. If you make it in Nigeria, you can kind of make it anywhere.

Going into Kenya, it’s actually a huge bed for a lot of repatriates; people that think about in like expats and repats. Think about, oh, I want to build something in Africa because there’s some policies in East Africa that are a bit more friendly. There’s an environment that is a little bit easier to do business in. And there’s also 50 million people in Kenya as well. So again, another huge population to kind of testing out with. Then when you look at Egypt, it’s kind of that link to the Middle East.

So a lot of North African companies, they build something in Egypt, and they have available market across North Africa and going into the Middle East. So these are all kinds of the main four markets. But there’s been a lot of attention given to Francophone Africa lately, there is Senegal, Côte d’Ivoire, but these other countries now that are saying, “Hey, we would like to grow and do a bit more here. How can we take advantage of that and use technology to kind of really push us ahead?” But it’s still definitely not true like Africa, in every region, ecosystem. It’s really still concentrated in four countries.

Shawn Flynn  05:53

Those four countries I mean, Nigeria, 200 million people you had mentioned when companies there want to expand, do they… after they expand their home country, do they then have to go to another continent? Or are they expanding to the other countries in Africa? What does the expansion look like?

Nichole Yembra  06:10

Yeah, I’ve seen kind of both cases. And I am a huge fan of expanding beyond the continent, because what we’re solving for a lot of times are problems that are very similar in other frontier markets. So there’s no reason to limit that to the continent. And if you’re thinking about, so you get investment money, and all of those things, you just minimize your risk, right? Like by making sure you expand across multiple regions.

So we see Nigerian companies that a lot of them go to at times… So Brazil is a market and then also, you know, going into like Indonesia and like stuff like that and saying, okay, how can I do things in these other like, Asian markets, not China, but other Asian markets? The Chinese are the ones coming to us. But you know, all these other Asian markets are like other viable ones to kind of say, okay, how do I test this out and expand in the Middle East as well.

But what we’ve seen most common in the past was going next to Ghana. Ghana is always the next easiest one. Language is the same. It’s literally across the border, very similar kind of background. And then people want to go to East Africa and go right to Kenya, Uganda, or Rwanda. A lot of people live in Sub-Saharan Africa, they don’t expand really into South Africa or to North Africa. And South Africans, they definitely go to Europe. So a lot of things that work in South Africa don’t really work elsewhere outside of Africa, because their infrastructure and their systems are just different versus SSA is sort of similar.  So when you’re doing that analysis, a lot like South Africa may not be the most viable market. So you may do other countries, SSA, and then go to Laos or like Indonesia, Malaysia.

Shawn Flynn  07:41

Can you talk more about the infrastructure of these countries?

Nichole Yembra  07:45

So over, I think the number was like one in four people in the world without access to power is a Nigerian, right, which is psychotic. I think we were you know, we’re on the call last week. I was like, yeah, my generator is on outside, like I’m literally my own power generator. My own water like this, you know, my own water company, I’m like my own everything.

The infrastructure, so 66% of us in here in Africa doesn’t have access to grid power. Now that means people saying yes, I can’t just move into an apartment and then turn on and the lights work and I pay my bill. But there’s so much opportunity on the other side of that too, right? Like we have the world’s largest surface for solar.

Well, you can go ahead and cultivate that, like if it’s cultivated properly, it could power huge parts of the world, not just the continent. We have huge availability for like for hydro and all kinds of other things, other power sources, renewable energy sources, but it requires a ton of money that has not been invested so far. You know, just the Nigerian grid infrastructure requires billions of dollars. I think the number is closer to $20 billion to just even stabilize the current infrastructure before we are talking about like increasing access of that across the continent… versus a place like Ghana has stable electricity now, but it’s tiny. It’s a faction of Nigeria.

There’s other great countries like Rwanda, etc. But again, Rwanda as an entire country is like half of Lagos, which is one city in Nigeria. So you now started looking at those infrastructure challenges. So yes, just even just from the basic there, the more naval environment is in East Africa or is in South Africa, hence why those were easier places to kind of start companies and businesses. But I also said if you make it in Nigeria, which has all these challenges, you would literally be able to dominate elsewhere.

Shawn Flynn  09:24

Can you talk about some more of these challenges that entrepreneurs might face in Nigeria or other parts of Africa?

Nichole Yembra  09:31

Yeah, so a huge one is, you know, regulation. I’m always on my little campaign or slash crusade against the government saying that I actually just need three things from you. I need identification, I need infrastructure, and I need regulation.

So from the identification perspective here, we don’t think anything of being born and having a social security number that literally is with us, our entire existence. There’s no like sole form of national ID across Nigeria and across a lot of different African countries. There have been initiatives to go and like try to identify everybody but literally like at birth, especially rural places, no one is giving children IDs. So this 200 million number, are there people that are studying it? Are they going around counting? But do we actually know, 100%? No, we don’t. Because there’s no national form of ID, the closest thing we’ve been able to see has been like a big verification number, for example. But that leaves only the 50% of the country that’s banked. Again, another assumption based on based on these numbers, you don’t really have viable data.

Now I’ll go into infrastructure again, there are talks about power and water. And where all of that just means even roads, talk about access to markets. Our *inaudible Nigerian government decided it was wise to close the ports. The borders like for last couple weeks saying, “Oh, people are importing too much foreign food.” Well, that’s just made prices go up in the country, which is really dumb and the ports have been backed up for several weeks. And I mentioned to you earlier I was building out my new office like our chairs and some furniture is stuck at the ports right now. Like we don’t even know when we’re going to get them out because these are just major issues like here, you can ship and receive things without blinking an eye.

For Nigerians and a lot of Africans, like our mailing system is who’s going to Nigeria on this day, right? And you’re sending packages to them and arranging delivery. So infrastructure is a huge, huge thing to think about as a business person. How do you get your products to market? How do you get your products out of the country, if you don’t have infrastructure that’s reliable?

And then the last is about regulation. So a lot of our policies are extremely out of date, and then others are not made with really sound data. So for FinTech, which has received the largest amount of funding on the continent over the last four years, but the regulation guiding a lot of FinTech is the same regulation that was driving financial institutions. So literally, they’re saying, “Oh, you need to hold deposit at the Central Bank of $10 million.” And you’re like, “I’m a FinTech. Like, where do I even get $10 million just to store at the central bank to be able to process?”

But they haven’t come up with anything that’s separate for just FinTechs.  So that all of these rules are still super archaic, and then you have to work ways around them. So let’s say it tells you get a license in Lagos State, technically that FinTech cannot open any offices in any other states. It’s digital. So they can have people download their app, all the 30 states in Nigeria, but they can’t have physical offices because it breaks the law. It doesn’t make sense. And so we think about just that, like regulation across our different countries.

A great example is I want to send money to Kenya, Kenya shillings. I have to change my Naira to dollars and from dollars to shilling. So these things that you’re like how my currencies are unstable, like it doesn’t make transfers easy. There’s so many opportunities from that. But it’s also just the kind of problems that go into identification, infrastructure and regulation.

Shawn Flynn  12:40

How is the government in Nigeria wanting to work with startups? Or how are things changing to be more I want to say startup friendly or is that not happening?

Nichole Yembra  12:51

In their mind, it’s happening, and there’s good examples in West Africa, but I don’t think that it’s happening fast enough or well enough. Good examples would be, you know, Kagame in Rwanda. So he has an entire team that they call… It’s used to be called Rwanda Online. Now, it’s IREMBO.

So it’s run now by a lady named Faith Keza. She’s actually an MIT grad and ex-Googler. And she’s super young. Faith is not even up to 30 yet, and she runs the IT company for the government. So they process their visa on arrival, they process like everything that is run, like trying to digitize as much, using technology for the entire Rwandees and the Rwandan government. And she runs that. And so they’re really big on innovation working with these companies, how they made experts easier, how they actually truly make all of these things better.

On the other side, and you know, there are wonderful governments, like in Nigeria, where our leaders are all like 80 something years old, and their ideas, technologies, like “Oh, we took this over on Twitter, and like, that’s technology.” And you’re like, “That’s not really helpful to me that you responded to something on Twitter”. And when the tech ecosystem people, they’ll say come, let’s have a meeting. Always having a meeting, I guess that’s government in general wanting to have a lot of meetings. But then output of that is not something that’s super concrete, as far as I’m concerned.

So, oh, we’re going to launch an Innovation Fund, and they’ll put like a million dollars. I’m like, “What do you want me to do with a million dollars? Give it to one company, and then say that you’ve done all kinds of things?” And they’re like, “Oh, yeah, we’re going to solve climate change, and power, and this and this and this.” And we have $500,000 to do it, seriously. Like, it actually doesn’t make any sense. You’re not actually putting capital behind it.

But then on the other side, which is now just even more dangerous. We’ve seen policies that are not even sort of friendly at all. So for it to talk about that… traffic in Nigeria is hideous, right? You can literally be going a mile and be in traffic for three hours. And so I know think it’s bad here but I promise you it’s nothing compared to like Nigeria, like Lagos, and Nairobi. They are just like different, different beast. And so all of these like ride-hailing bikes, like motorcycles came up. So one of them MAX.ng, they’re pioneered it. They’re one of my portfolio companies.

They went and they like to talk to the government and how do they get this thing passed. So they basically, first they were moving like package, then decided to move people. So literally, Uber model requested, get a motorcycle, go from place to place, weave in and out of traffic, all of those things. Make sure it was safe.  As they started going, and other competitors start coming in the market. And then the government starts going, “Looks like these guys are making money.” They now start arresting a bunch of their drivers and start extorting them for all kinds of money.

And so now they go from having like, just like a normal license that was maybe like $1 a month to be like, you have to now pay thousands of dollars on these bikes every month, just so we can increase our revenue. But they’re solving traffic that you failed to solve because you have bad roads, and not enough of them. So now you want to now take money from them.  They also see all these FinTechs making payments and stuff easier.

They now increased the basic agenda like double taxation on it and say, “Oh, we want these taxes. We want all these other things on online payments.” But we literally are finding ways to innovate around things that you did that are archaic but now you’re seeing as a source of revenues. Rather you growing your tax base and you spending times actually bringing more people into your tax base and bringing more people into the bank population, you’re just going to keep honing down on the companies that are already there trying to do something good, and taxing them to bits, which doesn’t make sense.

Shawn Flynn  16:17

With all this pushback, it sounds like are entrepreneurs still want to take the risk and start companies?

Nichole Yembra  16:23

Entrepreneurs are going to. So Africa is just an extremely entrepreneurial place. I was reading something yesterday actually that Africa is the first continent, is the only continent where women entrepreneurs, outnumber men, male entrepreneurs. I think a lot of it has to do with the fact that we don’t have really stable institutions, where people can say, “Oh, I’m gonna graduate and go work for…”

We have Google stuff like that but if they don’t hire enough people, that it’s like this super viable pipeline. Or all the big four, like, again, they exist, but their numbers on the continent are so small compared to the number of jobs and the number of things that are needed on the continent. And so a lot of people’s avenue is starting their own business.

If you look at poverty, you know you have, we have the number… highest number of people living in extreme poverty in a place like Nigeria, for example. And other places across the continent, the wage levels are super low. And so side gig or how to start a business is the way to really try to help pull your family out.  A viable way around that is building for the continent and building for outside of the continent versus just in your own country.

If something happens, and you know all this like policy here, okay, maybe you’re a bit protected in Ghana at this time. Or if there’s an election in Nigeria in 2019… There’s an election in Kenya in 2020. Okay, so I know I’m good in Kenya for the next two years. And then when this happened, you now plan around election cycles. So that diversification is a way to *inaudible* that. But absolutely, you’re going to start businesses because you cannot walk around any of the cities that are on the continent and not see viable opportunities.

Shawn Flynn  17:54

So then is there a startup center or startup hub in Nigeria, such as Silicon Valley? Is there a version there?

Nichole Yembra  18:00

So they attempted one a couple years ago, it actually was a couple years ago. But I think now, like social media and just access to the real Valley, raised our tastes, quote-unquote. So there should be an area called Yaba and today’s joke and call it YabaCon. And so a lot of the early stage, tech companies didn’t have a ton of money.

So they all were kind of like in these areas. But now in the last four years, we have our companies raising hundreds of billions of dollars from the Valley, from Europe, etc. And now they’ve gone and created these big gorgeous other places around the island and stuff. So there’s not like just one area as much but I would still say Lagos, if you’re looking at Nigeria. Nairobi, if you’re looking in Kenya in Joburg, actually, Cape Town is doing a lot better from like a tech perspective. Then, Johannesburg is you know, and so there’s still just the cities versus like one area of a city anymore.

Shawn Flynn  18:53

These areas do they specialize in a certain type of technology mostly or is it pretty diverse? And also, I’ve heard that Africa, some technologies are actually more advanced than here in the US, such as mobile payments, bank first unbanked to solve that problems. Can you talk about if this is true? Or is this just something that makes good headlines in newspapers?

Nichole Yembra  19:13

I wouldn’t say that there is any like specialization in terms of. It is whatever people see that they want to solve for, but what has been, and it’s just been tied to like our real problems. So whether that’s around financial inclusion, that’s around energy, that’s around education. And we’re seeing a lot of those things right? And say FinTech loosely, that’s been like a big driver.

Now, I definitely agree that technology, there’s some things that are more advanced than we have in America, and there’s particularly around like financial services. So for example, I remember I was having lunch with this lady, and she was like, my card had expired. I forgot about it, like my card expired on February 28. And it was like now March 1, so I go, like, “Oh, here’s my card.” So they put in the POS machine and they were like, “Oh card expired.” I was like, “Oh shoot.” And she’s like, “Oh, do you need cash or should I check it? I was like, “Oh, don’t worry.” I pulled up my phone and I was like, “What’s your account number for the company?” They gave it to me. And then I just sent them the payment to their account. And she was like, “Wait, how did you…?” And I was like, “Yeah, all of our stuff is all interconnected in the inter-banking system.”

So anybody, as long as they have an account number, it can be a mobile account number, could be a real account number, I can just transfer these payments, either even USSD via text message. It’s like *727, put their account number, you can send it via text message, you don’t actually have to log in and have internet and have an app, you can make those payments happen. And so there’s like, okay, that’s interesting. And I’m like, yeah, in the US, if I went to a shop and I didn’t have my card or I didn’t have cash, I would be like, maybe some now have Venmo. But like not enough places have Venmo where it’s standard. But most of these companies will see these locations have some kind of account, can be an e-wallet, mobile account or an actual bank account and I can interact with it.

Shawn Flynn  20:51

So I’m guessing that person you’re having that meal with was not from the continent?

Nichole Yembra  20:55

No.

Shawn Flynn  20:55

Are you seeing a lot more activity from the Valley and overseas countries looking and more interested in Nigeria right now?

Nichole Yembra  21:03

There’s definitely been a lot of interest from people just building technology one side, but definitely a lot of interest in people funding businesses. So I spend a lot of time having a conversation like we’re having like, “Hey, we’re not a monolith, right?” Like, there’s so many different dimensions, but there’s so many different opportunities. It’s all about how this set of companies are actually solving it.

And here’s why it’s viable. Here’s why these 1.2 billion people are a market they should take seriously on the continent. And you get 18% of that if you look at Nigeria to start.

So we’ve seen funding when I moved four years ago, and we raised our money, African continent had .05% of total venture capital funding, and at the end of last year, it was .3%.  Now, it’s not a huge number, but it’s like it’s a huge growth number right here on year going from literally… It’s still less than 1% of the global VC funding, but it’s a huge growth number. I mean, we’ve seen a lot of different investors. I think the number, the last one for this year was over 100 something different investors.

Some on the continent but a lot not on the continent have put money into African companies. And that continues to… Some of them just out of curiosity initially, and then they start realizing this is interesting. And everyone is being super pessimistic about the US is going to get another recession again, and this is going to happen. So how do I diversify? How do I start thinking and looking at all these viable opportunities?  And there’s just some things that good or bad can happen on the continent that can happen elsewhere.

So example is like micro lending. Here, it’s been so long since I’ve got any kind of interest or credit card or anything here, but like in America, you know, maybe you get like a personal loan, It’s like 8%, or something, or 10% for the year or something like that. In Nigeria, you can do a micro loan and it’s 25% in a month. So there’s people that are, “Give my money to this company, I can make 25-30% per year on returns. Yeah, I’ll go ahead and put money buying some of these indices.” And so there’s an opportunity for huge huge returns if you’re a very commercial person, but then the other side of it is by putting that money, you’re still actually, you’re impacting a large base of people. So it’s a perfect combination of high impact and commercial returns.

Shawn Flynn  23:09

Now, these investments is it easily transferable, can you get money in and out of the country easily? And yeah, I guess that’s my first concern with that.

Nichole Yembra  23:16

It’s actually pretty easy. So in a place like Nigeria… Some other countries have different rules around it, but it’s actually pretty easy to wire money in now. If you want to somewhere like Nigeria has a bit of difficulty sometimes, not in the last couple years, but getting dollars back out. So what you would do would be like file a certificate of capital importation. So you bring the money in so that we when you’re ready to take that investment plus your return out, the central bank would guarantee giving you the dollars back.  Other countries have no difficulty in their banks in terms of having dollars to be able to give you your money and your returns back. This is simple wires anywhere else. You can get the money in the account, same day, if you want it.

Shawn Flynn  23:58

Can you talk a little bit more about that your venture capitalist funding? A fund in Nigeria, is it the same structure as overseas or do things have to be modified a bit?

Nichole Yembra  24:08

I, and most others, we don’t use local vehicles for a million and one different reasons. Part of that is I’m trying to give like the companies I invested, I want them to have global appeal. Global appeal therefore most likely means like a Delaware parent company. So we’ve also done Mauritius like my former fintech was a Mauritius holding company.

Shawn Flynn  24:28

Can you talk a little bit more about those terms that you used?

Nichole Yembra  24:33

Sure. So for a lot of the companies, I think this may be just common place, but we don’t want… You wouldn’t put money into a specific like Nigerian entity. So using a Delaware holding company, registered US company and have the headquarters in Delaware. And that now makes it easier for investors, in US Europe to put money into those companies. Another viable region on the continent is Mauritius.

So my FinTech that I was CFO of, we had our parent company in Mauritius because our investors are primarily African anyway, so it made sense to use Mauritius with tax laws and things that are easier for transparency and reporting for them.  So in terms of running the fund that is primarily investing in companies on the continent, it doesn’t really matter because their parent is most likely going to be in the US and also just to make it easier to raise money overall and also just reporting and transparency and all of that great stuff that investors love.

Shawn Flynn  25:30

And then the harvesting period when you try to get your money back from the companies, is that pretty similar to the US, like five, seven or ten years? Or is that another adventure?

Nichole Yembra  25:40

My personal thought and a lot of people actually on board, like in the same thing is that the traditional 10 and 2 doesn’t really work for the continent. However, if you want to be able to raise for money as a GP, you end up kind of being stuck, you know, doing this 10 and 2. When we created our investment arm, we actually did evergreen fund because for example, when we exited Flutterwave, we did it within two years.

But there’s some other companies that we know we’re going to have to hold for much longer because just the nature of the company, they’re raising in like later stages, or they may want to M&A. And looking for the right person, it may take a little bit longer.  And I think a lot of the research, even like IFC, CBC, what they’ve been doing lately has been showing that some of these SME funds, the best time for them is like in year 15, or 13, 14, 15. But yeah, you’re kind of rushing to kind of get out a little bit earlier. So in general, yes, it is the same time and structure, but ideally it would be to have a bit more time and something that’s more traditional. But that’s the other side why I like technology, because with technology, you can actually get out typically in shorter timeframes that kind of meet that cut into timeframe.

Shawn Flynn  26:51

What are exits… What do those kind of like for companies there? They don’t have access to the capital markets to do that, and they don’t go IPO.

Nichole Yembra  26:59

They do actually. So we actually have our first tech company IPO on the US stock exchange called Jumia. That happened earlier this year. And then we have one company that’s going to IPO early next year called Interswitch. They’re the OG FinTech of Nigeria. So Visa just did a pre-IPO investment of $200 million. Basically, they’re going to choose a London Stock Exchange instead of the US stock exchange.

And there’s a couple others that are rumored to kind of be heading that way. There’s 40 different exchanges all over the world. So we’ve seen some African companies, German Stock Exchange, or the Australian Exchange as ways to kind of get capital and continue to expand and grow. So that’s like one thing that’s viable. But as you know, you know, 97% of exits are M&A. So you see a lot of that happening. And that activity has increased significantly on the continent.

So between 2017 and 2018, it went up two and a half x in terms of the number of M&A activities, happening by both Africans, East African players or also international to African players happening. So we’re seeing M&A activity kind of increase. And so an early stage investor, the way I got my money out from Flutterwave was the secondary sale. So when they were now raising the next round, we said, okay, we would like to exit, structure that out, took a slight discount, and then we were able to get our cash out for investors. And they, it was move on that way. So there’s a bunch of different creative ways to structure exits for companies.

Shawn Flynn  28:25

And then right now, what are the obstacles to get more VC funding into these countries?

Nichole Yembra  28:30

I think a lot of it is just understanding. So when you start having conversations about what the opportunities are, and why these are the right founders to back and support, I think it’s just understanding.

So a favorite example that I use, and it’s not out of anything to them. It’s just the nature where money is. The conversation between ZipLine and Life Bank. So both of them use drones to deliver blood across different African countries, like ZipLine does it primarily in Rwanda, Ghana. Life Bank is Nigeria, Ghana. Again, using drones, using all kinds of things to deliver blood.

But ZipLine has raised over 200 million in funding. They’re valued at 1.3 billion. They say probably on their website, “We are a Silicon Valley company that’s saving Africa.” And I’m sure they didn’t say saving Africa but they said something to that extent. Versus like Life Bank. She’s been, she barely has raised over a million until now. She just won the Jack Ma African Entrepreneur of the Year Award. So now she’s getting like, all of these press like, “Oh my God, your work is amazing.”

And she’s like, “Yeah.” While the person from the Valley say it is the same thing. But they know them. They understand them. It looks like them, they understand their same conversation, etc. They have access, they understand it. So same market, same continent, same process, but just different founders.  So I think as more people get to meet more African founders, which is why I’m a fan of like YC and the 500s. I’m a fan of these trips where people are trying to come and understand what’s going on the continent. I think it reduces those barriers and then it would make the African founders solving this problems on ground to be able to raise more money.

Shawn Flynn  30:02

So what’s it like being a minority female venture capitalist raising a fund to invest in African startups?

Nichole Yembra  30:07

It is almost impossible. It’s already been difficult to be a black woman in America raising a fund for American companies. And then I now add the complexity of investing on the continent. I think conversations have been really interesting. It’s either your fund is too small. And then I explain, “Well, I was 4 million, I literally have returned that…” Actually, it is more than 20 million now because two of the companies are about to announce rounds, they’re over 100 billion plus. So likewise, I have taken my stakeholding in that, it’s going to be even more.

So I’m like, I get it. It’s tiny to you. But there’s literally nowhere to put this money. We don’t have the companies that are *inaudible*, like the largest one I just told you about was Visa giving 200 million to Interswitch right before they’re about to IPO and that is the first one. And then you have Jumia that was like in that position the year before. I was like if I raise 100 million dollar fund, 20 million, where am I going to put the money? What’s gonna happen? And so how to explain to them that the ecosystem is just not there yet. So the way that I will make sure you get your returns and get four or five extra money is by going to, even if it’s 500,000, a million dollars and a company, that trade off for them, where they’re just saying I’d rather just write large tickets and move on. That’s one thing.

The second side is also that this education, of having to talk about these opportunities and why they are successful and why even though they may not fully understand or fully, like, have context around everything. This will be the future of the continent. If you talk about the world’s arable land in terms of being able to make food, Africa has over half of the world’s land that can be converted for agriculture, because you already have the largest surface area for renewable energy.

The way the world is going, look at our climate stuff, like you’re literally going to be reliant on the continent. We have the world’s youngest population and median age is 18.6. Whereas the rest of the world is going to be aging. Who’s going to do the labor? Who’s going to be the people growing and doing all the stuff for the rest of the world? It is going to be in Africa.  So having to explain that if you don’t invest now, you’re not going to be part of that wave in the future. But the people that get it, good or bad, or the Chinese. They have invested in almost every single country, even in parts that people are like, why would they put money there? But they’re literally investing for the future? How can the rest of the world and the countries that we think are more friendly a bit like you know, take their capital and build something? But the Chinese are coming in and dropping a lot of money.

Shawn Flynn  32:30

So when you’re in the meetings with these LPs trying to get their money for your fund, what’s your investment thesis that you’re pushing towards?

Nichole Yembra  32:38

Yeah, so my thesis is centered around global companies, but we just happen to have African founders. Not building technology that’s only good for Nigeria or Lagos, building things that we think are competitive globally. And it’s also just part of like changing that narrative that’s like, oh, the rest of the world and then Africa is on this side. No. Africa is part of this interconnected world.

Just look at these other founders right and what they can do is viable.  *inaudible the fact, the continent is still super far behind. And the only way we’re going to catch up is with technology. You look at power, they’re not going to go and drill all of these lines, and connect everyone to this grid. You’re better off just creating standalone renewable energy like solar plants, and then powering houses that way. Or creating a solar power in every house or creating hydro and doing that way. You’re not going to be able to build enough schools. It literally shows this, the data is showing that we need to build three new schools every day. To be able to keep up with the demand, we will need by 2040.

They’re not building 30 classrooms every single day. And so then you talk about e-learning and how you now use mobile technology, which is super spread out everywhere to be able to catch up and be able to educate people and solve the problems around that.  Technology is really the only way that we’re going to be able to kind of move forward. If you look at our election system, voting is you know, on these like paper things which wouldn’t be so bad if it wasn’t just like a plastic box and the ballots get stolen, right. How do you not use technology to like, make all of that better and have free and fair elections? There’s so many things technology can do. And if you care about having some sort of impact, even if it’s just on people’s lives, that their life is marginally better, there’s no place that your your dollar will go further than on the continent.

Shawn Flynn  34:18

Can you talk about some of your portfolio companies and maybe the problems that they’re solving?

Nichole Yembra  34:23

Yeah, so a fave, which is their favorite, but it is so interesting how this conversation was about Helium Health. Part of the reason actually here in the states now we were at the Forbes Health Care Forum earlier this week with basically I mean, everyone that is anything in global healthcare, Ken Frazier, who’s the CEO of Merck, and the Founders of Epic, and all these other multi-billion dollar US conglomerates for healthcare.

There’s literally Helium Health, that is, you know, digitizing health records for patients on the continent. So Helium’s entire proposition is that without data, you don’t know what problems you’re trying to solve. So people go into like, “Oh yeah, there’s AIDS. There’s Malaria. There’s this.” But there’s no real data on what that is. For example, like the Gates Foundation gave Nigeria, it was kind of a three part grant to eradicate polio, which basically, you should really not have in 2019. But that’s a different case in it of itself.

But the Japanese government had lent money to Nigeria, about 70 something million dollars to work on eradicating polio. And then if they hit it by that target, then the Gates Foundation would actually pay off the debt. And that’s what happened. So they end up counting that as a win. But do we really track that information properly? Did we really? Are we sure? I don’t trust any of it. So an example is one of the Helium co-founders, she used to work at the Lagos State AIDS Control Agency.

And she said that they’re taking intake forms and trying to write people’s information and then they’ll go from one system to like this register, and then they would enter the data into the different donor agency systems and when they’re now had to go in and try to review it, sometimes like male would change the female. Positive would change to negative, like okay. So she was like, I do not trust any of these results. None of this stuff is accurate. No one really knows where this medicine is going, where money is going, where all of these things.

And so we realized data was really central. But there is no way to get the data. I mean, there’s paper systems. So they had to first build the technology, which is electronic medical records and hospital management system. So you can start collecting the data. So now three years later, they can now use that data they’ve been collecting from all of these hospitals to now start creating products that are the things that are viable to continue to solve healthcare problems.

There’s now data, they’ve influenced legislation, there’s nothing around healthcare, privacy, and data privacy… because of them, they’ve been able to actually sit down with governors, and let’s talk about what that looks like. They’re able to influence state policies on what facilities update, what treatments are needed, what medication is needed in these different places, because they’re seeing data from these locations. Those have been like really cool seeing how their technology is actually transforming people’s lives, but it’s still you know, viable business.

Shawn Flynn  36:51

And then if anyone wants to find out more information about you, your fund what you’re doing, what’s the best way to go about doing that?

Nichole Yembra  36:57

Our website is thechrysaliscapital.com. So thechrysaliscapital.com. You can find all of our information there. But from us, you can connect to all our different portfolio companies, you can learn a lot more about our work to find out all of our social media fund stuff. But I will talk to you all about more like I love talking about my continent, my country and especially how technology can really transform that. So reach out.

Shawn Flynn  37:22

Nichole, I want to thank you for your time today. And I also want to thank Nigel Selina who made the introduction to Nichole that allowed this interview to happen, I’ll have his contact information as well in the show notes as well as Nichole’s. So if anyone wants to get ahold of anyone, just visit our website, The Investor’s Podcast and click on Silicon Valley. Don’t forget to leave us a great review on iTunes if you liked the episode, and please share it with all your contacts to spread this information, to help everyone out there. So once again, Nichole, thank you for your time.

Nichole Yembra  37:48

Thank you so much.

Outro  37:50

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