Equity Merchants

An insight into how Shaka VC invests in African startups

August 08, 2019 · 3 min read
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The name Shaka VC may not ring a bell and understandably so. Shaka VC, registered as Shaka Ventures, is a Chinese VC fund. But as a pan-African venture capital firm, Shaka VC is indeed based both in Nairobi and Lagos. The investment firm is responsible for providing funding to startups you may have heard about.

Shaka VC was founded by Larry Liu and Jackie Li and has four other partners indirectly involved in the daily running of operations.

Larry Liu – Partner Shaka VC

Every other week, we will put the spotlight on Africa-focused private and institutional investors and their activities. In this first edition, Shaka VC answers important questions that will help many African entrepreneurs on their journey.

What does venture capital mean to you?

To us VC means being able to identify the best projects and entrepreneurs and support them financially and strategically.

Africa has a lot of challenges that need solutions, resulting in many businesses attempting to solve these challenges. As long as that exists, the need for VC will always arise.

How did Shaka VC come into existence?

We formally started operation in November 2018. But long before then we leveraged on the expertise and experience of our partners, who have had extensive years of founding, developing, and supporting startups across Africa. During these years, we came across amazing entrepreneurs and startups with good ideas for solving key problems in the region.

As a result, we created a fund to support the best entrepreneurs in Africa, while leveraging on Chinese partnerships, technology, experience, and background.

Every VC has an eye or eyes in certain markets, kindly tell what market Shaka VC is interested in and why?

We are currently only focusing on tech startups because we believe technology is easy to scale across regions, and as investors it is also very easy to observe market reach and progress in tech.

How do you determine that a startup is investible?

For starters, we look at key factors such as whether the startup is addressing key problems and whether they are doing it in the most efficient way.

If these are in place, the next logical step for us is to begin to look at how we can strategically support them to scale. But if it came down to one thing, the “take my money factor” all comes down to the team for us.

At Shaka we believe you can have a great idea and the most efficient product/service, but if the team structure, qualification, and vision do not match up it is not worth investing in.

By Shaka VC’s standards, what should a startup not be doing?

A startup should not waste money on employees that are not productive. And this generally ties into startups  not spending on the unnecessary, like an expensive office for example.

A startup should also never make assumptions about its customers, industry, or competitors. Too much rejection most likely means it’s about time you (startup) changed/amended your approach or pitch.

At what stage of growth do you usually invest in startups?

Our current focus is on early stage, from seed stage to series A mainly because the groundwork is laid in this phase and as “the entrepreneurs behind entrepreneurs” we would like to support that process.

How do you deal with bad investments?

Because we are a young fund, we are still yet to label some of our portfolio companies as bad investments.

What industries are of most interest to you?

We have an interest in fintech, health, transport, and logistics. We however have a strong focus on fintech as we’ve realised that the biggest challenges facing startups and the general population in Africa is the access to financial services.

The other times that we have invested in health was because access to health services is the pillar of survival of any society. In a similar vein, we see a big market with the transport and logistics sectors.

What investment opportunities have you regrettably passed on and why?

Again, because we are a new fund, we are still yet to cross that bridge of regret for some of the projects we have come across. Some of the reasons we have passed on projects include, project just not being a strategic fit, poor team vision and business model, project being too early, and market size/poor growth potential.

Which startups are currently in your portfolio?

A Pay, GONA, Ilara Health, Pinktie, MorsunMed and Good Hope Insights.

What is your average  ticket size ?

We invest up to $1 million.

How can startup founders reach you?

You can reach us on coolkids@shakavc.com

Ifeanyi Ndiomewese

Ifeanyi Ndiomewese

Author

Ifeanyi is a desk reporter-turned administrator. Outside of work, I love to read and travel.

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