Sub-Saharan Africa is forecasted to be the world’s third fastest growing region in 2013 and 2014 by the International Monetary Fund (IMF).

In 2012, Darshan Daya Partner at Capitalworks stated, “We are blessed with a strongly entrepreneurial culture in SA, and many companies which are good operationally need a financial partner to get to the next level.” – Financial Mail – February 24, 2012.

Small and medium sized Enterprises (SME’s) are the dominant form of entrepreneurial activity in Sub-Saharan Africa. Over 90 percent of Sub-Saharan business operations stem from SME activity, making up 50 percent of employment and GDP. The Legatum Prosperity IndexTM depicts that the key to helping entrepreneurship and opportunity thrive will emerge from the ICT platform environments.

Launched in 2010, Vincent Kouwenhoven and Brian Hirman, two successful internet entrepreneurs brought the eVentures Africa Fund to the Sub-Saharan Market. The company is focused on investing long-term equity in established small businesses that have been trading and generating revenue streams, but need to be set on a growth trajectory. These businesses are all involved in the digital platforms. Kouwenhoven says, “A barrier to investing in Sub-Saharan Africa is the general misunderstanding about venture capital by business owners.”

The key focus of eVA is to inject capital into second stage investments, where the companies have identified a niche in the digital market, invested in their start-up and to some extent grown the business into an equitable prospect.

VA: eVA Fund offer capital and then ‘lends’ on your background to assist make the business investments achieve the anticipated returns. Is there no conflict in terms of your involvement with the actual owner/manager(s) of the business?

VINCENT: The eVA Fund offers capital in combination with very active business-coaching, given our backgrounds with internet dating from the start of it all in the west, back into the mid-nineties. Active coaching implies several interactions by email/Skype during the week, with our investee company’s management, as well as face-to-face contact at least every two months, during visits to the companies. Coaching goes from technology, marketing/commerce, business/organization etc. In this sense we operate totally different than most VC’s, i.e. significantly more hands-on. There is an obvious and logical limit to the number of investments we can assist in this way.

VA: What triggered the passion for investing in Africa?

VINCENT: Seeing the deployment scheme of the sea cables in 2008/2009, the lack of truly African internet solutions for African issues by that time (back in 2008/2009), the funding gap in the middle (too big for micro payments, too small for Private Equity, hence venture capital required), which serves best for opportunities for fast growth in this space. Furthermore a passionate belief in the impact internet will have on Africa’s development in general (talking about main Africa now, not particularly SA).

VA: Investing in Africa must come with some challenges. Can you list a few of the most critical to date?

VINCENT: Again, not specifically for SA, but Africa in general: immature market for digital itself (sometimes chicken & egg problem); recruitment of people with a combination of both technological savvy and  business skills. In general, tech-wise the levels are  up to standard, but combined with business skills is harder to find, sometimes challenges in the area of legal frameworks, but in general fine, with the help of local lawyers/fiscal advisors. In some countries: power issues…and obviously sometimes cultural issues, although we quite often work with native Africans which have studied/worked abroad, which ‘guarantees’ the best of both worlds

VA: This is Africa. How does the investing environment change in terms of Africa as the location?

VINCENT: Obviously the fact that Africa is all about mobile, is a big difference (and potential future advantage) of Africa over the US/Europe.

VA: Obviously eVA operates in different countries. in terms of prospects and current performance, which ones stand out?

VINCENT: In performance terms it might be too soon to judge. We’ve invested in Ghana, Kenya and SA so far, all of which are very promising. Important for eVA is that we have strong networks in these countries, especially now with the recent partnership with 88mph. Otherwise we don’t exclude other countries, and have looked at serious applications from Nigeria, Uganda/Tanzania and Zambia as well.

VA: Are you (eVA) achieving anticipated return targets?

VINCENT: eVA’s investors expect a combination of sound financial returns as well as positive impact (in terms of local employment, business enabling etc)

VA: Please highlight some of the eVA success factors for VC investing in Africa?

VINCENT: Background of the fund managers; combination of having over 10 years VC practice in Europe plus having built, grown and sold their own internet-businesses on the one hand, and an active group of private investors behind us, of whom most of them have also developed and managed, or still manage, successful internet business, also on an international/global scale, who are actively involved in the process. For instance, next week a group of 8 of our investors will join us on a trip to SA and Kenya, to visit our portfolio companies themselves.

VA: Performance wise – can you ring-fence the cumulative ROI for eVA in Africa?

VINCENT: I can, but we don’t share financial data publicly, being a privately funded fund

 VA: On the SMME (Small, Medium and Micro) spectrum, where is the bulk of VC capital investments been channelled?

VINCENT: These are medium investments from 250, 000- $1.5 million. Typically these businesses have between 5 – 15 employees.

VA: Has there been any interest by eVA in Social Enterprises and what is the ROI dashboard indicating – in terms of an African context (comparatively speaking)?

VINCENT: We don’t focus on social enterprises specifically, but do place high standards on the fact that our investment companies must have a positive impact on the African eco-systems; best guarantee for that is growth (i.e. high valued jobs) and profitability to be a sustainable business.

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