Mbwana Alliy: “Africa is About to Peak”
A fund helps startups in sub-Saharan Africa rise from obscurity.
The emerging middle class in Africa provides opportunities for investment in early-stage mobile and internet startups. | Reuters/Thomas Mukoya
Originally from Tanzania, Mbwana Alliy went on to earn degrees in England and America, all the while planning to eventually return home to East Africa.
Upon returning, he cofounded Savannah Fund, a seed capital investment firm located in Nairobi, Kenya, with links to Silicon Valley, where he first worked at a small accelerator fund, i/o ventures. He invests small sums of capital — between $25,000 and $500,000 — in ambitious early-stage mobile and internet startups in sub-Saharan Africa. To date, he has made 22 investments in six countries.
He graduated from the University of Bristol with a degree in electrical and communications engineering before working as an aerospace systems engineer at the UK’s Defense Evaluation Research Agency (now known as QinetiQ). Later he became a product manager at Microsoft after earning his MBA from Stanford Graduate School of Business in 2007.
Alliy talked to Insights by Stanford Business about the negative impacts of Ebola, terrorism, and well-meaning charitable organizations on entrepreneurship in Africa.
In 10 words or fewer, what is the big idea behind your business?
We want to be the leading venture capital firm in Africa.
Africa is about to peak: Smartphone connectivity, an emerging middle class, and opportunities for technology are unprecedented. People are starting to see Africa as a private-sector market, rather than just a recipient for aid. Africa is not just comprised of poor people who need to be saved. People here want the same things people have in the U.S.
How do you describe your primary target audience?
We are looking for entrepreneurs in Africa who are shut off from access to risk capital. There is too much “soft” capital; they do not only depend on grants. Some entrepreneurs want to raise risk capital to build large-scale, fast-growing businesses. They are bold and can navigate the local environment, versus foreign founders coming to Africa for opportunity. The Alibaba of Africa will be founded by an African.
What are your biggest challenges right now in building your business?
Fundraising. Explaining to investors that there is an opportunity in tech VC in Africa. This is not yet a proven category. When there is a negative event, like Ebola or a terrorist incident, investment momentum gets set back and talent leaves. Operating in emerging markets can be harsh; entrepreneurs burn out quickly. Roads are badly congested, which leads to negative productivity. The ecosystem is still developing, so it can be harder to find competent lawyers, advisors, product managers, and others who are willing to work with startups for lower fees. One year of operating in Africa is like two or three years in the U.S.
What is the best advice you’ve ever received?
I have climbed Mount Kilimanjaro three times. The guides have a saying: “Pole, pole.” Slow, slow. They keep you from getting altitude sickness by ascending the mountain too quickly. You can easily burn out. You need to take three steps up because you slide two steps back. You have to push, push. It is like entrepreneurship in Africa. You are pushing against unreliable roads and corruption. To get anything done you have to work extra hard. You will still get up to the top, but you can’t think of these as normal steps.
What was the most difficult lesson you have learned on the job?
Convincing entrepreneurs in Africa, particularly Kenya, that venture capital is the right way to go for their business, rather than accept free donor money. Venture capital is still largely a foreign concept. We want better reporting than they are used to. For an NGO, reporting often means sharing photos of babies and poor people. We ask for monthly updates on users and churn just like Valley-backed startups. We require proper governance and accountability. Startups often think we fund their R&D department versus commercializing. If something is not going well, it is especially hard to tell them because the other financial players do not care as much, focusing on narrow outcomes in a sector or country.
If there was one thing that has enabled you to be successful as an entrepreneur, what would it be?
Knowing that my parents will always back what I do, even if it’s difficult for them to understand; even if I fail.
What inspires you? How do you come up with your best ideas?
Travel and photography. I get out, turn off everything, including the internet, and allow my mind to recharge. I go all over — from Zanzibar to the Serengeti, and untouched areas
What is your greatest achievement?
Being an effective bridge between two worlds.
What impact would you like to have on the world?
I love helping a founder of a company that starts in obscurity in Africa without capital or a network to get their venture off the ground. They do not have to come from an incubator in Silicon Valley in order to do well.
What was your first paying job?
I was an aerospace test engineer. My mentor never went to college but took the apprenticeship route. When he first showed me all the parts of a new helicopter, it was like he was showing me the inside of his apartment. The way he learned was through experience and building in garages and hangars, not through theory. That is how I work. I talk to people on the bus or when I am walking around in the market. I want to know what technology they use and why. I do not just read reports.
What businessperson do you most admire?
Said Salim Awadh Bakhresa. He started out as a shoe polisher in Zanzibar and now his business is the biggest conglomerate in Tanzania.
What do you think is the greatest innovation in the past decade?
The introduction of mobile money and payments in Africa. Basic technology and a little business model innovation have leapfrogged traditional banking infrastructure. People who have never had a bank account use mobile money to pay their rent and get paid.
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