Armed with a substantial $45 million war chest, the leadership trio of Verod-Kepple Africa Ventures (VKAV), comprising Ory Okolloh, Ryosuke Yamawaki, and Satoshi Shinada, brings decades of Africa-focused operating and investment experience.
Originating from diverse backgrounds, including the founding of Japan’s embassy in Botswana and extensive work in energy and infrastructure projects in West Africa, the team’s journey has evolved to address the growth-stage needs of African startups.
Founding Philosophy and Evolution: Kepple Africa Ventures’ Transformation into VKAV
Yamawaki, the founder of Japan’s embassy in Botswana, and Shinada, with a background in West African energy and infrastructure projects, joined forces post-MBA from Berkeley to establish Kepple Africa Ventures.
Over three years, Kepple Africa Ventures invested in over 100 African startups, embracing a “hands-off” approach during its seed-stage focus.
In 2021, the firm transitioned to a growth-stage focus, leading to the formation of Verod-Kepple Africa (VKAV) in collaboration with Ory Okolloh, a seasoned tech and investment professional with experience at Google and Safaricom.
Strategic Shift: VKAV’s Focus on Growth-Stage Startups and Series A/B Investments
While VKAV has departed from the seed-stage investing model of Kepple Africa, it retains the Japanese connection and continues its commitment to growth-stage startups at the Series A and B stages.
The firm, with an average ticket size between $1 million and $3 million, has backed 11 growth-stage startups, including notable names like Moove, Shuttlers, Chari, and Julaya.
VKAV strategically involves its limited partners, primarily Japanese companies, as co-investors and explores potential acquisition events for portfolio startups.
Investment Philosophy: VKAV’s Collaborative Approach with Verod Capital
In a conversation with TechCabal, the VKAV leadership shed light on their collaboration with Verod Capital, emphasizing the advantages of partnering with a private equity firm.
Shinada highlighted the significance of Private Equity’s hands-on approach in managing issues like governance, operation, hiring, and finance, which become crucial as startups transition into the growth phase.
The collaboration enables VKAV to institutionalize the experience and knowledge gained through growth-stage investments.
Assessment Criteria and Investment Strategy: VKAV’s Three Pillars
Yamawaki detailed VKAV’s investment strategy, focusing on scalable and untapped opportunities that address significant frictions in Africa.
The firm emphasizes three pillars: infrastructure, inefficiency solvers, and market creators.
VKAV evaluates potential investments based on these pillars to ensure a deep impact on African challenges.
The assessment process involves a two-step investment committee process with due diligence tailored to the venture capital context, maintaining independence while benefiting from shared back-office functions with Verod.
Founder Selection Criteria: Vision, Global Perspectives, and Adaptability
Shinada and Yamawaki shared VKAV’s criteria for backing founders, emphasizing the importance of visionary leaders capable of translating big visions into tangible steps.
The founders need global perspectives, adaptability to adjust business models, and a willingness to learn from successes and mistakes.
Chemistry and a personal connection with founders are also key considerations for VKAV, aligning with its strong intention to add value to portfolio companies.
Red Flags and Diligence: VKAV’s Cautious Approach
In assessing potential investments, Okolloh highlighted red flags such as a lack of pain-market fit, high turnover within teams, and transparency issues.
VKAV conducts due diligence independently, adjusting requirements for the venture capital context. While VKAV shares back-office functions with Verod, its investment team operates independently, ensuring a tailored approach to diligence with deeper knowledge of potential risks.
Support Beyond Funding: VKAV’s Hands-On Approach and Peer Networking
VKAV and Verod collaborate internally to provide hands-on support through governance, aiding companies in transitioning to more formal boards and implementing essential processes.
The firm extends support in recruitment, HR processes, ESG, and impact tracking. VKAV places significant emphasis on building a peer network within its portfolio, believing in the value derived from entrepreneurs collaborating with each other.
Learnings from Kepple’s Early-Stage Investments: VKAV’s Market Insights
Reflecting on Kepple Africa Ventures’ early-stage investments, Yamawaki highlighted the importance of total market size for startups in Africa.
VKAV’s experience emphasizes the need for startups to have a substantial ambition or market potential to be considered viable for venture capital backing.
The team recognizes the cyclical nature of the African VC market, viewing the current market conditions as an opportunity to invest strategically and support founders navigating challenges.
Future Investments and Patient Capital: VKAV’s Outlook
As Africa emerges from post-bubble valuations, VKAV views the current market downturn as cyclical, emphasizing the need for patient capital.
The team believes this period is opportune for investing and deploying capital, enabling founders to make strategic decisions, pivot, and refine business models.
VKAV aims to partner with other investors and provide additional resources to support companies facing macro challenges beyond their control.
Exit Strategies: VKAV’s Multi-Faceted Approach
Considering the unique challenges of the African market, VKAV recognizes the need for a diverse portfolio of exits, including secondaries, buyouts, and IPOs.
The firm emphasizes the proactive crafting of secondaries when timing is right, recognizing them as a primary avenue for exits. VKAV’s approach diverges from relying solely on IPOs, aligning with the multifaceted nature of successful exits in the African context.*
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