The founder of Pivo, Nkiru Amadi-Emina, in this interview with TEMITAYO JAIYEOLA, speaks on the startup investment ecosystem and its challenges
Access to funding for women continues to be tough despite the numerous efforts of various stakeholders. How have you navigated the funding space as a female founder?
It is evident that women-led companies are not typically well-funded by investors. Our male counterparts can easily and frequently raise money. It has impacted us, and not only us but every female-led startup across the ecosystem.
One of the things that we have done is to change how we approach investments. When we look at fundraising, when we look at speaking to investors, when we look at angel investors, one of the things we essentially look out for is intentionality towards funding female founders. While it may shrink the pipeline, it brings us much closer to a yes. Another thing that we have seen as a trend in recent times is that because a lot of investors are starting to see the successes that are tied to female-led companies, there is a shift in the ecosystem towards putting more money in and backing female founders. That was not there before.
It provides an environment for many more female-led founders to spring up. It provides a way for a lot more capital to be channelled to more female-led companies. It has been quite difficult; it has not been as easy. But we are super intentional about the investors that we speak to. What we are seeing now is that a lot more investors are starting to back female-led companies, which is making the conversation a lot easier.
How is the local funding space in the country?
The dynamics between local investors and foreign investors are completely different. For local investors, we have to give it to them, the ecosystem is still very nascent. There is a lot of trying to define what this ecosystem looks like, and what successes will be termed as. This is compared to foreign investors whose ecosystem has been around for longer. There is an understanding. There are success stories that exist in the foreign investor ecosystem, so it is a lot easier for them to be riskier with capital than it is for local investors.
What are seeing now is that a lot more local investors are interested in the early/seed stage. For them, the idea is because I am coming in so early, I will be taking a larger risk. That is why typically, their terms are strenuous. What we have also seen is that foreign investors are choosing to come in early, not just in the startup scene in Africa but also in the ecosystem abroad.
What they have found out is that it is less risky for them to come in early than to come in at a series round. This now means that if a local investor is not going to invest at favourable terms, a local startup can find an investor that will invest with favourable terms.
The local investor ecosystem is starting to see that all the conditions that existed before: the preconditions, risks, capital, and nascent ecosystem, are no longer enough. This is because foreign investors are becoming more interested in putting more money into Africa. They are more interested in success stories. They also have a very high-risk appetite. Local investors are starting to adjust to that and starting to take opportunities as they come.
The investment landscape has improved significantly and will only continue to improve as the years go by. Investing in 2022 was completely different from the investment landscape in 2016 when I built my first company. There is a lot more capital now. There is a higher risk appetite than there was then. There are success stories now. There are more stories coming up. There are more things that people are building. I think it is a slow adjustment, but there are improvements, and we can only be patient.
You are a beneficiary of the Google Black Founder Fund. What role do such specialised funds play in the ecosystem?
One thing that differentiated the black founder fund was the concept behind it and the intentionality to back diverse teams and drive inclusion in the startup ecosystem.
It is rare to see a programme whose intention is to back, deploy resources and support minority founders. That alone sets it apart because what it means is that there is a lot of intentionalities put into identifying where these minority founders are and providing them with the support and resources that they need to succeed.
How is the current slowdown in funding going to affect the startup space?
What we are seeing is that a lot of big investors and principals in smaller funds are being a lot more conservative with the funds they deploy. This is especially because of what happened in the entire startup space last year, the crypto crash for instance and more.
This is going to continue for the next 18 to 20 months. At worst, we will see it continue for 24 months. This dynamic will mean that a lot of businesses will have to prove themselves, their thesis, and the solution to the problem that they are solving. A lot of companies will have to prove and show that this is a real problem and if solved will be able to generate a lot of return on investment.
What we are going to see is a conservative approach to how we utilise equity. We will see a lot more companies transition from less burn to more push for profitability while also pushing for growth. We will see a lot of real businesses being built. This change in dynamics is very key for the ecosystem that we are in because in Africa we have real problems and we need real solutions.
We are likely to see more layoffs. We have seen a couple of them over the next couple of months. Companies are learning that we need to be more conservative.
How will the implementation of the Startup Act impact the ecosystem?
The Act is a very welcome initiative. A lot of what exists in it is geared towards creating an environment that allows startups to thrive. But I am also very big on a lot more action and fewer words. The only way we would know if it was successful is to see its implementation. We should wait and see what happens over the next couple of months.
Startups can now list on the stock exchange. Do you think startups will explore this to raise funds?
I think startups will explore this.
Can you tell us about your business?
Pivo is a digital bank. We provide financial services to SME vendors that operate within supply chains. The idea is that if I am a logistics provider, I am a supplier of raw materials/products, if I am a wholesale distributor or micro distributor and I operate within a supply chain that belongs to, for example, Dangote, I can come to Pivo and access all the financial services I need to continue to operate within the supply chain.
We facilitate access to working capital, payment and help with insurance. We are building the financial services platform to power the supply chain and all the activities that exist between the same.
This content was originally published here.
