Founder resiliency | April 2020

April 2020

I hope you and your families are staying safe and well.   We are in South Africa and remain in very good spirits.  I am in regular dialogue with our founders, keeping up an at-home workout routine and learning a new language with my partner (using Duolingo).  I give credit to the South African government for swift and decisive action around increasing testing, ensuring supply chains of essential products remain available, and the President messaging proactively on the distribution of funds to individuals and businesses in need.

I am not an expert on infectious diseases, and will limit sharing my views on the Coronavirus itself.  But this virus has shown how interconnected we all are, and I think that there is an important lesson to be learned.  We live in a globalized, connected world, and we need to think about the broader collective.  That means caring about everyone.

On a positive note, we’ve seen friends and business partners across the world working hard on policy initiatives to support small businesses, as well as assisting in sourcing critical testing kits, ensuring they are as widely available as possible.  The world is unified right now and we all benefit if we can keep it that way going forward.

Founder resiliency

We’ve been in regular contact with our founders and each company has set in motion plans to ensure the safety and well-being of their staff while dedicating themselves to providing key services during this crisis.  Given our focus on supply chains, logistics and payments, many of our companies are providing essential services including delivery of agriculture inputs, food and medical supplies, as well as financial payments.  However, most of our companies are not immune to the economic upheaval, and we remain focused on strategy and execution.

We have eleven portfolio companies in the Raba partnership, with all eleven having completed rounds of funding within the last six months.  While our companies have come into the crisis with relatively stronger financial positions, we are advising them to keep focused on strategic priorities to ensure we can play offense in the future.  For our founders, many have navigated through crises before, and they are accustomed to turbulence in the end-markets they serve.  The founders of Flutterwave started their business during the height of the economic recession and currency crisis in Nigeria just a few years ago.  Other founders have continued to grow through trying periods, from turbulent elections in Kenya when the economy was effectively shut down to declines in per capita GDP in South Africa during a period when global growth boomed.  Despite these significant challenges, our founders found ways to start, grow and scale great companies in exceptionally challenging markets.  I believe in the dynamism of our founders to overcome the challenges of this period and come out stronger than before.

And what’s next?

With COVID-19, there is a new work operating protocol — it’s remote.   I believe that traditional companies will adjust to more remote working infrastructure, and that technology companies starting now will start remote first.  This is an especially important trend for African companies given the geographic distances of this vast continent (see the true size of Africa) and the need to work with the best talent across Africa and the world.  In addition, the emerging technology hubs in Africa will create a demand to work with companies around the world.  Companies like Automattic (best known for Wordpress.com) grew up distributed first, and this trend will accelerate.  Aadil Mamujee, a Raba limited partner and head of product at Automattic, wrote this insightful piece on distributed teams, including suggestions on tools to use.

The movement of essentials (food, pharmaceuticals, capital) in and across African countries has been the primary focus of Raba’s investment strategy.  As supply chains and logistics networks become overwhelmed, fortifying our ability to move products will be even more important going forward.  The interconnectedness of people and supply chains accentuated by this crisis has demonstrated where current infrastructure is inadequate, and provides us with insights on how we can rethink critical services going forward.  I believe every country will need to undertake a deeper strategic review of its infrastructure vulnerabilities.  Many of Raba’s current portfolio companies will play increasingly important roles in such strategic initiatives across the continent.

There is much work to do analysing what the world may look like post COVID-19 — projections and hypotheses abound regarding the nature of work, commerce and social interaction (will social distancing be a thing?).  Fundamentally, I believe that great companies are started in any market environment, and that companies that survive this period can emerge stronger and with greater upside than before the crisis.  As global investor appetite abates, we will likely see more even higher quality founders emerge — who despite a global pandemic and  long odds have the conviction to build something important and impactful.  As early stage investors, we remain open for business and will continue to partner with capable, deeply passionate, authentic founders who are solving hard problems (a mission more important than ever before).