Media Briefing for the International Symposium on Venture Capital

When the Citizen Economic Empowerment Commission rallies behind a noble cause, you know things are about to get interesting. FiZ had a front row seat at the recently held, symposium media briefing for the upcoming SensXAfrica conference. In attendance at the event were the Director General of CEEC, Likando Mukumbuta and the German Ambassador to Zambia his Excellency Achim Burkart.

We had indicated in an earlier article about the passion of the founder of SensxAfrica, Bibusa Wisseman and it was clear from the assembled delegates that this conference was one not to miss. The fact that the DG of the empowerment house made time to come to the brief showed the level of commitment he and his team are making in building businesses in Zambia.

Coincidentally, an extract of CEEC’s mission which reads “To promote the economic empowerment of citizens through ownership of productive assets, skills development, access to finance..”  made part of the back dropped of the high table. This mission statement is the role that VCs play when they come in to invest. Zambian entrepreneurs far and wide have the unique opportunity to show case their businesses and learn from industry leaders on how to not only manage successful businesses but to be game changers in their own right.

Although the story of venture capital in Zambia has not been ubiquitously told, we believe the SensXAfrica conference markets the rebirth of alternative finance options in Zambia. The timing could not be better because as growth industries in the first world gradually diminish, investors will be looking for new markets such as Zambia to make a return on their investment.

However, entrepreneurs must also understand that VCs are astute and know their industries. In Kaplan and Stromberg’s (2000) paper titled “How Do Venture Capitalists Choose Investments”, the selection criteria that is common for VCs when they decide to invest money is to consider explicitly the attractiveness of the opportunity –  the market size, the strategy, the technology, customer adoption, and competition – the management team, and the deal terms.  Hence, local companies that do attract investors must be prepared to have venture capitalists monitor their investments. This may be uncomfortable for some local businesses as they feel they would lose a sense of ownership. However, it is the ultimate tradeoff to lose part and gain a wealth of business experience in the industry that you operate in. In addition, it is not always that control is complete lost as in the case of facebook which even at Initial public offering, its founder was able to continue having majority control of the company through the share structure that was designed.

Likando Mukumbuta’s confidence in the event was resounding. He believes in this inaugural VC conference and that there are many opportunities that VCs can exploit in Zambia. Through the mandate of the CEEC, he understands that this platform can give companies in the country an opportunity to leverage of the capacity that VCs bring. In addition, shared risk is a catalyst to have capital enter the Zambia market with endless possibilities. Over coffee, he joked with the founder of FiZ that many small business owners must give up the fear of losing control because that’s not what the VCs are here for.

In his speech, Likando indicated that CEEC also hopes to de-risk their investments through syndication with VCs. Furthermore, he has hopes that this event becomes an annual one.

When Bibusa took to the podium, she reiterated the importance of VC in the investment story. She believes that through the diverse backgrounds of the various speakers that her conference will assemble, much will be learned by businesses in Zambia. Furthermore, due to her background and experience as an entrepreneur who has tried to go the bank route and knows about the perils of interest rates and collateral, going the VC route offers the ultimate finance option to many small businesses in Zambia.

When it was the German Ambassador turn to speak, he reminded the press of the 21 billion euro in FDI that flowed into Africa which was comparable to the amount sent by Africans living abroad. He applauded government for supporting the effort of SensXAfrica as it tries to achieve the creation of 1 million jobs. He will be keening watching what comes out of SensXAfrica and so will FiZ.

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