Angel investing in Africa (case study part 1): Canadian investor Jerome Kisting and Kenyan based m-Kazi

Recently M-Kazi closed their seed round with angel investor Jerome Kisting. This interview is the first installment of a three part series and abbreviates from an interview held with Jerome Kisting on Thursday the 22nd of November 2012.

Can you tell us about your background?



“I have a background working in finance and investments in Namibia. I became interested in the impact investing area 4 years ago. When I moved to Canada I got involved with an impact-investing fund, called the Toronto Enterprise Fund that gives grants to social enterprises. And it was a great introduction to the social enterprise business model and it broadened my perspective on business and what it can achieve.”

Please describe yourself as an investor

“I’m not the kind of person that will start a fund. I’m just curious and I want to try things and that is what this is about for me. I describe myself as an Angel impact investor. The money that I invest is my own resources that I’ve earned from other business transactions. ’I like the $25k to $100k range and what I also do is help channel some VC cash to the companies I’ve invested in. If a VC takes a stake, that is another milestone in the development of the business. If you can raise money from the VC’s essentially it shows that another party has vetted the business model and thinks that it can scale.

I made a couple of investments this year and I would like to give them some time to advance. The founders don’t need me on a day-to-day basis, it’s more a once a week call where we talk mostly strategy. So for now I’m focusing on my current investments, but will look at one or two more investments as I do want to create a portfolio over the next two to three years. The sectors that I’m interested in are food and agriculture, healthcare and technology – with technology I mean mobile, web and tech.”



What role do you see the Angel investor play and what is the opportunity to invest?

Richard Branson said: ‘You have to use money to make something happen’.  I really like to make things happen, so when I see an entrepreneur who shows traction, who takes his idea out on the street to ask customer X: ‘Will you buy this from me?’ If they can prove that to me, then absolutely I’m interested investing in the seed-stage. The lower the upfront investment, the greater your exit options are later. Because you don’t need to keep raising additional rounds and you don’t need to think about an IPO. For me it is key that a business supports itself. The lower the cash burn rate while the founders are trying different things and failing or succeeding fast the better because they will succeed at some point, or not. Of course you need funding to take the company to the next level, but the lower the investments the better. If you can’t show how the revenue model can be monetized in a relatively short time then I’m not interested in it because I’m not investing in capital intensive, four-year long R&D projects.”

Why do you look to Africa?

“I want to make investments that have a very defined social impact, but at the same time have a financial return. It’s interesting to see, especially because I’m looking at the African space, how you can still run a business and have a social impact. I choose to invest in Africa because I understand the dynamics in sub-Saharan Africa, I’ve done a lot of research; like a country analysis of Angola, evaluating the banks in Botswana and a lot of research on Namibia in the new energy sector. That’s why when I saw the M-Kazi profile on the VC4Africa website, I contacted Saskia from VC4Africa. From there I was introduced to Nancy and Lino.”

See the second part of this interview where Jerome talks about screening and structuring the angel investment with M-Kazi.
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