Digital Growth Africa or DiGAME is looking for great investments in Africa's major markets and has a clear idea of what it's looking for. Russell Southwood talked to one of its Principals, Emilian Popa, about the things it's invested in so far and what's coming next.
DiGAME is the African extension of Zouk Capital, a London based private equity fund that invests in European and US technology. In 2014, Zouk Capital invested in Off-Grid Electric , a solar-tech company in Tanzania. It was this investment that, in part, got Samer Salty, the founder of Zouk Capital, thinking about building a vehicle focused on Africa.
The next factor was the team: Zouk Capital's Salty wanted to build a team of people who had an understanding of the African continent: "I'd spent the past 5 years [before joining DiGAME], building and exiting early stage businesses with experience at Twangoo (sold to Groupon, became Groupon South Africa), Rocket Internet and Naspers' Africa Internet Accelerator. His partner, Nnena Nkongho, is a global, seasoned investment professional with experience in West Africa with experience at companies that includes Solo Phone (Nigeria) and Etisalat Nigeria (now 9mobile) amongst others.
While DiGAME can invest in businesses across the African continent, it is focused on South Africa, Kenya, Nigeria, Egypt and Morocco. "[Typically], we invest between US$2 and 5 million in tech-enabled businesses across all funds...we look for businesses that could develop into giants--US$100 million to US$1billion companies, and we look for the entrepreneurs who can deliver that type of growth in Africa. We favor companies that can scale across Africa and the world. We're encouraged by the fact that we've seen over 350 companies and made four investments. While we can invest in any tech enabled business, we prefer companies in the education, fintech, health tech and mobility sectors".
DiGAME has already made four portfolio investments, including one in a South African, edtech company, GetSmarter. DiGAME's investment in GetSmarter is particularly interesting because, in 2017, it also became one of the largest VC exits in Africa in recent history.
"While we initially met the founders, Rob and Sam Paddock, in Cape Town in 2012, we did not invest in the business until 2016, after working with them for over a year." Prior to DiGAME's involvement with the company, Getsmarter offered online education to mid-career professionals largely in South Africa and the in the SADC region. DiGAME helped them [Getsmarter] grow globally, doubling their revenue and helping to attract students from over 80 different countries. The company's high quality offering and strong completion rates led to an offer from an American leader in the edtech space, 2U Inc. In 2017, 2U made an all-cash offer of US$103m for the entire business.
This was an unusually short holding period; so, I asked Popa whether there would be other similarly speedy exits: "No, there are not that many exits [in Africa] and there are even fewer rapid exits [in Africa] and not many full exits".
Another company in DiGAME portfolio is SWVL (swivel). SWVL is an Egyptian ridesharing platform that uses dynamic routing technology to help solve commuting challenges in heavily congested Cairo. Current forms of public transportation, both buses and subway, don't fully serve the greater Cairo geography, the sexual harassment of female passengers on public transportation is common and other ride sharing utilities are too expensive for daily use. By deploying mini-buses, SWVL solves commuting challenges for residents living with inadequate public infrastructure and few alternatives. In April, DiGAME invested, together in a consortium led by Beco Capital, in SWVL's US$8m round.
"In Africa, we see so many amazing opportunities and entrepreneurs; we want to support them in building businesses--in taking them to the next stage of growth."