Inside the mind of a VC
7 questions with Gideon Greaves, Managing Director, Africa at CV VC
We're looking for startups that have a clear focus on solving real, tangible problems, especially in areas where blockchain technology can make a significant impact.
These areas include digital identity, verification systems, and disruptive fintech solutions promoting financial inclusion. Additionally, we appreciate startups led by resilient entrepreneurs, who showcase a deep personal commitment to their venture and can show that they have managed to bootstrap and validate their model before raising capital.
Their motivation to succeed despite challenges is inspiring and critical for us as an investment criteria.
One key question we ask is, "How does your startup provide a tangible solution to a real-world problem?" Given the practical utility focus of blockchain in Africa, it's important that startups demonstrate a clear and practical application of their idea, and not merely ride on technological speculation.
Africa, with its youthful average age of 19 and the highest global entrepreneurship rate at 22%, offers an exceptional opportunity for investments. The digital transformation in Africa, marked by 47% internet penetration which is growing at an incredbily fast rate and over a billion mobile subscriptions, creates a conducive environment for new and emerging tech like blockchain.Our focus lies in sectors where blockchain can have a transformative impact. Furthermore, the 34% increase in African venture funding and the astounding 429% surge in African Blockchain Venture Funding in 2021-2022 underline the tremendous potential of the continent.Investing in Africa offers not just promising returns but the unique opportunity to support resilient entrepreneurs who are deeply committed to their ventures.
Due diligence for us goes beyond evaluating the financial performance and traction metrics of a startup. We assess the viability of the startup's solution to address real-world problems, the resilience and commitment of the founders, and the growth potential of the market they operate in. We also scrutinize their business model, team dynamics, competitive landscape, and their growth strategy. The founders also have to be all in- no side hustles.
One of the main challenges in the African market is the lack of local market understanding, which often leads international venture capital to target later-stage rounds, resulting in limited access to early-stage venture capital for African startups. For LPs, it's about getting comfortable with the unique risks and opportunities that investing in Africa presents. For GPs, the challenge lies in identifying truly disruptive startups and helping them scale, especially given the relative novelty of sectors like blockchain.
Considering the recent surge in African blockchain venture funding and the continent's increasing digital transformation, we expect to see a heightened interest in the African startup ecosystem. This will likely attract more international investors and encourage more local entrepreneurship. Furthermore, we anticipate that blockchain applications will mature, offering even more innovative and practical solutions to real-world problems. Africa will be the next big emerging market to invest in.
We anticipate that blockchain applications will mature, offering even more innovative and practical solutions to real-world problems. Africa will be the next big emerging market to invest in.
Firstly, make sure your idea offers a tangible solution to a real problem. VCs are interested in utility over speculation. Secondly, showcase your resilience and tenacity. Funding might not come easily or quickly, but don't let that deter you. Network extensively and leverage platforms that can help propel your business. Lastly, understand the venture capital process and how VCs operate. Treat them like another customer, understand their needs and model, and what they look for in startups. This will help you tailor your pitch in a way that resonates with potential investors.
