Venture Capital in East Africa: Is There a Right Model?
Is there a right model for venture capital (VC) in East Africa? After working with primary and secondary sources, we concluded that such a right model does not exist at the moment. We found that the high cost of operating a fund in the region and the length of time it takes to find, evaluate, and make investments are the top concerns among fund managers. In addition, fund managers in the region are called upon to take on roles that are not typical of conventional fund management—including, in particular, getting heavily involved in their investees’ businesses. We also found that challenges related to deal flow and exit, while perhaps not in the realm of a right model for fund structures per se, inevitably have an impact on which structure works best. We propose various solutions to these and other VC challenges in East Africa that emerged from our study. We conclude that in order to succeed, VC has to adapt more effectively to suit the context and characteristics of venturing in the region.