We often compare the investment holding company model to the more common venture capital fund. A typical venture fund makes 15-20 investments in its 10 year lifetime. Or more specifically, it finds and invests in 15-20 total companies, often joining in one, two, or three rounds of investments per company over 10 years.
Africa Eats began with a portfolio of 27 companies. We’ll eventually add more, but for now that is plenty. Plenty, as in the first 10 months of operations we’ve made 20 investments into these companies. On average, one every other week.
That sounds like a lot but for us, it has been a slow year. We had hoped to do a lot more but we’ve been busy educating investors on the holdco model instead.
Beyond the quantity, what sets Africa Eats’ apart from other investors is the speed at which we make these investments. This is again a benefit of our structure. We’re not a “blank check” company. We don’t have companies coming to us cold or through introductions for funding. Instead our portfolio all come from the Fledge network of accelerators, and from there we already know these companies better than 99.9% of investors know their companies. Thus when one of our bizi sends us a financial need, our diligence is focused solely on that issue or opportunity.
Because of that, our fastest investment was done in 48 hours and typically we paper up an investment and wire out funding within a week or two.
There are co-investors in our bizi and the fastest we’ve seen from any of them is three months, and far more typically is six, nine, or fifteen months. That is just too long. Entrepreneurs don’t have the patience for a multi-month process. We know, as everyone in management at Africa Eats is not only experienced as an investor, but also has been an entrepreneur before too.
We’re still a month away from the first anniversary of incorporating Africa Eats, and two from the start of operations. Hopefully this time next year we’ll be touting 50 or more investments, averaging one per calendar week, minus a holiday or two.
