With rare exception,investment funds begin life with capital to invest, an area of interest, and fresh dealflow. Africa Eats is exceptional. We instead began with a portfolio of investments, curated over eight years, and only a modicum of capital, far less than the growth needs of that portfolio.
The first few months of Africa Eats has thus been about having the new members of the headquarters management team meet the founders of our 27 bizi.
Meeting is simple. That is done. Deeper understanding of each of the bizi are underway. Meanwhile, just like in any other investor, the queue of investment opportunities began on Day 1, and it has already grown beyond our available capital.
Unlike the typical funds, however, we already know each of these companies. Our job thus isn’t due diligence to figure out which of the opportunities is worth investing in, but instead to triage the opportunities to put the capital to its best use.
What criteria are we using for that? A mix of KPIs and impact.
First and foremost, we started Africa Eats in the midst of pandemic to help mitigate the pandemic-caused hunger crisis. Thus if an investment can stave off hunger, it is put on the front of the queue.
Second is dealing with pandemic-induced business issues. Some of the bizi have had setbacks caused by lockdowns.
Third is urgency. Some opportunities are only available if we move quickly. Quickly as in days or weeks, not months. The types of opportunities other investors can’t help capture as we can make investments within days.
Lastly are the KPIs. We know the historic annual growth rate of all our bizi. We know their capital efficiency (revenues generated by dollar of investment). Companies with a history of more growth per dollar of investment get ranked higher in the queue.
No doubt there will almost always be more investment opportunities than available capital. That is what happens when you put 27 founders together and ask the what they need. And if that stops being true, Africa Eats will add new bizi to the portfolio until it is true again.