Village Capital, a Washington D.C. based international non-profit venture-lending fund that recruits and helps establish startups that address specific issues, last week closed application to a competition that will award $100,000 in capital to two startups that provide the most innovative solution to improving access to financial services by smallholder farmers in East Africa.
The fund said it received 129 applications for its inaugural FinTech for Agriculture East African accelerator, from which 12 applicants will be chosen to participate in the three month accelerator, with two startups securing $50,000 each in funding at the end of the programme.
AFKInsider interviewed John Mulqueen and George Omedo of Village Capital on their take on East Africa’s startup scene and here is their take:
AFKInsider: What is the Africa fintech startup programme all about?
Village Capital: The aim is to unlock innovations that increase access to financial services for smallholder farmers. At the end of the program, the two start-ups ranked highest by other entrepreneurs in the program will each receive $50,000 USD to help scale their businesses and impact.
AFKInsider: How is this programme different from others we have across Africa?
Village Capital: Our award-winning peer-selection investment model has supported 450 ventures in 30 programs across 9 countries. In this model the participating startups peer select, through a ranking system, the top two participants who will be awarded the $50,000 USD investment. This system help startups be able to develop evaluation skills, understand the way investors think and better understand the problems they are trying to solve.
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AFKInsider: Is this a one-off competition or are we going to see more of these and an increase in the prize award in future competitions?
Village Capital: This is not a one off competition, as we are have run two previous programs in Kenya and plan to run a fourth program focused on Agriculture/Energy later this year. We recently completed an education-focused program in South Africa and have run 33 programs worldwide since 2009.
AFKInsider: How did you manage to bring all the sponsors together and do you have a history of working together?
Village Capital: [We] sources, trains, and invests in early-stage ventures solving major social problems through profitable business solutions. We put investors face-to-face with the best entrepreneurs in agriculture, energy, education, health, and financial inclusion, and in the last five years, we have been the most active small business development organization worldwide. Therefore we have a strong history of working with various partners to develop and manage accelerator programs worldwide.
AFKInsider: Why did you decide to focus on agriculture and most importantly smallholder farmers?
Village Capital: Most of the population in sub-Saharan Africa are rural based and are engaged in agriculture or in the agriculture value chain for their daily incomes. This population of Africans is also under banked and has difficulties accessing financial products and services.
AFKInsider: How will other participating startups who don’t win the final prize benefit from the programme?
Village Capital: At the end of each program, we hold a venture forum where the participating startups pitch to invited impact investors within our network. This acts as a formal introduction for engagement between the enterprises and investors. 80 percent of our graduates get investments in the first year after participating in our program. We will continue engaging with our alumni in order to help them develop their businesses and also connect with investors through different fora.
AFKInsider: How would you describe the startup landscape in Kenya, East Africa and Africa at large? And what do you think is needed to ensure more successful startups in the region?
Village Capital: The startup landscape in Kenya in particular is vibrant and many young people and enterprises are investing in innovation in various sectors trying to come up with new ways of doing things or improving on existing ones. These developments can be seen in agriculture, energy, health, education, transport, financial services and IT sectors. East Africa and African countries have also seen a major focus on innovation and entrepreneurship. Nigeria and South Africa stand out.
The increase of startups in Africa has been given a boost by the support infrastructure, especially the incubators, accelerators, funds and impact investors. These players have helped identify, nurture and scale activities of promising entrepreneurs and enabled some of them to succeed in business. There is a further need for all the players to coordinate their efforts and focus reduce wasted time and resources. Three ways to improve this effort would be to increase transparency of what key players are working on, improve the quality of human capital in the industry and focus on co-investments.