Aaron Fu, who is originally from Singapore, has been an early stage investor, advisor and consultant for African tech startups for most of the last decade. In his full time role at BFA Global he is head of growth for its Catalyst Fund, an inclusive fintech accelerator. In December 2020 he co-founded Sherpa Ventures with a team of former founders and former startup executives to back pre-seed startups in Africa. He also co-founded Venture for Africa which runs fellowship programs designed to fill talent gaps in Africa’s startup ecosystem.
What’s the most underrated opportunity for tech investment in Africa?
It feels like the elements are right for 2022 to be a really exciting year for social commerce. We’re seeing a significant maturing and increase in accessibility of the payment, logistics and business management tools necessary for fully digital micro-entrepreneurs to scale up their businesses this year. There will be opportunities to provide coordinating infrastructure, customer acquisition tools and of course financing to the rapidly increasing number of social sellers across the continent.
What are the biggest lessons you’ve learned from investing in early stage startups?
Team is everything, and in the earliest stages each and every founding team member in a startup’s first year determines the standard of talent for the next three years. Startups should hire leaders who are equally passionate about the problem the startup is solving, share the same values as the founders and be world class operators. Too many founders I’ve seen make the mistake of hiring interim mediocrity, raising too little to hire the right people into critical roles, I watch for indicators of this closely when reviewing allocations of funds raised.
A bit more tactically, we’ve also found that an early focus on creating exclusive and consistent data and insights into customer segments with thin or no structured data can yield a significant moat against competition, not only will others not see the opportunity you do but will not be able to navigate with your precision.
What do you look for in entrepreneurs in general, and specifically for the African context?
There isn’t a one-size-fits-all entrepreneur for the wide spectrum of opportunities out there but some consistent features we’ve seen that have correlated with high performance in the sectors and stage we focus on have been: courage, curiosity, conviction, and charisma.
Courage is especially key for African founders who are often building in truly unexplored territory, experimenting with configurations of delivering value and technologies that have not ever been deployed in their context.
Curiosity means founders who truly listen, and listen regularly to their team, their customers, and their stakeholders. They have consistently been able to adjust, adapt and use their curiosity to not just look at statistics, but also interrogate them.
Conviction means you’ve gotta believe, like, really believe in what you’re building and the importance of solving this problem.
Charisma is sometimes seen as superficial but we’ve seen that a founding team with at least one charismatic member is able to leverage that to inspire team members to go the extra mile, attract talent and reassure partners on their ability to deliver without a track record.
What tech investment do you regret missing when you had the chance?
That’s a long list but one that stands out is Twiga because of what it’s taught me. I had known Grant Brooke, their then CEO, to not just be ridiculously passionate about fixing the structural inefficiencies in the agricultural supply chain but also precise and measured in how the team was going to be about addressing each of these gaps. But I did not feel that me or my team at the time could value add to his business, our experience with agriculture was zero, our experience with the food supply chain was limited to developed market retail and cross-border commodities, in short, we weren’t experts in the sector and didn’t feel like the right partners to be taking up room on his cap table. Today, when we’re faced with similar situations we make it a point to first, push ourselves as hard as we can to understand as much of a potential sector as we can. Brooke is now on our investment committee at Sherpa Ventures.
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