At the beginning of this year, I met Aga Sekalala Jr - for the very first time - at an event organized by Kampala Angel Investors Network at The Innovation Village. It is from there that I learned he was setting up a fund to invest in technology companies in Uganda.
This is not only the first by a Ugandan, it is the only one - to the best of my knowledge.
If you have no idea of who Aga Sekalala Jr is, he is the founder of Radio Simba. One of the country’s leading radio stations (and my best Luganda radio station). He also founded Ugachick and has interest in a couple of other businesses and ventures.
Worth noting is that Aga also sits on the boards of KCB Bank, Uganda Investment Authority, and Uganda Manufacturers Association. Additionally, he holds a BSC in Chemical Engineering from the University of New Mexico in Albuquerque, USA and an Alumni of Harvard Business School.
I had a sit down with him and he told me more about Rochas Capital LLP, the investment fund, as well as why he decided to go in that direction. It was an interesting conversation but has been edited for the sake of rhythm and to make it shorter for easier digesting. Enjoy.
Malinz: What is Rochas capital?
Aga Sekalala: Rochas capital is a hybrid of an Angel investment and a Venture Capital fund. It is a collection of funds mainly from high net-worth individuals that have put together some money for investment. Especially in the tech sector.
The idea is; Commercial ventures that need to grow from idea to commercialization, and also those that are a little commercial that requires capital to grow to scale. Another thing that Rochas Capital does is that it does not provide money only. But also provide a pool of expertise in the field of finance.
There are people with a lot of commercial or legal experience [in Rochas Capital]. There are [also] people with operational knowledge, marketing and [the experience of] building [a business from the ground up]. People with all these skills that are required to put a business up to speed.
And so what we do is bring those skills and experiences close and we will apply them if we can find a business that is interested and also a deal that makes sense to us.
But we will probably not deal with a business that is not sure and one that maybe not be fully operational and has [potential for only] hundreds or thousands of customers. We are looking at the high growth [potential] sector.
Most of us here clone the US market because we are using their definitions. So when you say high net worth individual, what is your definition?
These are like-minded people that are interested in putting a little bit of money into the next generation of entrepreneurs. There is no specific definition.
But, these people have some savings, and they also have some skills. So, over the years, they have accumulated some skills which they have reached fully, but they also have some savings which they would like to invest in some high growth [potential startup] opportunities where they exist.
It's a tough market, it is very devoid of very good commercial activities and ideas but nevertheless, it is an interesting market. We set up this entity now to try and see if we can seriously take advantage if an opportunity does exist.
You talked of Rochas being at the intersection of an Angel and VC fund. Does that have a limit to how much you can put in a venture?
Yes. It does create a bit of a limit on how much we can put [into a round]. We would not subscribe to invest in five million dollars for instance. We believe that we need to try and get more opportunities for the size of deals that are available on the ground.
We think of ourselves really in the range of anywhere from $50,000 to $500,000. And maybe 750,000 or $1,000,000. It seems to be a good range for us. [Though] we [would] like to partner with other firms and have other several funds abroad that we tend to call in to be able to match funds.
So they [first] want to know that there is a local fund, and that is where the interest has come from.
We run into a lot of people in our daily work who are interested in investing here but they want a local fund to provide local leadership and guidance. They want people who know the local environment and the landscape and the local networks.
So if somebody is going to invest 3 million dollars or 2 million dollars in a local business, they want to know [that] there is a local firm that is also putting in some money. That's the role we think we will play.
We think that we will be able to provide a level of governance and management in a local business to attract even foreign firms once they know that there are some serious partners within their venture.
How can one join Rochas? As a Limited or General Partner?
We already have a general partner [but] it is a limited liability partnership. So, basically, what we do is that the way it is structured, the limited liability partnership enables us to be very flexible on how we operate.
For each particular deal, we can actually set up a new set of partners. I serve as the general partner which means that normally I am at the center of most of the deals. But we have several other partners. So there might be a deal where a partner who did deal X is not interested in deal Y. They are free to sit out on deal Y.
And that's a way the partnership gives us that flexibility. To be able to do newly structured things under separate partnerships within the same structure [but] without necessarily having the limitations of other types of entities that will be out there.
For someone to join, do they necessarily have to be high net-worth individuals in Uganda or anyone from anywhere [as long as they are] interested?
We are looking for like-minded individuals who are interested to invest in the long term. So we don't have really a limitation on who can join. Or why they should join or how they join. But the most important thing is that you have got to be a like-minded individual.
You have got to be not only interested in investing money, you better be interested in the whole long run, the benefits, the offtake and what else can come out from some of these arrangements.
It's about [the] big picture. We have got a lot of people who are interested to join. But like I said earlier, there is a limitation to what is available out there. A lot of ideas in the market are a copy and paste. When you listen to them, a lot of them don't have a lot of local traction. So it is [still] a bit of a challenge.
But we think there will be ideas. A lot has already happened [so far] and we are very keen to find something that will work, and then it does not have to keep on trying.
When did you exactly launch this and between then and now have you done any deals?
Not really. We have been actually looking at three businesses. One is a very early stage, one has already finished its proof of concept and they have even done some trial rounds on [the] ground. That's an interesting one.
Then we are looking at another one which is active as a business but is looking to grow. They have got a good business model and it is interesting so we look at various things and then we sort of evaluate which one of them offers a long interesting thing.
So we are very interested in the entrepreneurs behind the business. That's very important for us. It’s actually 60%- 70% [of what we consider before investing]. If we don't think we are compatible with the entrepreneur we will leave them. We will leave it on the table.
Which industries are these three startups in?
These industries are all in tech and they are all a bit in the financial technology (fintech) space. Rochas Capital would like to specialize in that area. Although we are not excluding ourselves from other technology ideas.
We look at ourselves as the team [that] understands fintech, and right now that seems to be the area that we are looking at.
I know you have a lot of knowledge of the local Ugandan Market. Does that mean you are going to focus mainly on ventures that are here or started by local Ugandans?
We think that this is a starting point. We have [our] ears on the ground in different markets [though]. But this is our home.
One of the interests that the group has is not just to make money. The issue is about 'how do we develop our own technology sector? How do we ensure that we can have a series of products that come out [of the country]? And what can I support?' So we see some really interesting ideas and the issue sometimes is turning them into commercial [ventures]. 'How do you monetize them? How do you make money out of them?'
Being the only General Partner, you might be the only person who is going to be the fulcrum for Rochas Capital. Do you think you will have the time for all entrepreneurs and ventures Rochas will invest in?
I don't know. I can't say right now. I don't see so many deals [coming in right now] that I might not have time for everybody. From what I can see is that extent not being that large [in the near future]. It could be different in a year, it could be different in 5 years. I can't predict the future.
My view or my take may be that the idea will also be to replicate and perhaps learn how to manage some of these processes as we grow along. It’s also a learning process for us.
How can we invest faster? It might be that eventually in future Rochas capital might be able to do investments where I am not the fulcrum. When I am not at the center of what’s going on. But my skills can still be passed on. I think what normally happens with these things is that you sort of learn as you go along.
At the moment, it is very dependent on me. But I think that is only [for the] transit. At the end of the day, in all the businesses I have been involved, as the business grows, they become less dependent on me.
As you have been here [at Radio Simba], I don't have an office [here]. And I think you realize that this business (the radio station) runs without me.
Which year was Rochas started?
We started this year . It was incorporated earlier in the year [but] it has been an idea that has been on our minds for the last couple of years. We have been looking at it, but [the] time was not right [then]. We believe that [right now] the opportunity is quite good.
However, currently, we still have some challenges. I think that we have lately been getting a negative rating from the whole policy [thing]. The whole government policy and [mobile money and OTT] taxation policy.
Right now, we are getting a very big red flag over us [from potential external partners] because people feel that the government is very unreliable from a tax point of view. They feel there is a lack of reliability and a lack of predictability - which is the most important thing.
People [interested in partnering with us] need to know that these number that you project are able to last a long term.
There is always a need for taxation [in a country], but there [also] needs to be a predictable way the taxation will work.
Right now, the way it is looking, it is very easy to be one thing for at least 2 weeks, then in 3 weeks, it has changed to something else. So that is creating a little bit of an inward look.
[Currently], we are getting a bit of a sit out [from potential partners] at the moment, and it has been there for the last two months. Even before these taxes were passed. We have had pretty much [of] a sit out [from them].
Everybody has been waiting to see what is going to happen. So a lot of investors who would have partnered with us have been really [on] a wait and see. For instance, the mobile money sector is down quite substantially, people don't want to use the channel and so it affects everybody.