INTERVIEW: We have so far invested in 9 African ventures, including Uganda's Numida - Rithu Rajan, EWB Ventures

On December 7 and 8, Swarm Summit 2017 took place at The Square in Industrial. It featured several speakers on several panels dissecting issues hindering the building of a connected and robust technology and startup ecosystem in Uganda. Among the panel speakers at the summit was Rithu Rajan, an Investment Officer with EWB Ventures, currently scouting for investments in Uganda and Kenya.

Rithu Rajan featured on the panel that discussed Building investible technology Startups in Uganda together with Oben Bate from Peppermint Holdings, Dustyn Winder from Akili VC, Lyndsay Holley Handler the CEO of Fenix International and Adedana Ashebir - who was on Skype - from Village Capital.

We caught up with Rithu to understand more about EWB Ventures, the kind of investments they make, as well as how they plan to break away from investments based on pattern recognition. 

Startup Digest Africa: Hi Rithu, that was a nice session. So, I wanted to understand more about EWB Ventures.  

Rithu Rajan: EWB Ventures invests in social enterprises in Uganda, Kenya, Ghana and Côte D'Ivoire, and our ticket size ranges from $10,000 up to $100,000. Apart from financial investment, we also provide talent and advisory support. The talent support means providing staff for up to 2 years for critical roles in companies EWB Ventures has invested in. This is done to jump-start the company’s growth. In terms of advisory support, we work with a company to figure out strategic decisions around the business model, customer acquisition strategy, and fundraising strategy.

SDA: Do you work with pre or post-revenue companies?

RR: Both. There's pre-revenue, some revenue and then some revenue but pre-break even. When we talk about revenue, we are not talking about big revenue. We are talking about less than $1,000 sometimes. Something just enough to show that your customers are willing to pay for your product and that you have done some groundwork for your product or service.

SDA: You said that one of your forms of investment is through talent support, but we would like to understand, what is the role of an investor?

RR: The role of an investor varies depending on whether they are an early-stage or late-stage investor. Early-stage investors, for example, are focused on building the business’ potential. They provide support to enable it to reach a growth such that it can either attract later-stage investors or be sustainable through its own operations. Sometimes, this support needs to be complemented through accelerators. They provide a condensed, intense level of support over three months to fill in the gaps that you might have on your team or in your business model. After that, a company is more investor ready.

SDA:  Talking about accelerator programs, we are in a market where they are scarce. Those that get admitted have to go either to Nairobi, Cape Town or Lagos. Sometimes it is even expensive. How do you advise one to go about that?

RR: What I would say is that there are some accelerators that will fund at least one of the co-founders to attend the accelerator program. This would include covering costs for the flight ticket, food and a hotel. Of course in an ideal world, I would say go through Ugandan accelerators but they are few. However, just because the closest ones are based in Nairobi, it doesn't mean that you should write them off.

SDA: Let's talk about the investments EWB Ventures has made. And given that your ticket size ranges from $10,000 to $100,000. What's the least and highest you have made so far?

RR: Highest is $100,000 and the least has been $10,000. I can't talk about them specifically but can in general. So far, we have made 9 investments and one of them is based in Uganda. Most are right now based in Kenya actually. For example, M-Shule is an Education Technology company that provides an SMS-based learning solution for students in low-income schools. Our investment in Uganda, Numida, is a financial tracking app that helps SMEs keep digital records of their financial information.  Based on this information, Numida determines a credit score and then provides an unsecured loan to help the SME further grow their business.

See also: Numida ranks #3 on the Startup Digest Africa Founders Top 10 2017 ranking of best tech startups in Uganda

SDA: During the panel session, you talked about the issue of attitude. How often do you encounter individuals or entrepreneurs with a bad attitude?

RR: Now and then I receive emails that read 'This would be the best opportunity in the world for you' as opposed to being a little more flexible and saying 'Here is my pitch deck and I welcome any feedback'. While we believe that entrepreneurs should be confident about their businesses, we also value openness to questions from investors. As investors, we’re not as familiar with your business as you are and that's why we ask a lot of questions so that we can learn about it.

SDA: What do you think about the calls to investors to allow humanity to prevail when making some investments?

RR: During the early negotiating process, if you don't understand the terms or rationale for certain clauses, ask us. One of the reasons institutional investors take a long time is not only the due diligence, it is also the negotiation. There's a lot of back and forth. That back and forth varies depending on the company and whether they have access to a good lawyer. We absolutely encourage questions not only during the due diligence phase but also during negotiation.

SDA: What do you think about supporting Angel Investors?

RR: We are interested in engaging with angel investors. It has been challenging so far because we just started investing here and are just starting to attend events, do networking and engage with associations where there are angel investors. One way we can help build the startup ecosystem is by having a network of angel investors so that even if we are not able to invest in a company, we can refer them to other investors who may be interested. We are trying to be strategic in making those relationships happen as well.

SDA: On the panel, you briefly talked about the reasons why you haven't invested in as many Ugandan ventures as you'd like. Could you break them down a little more?

RR: We see a lot of exciting ventures in Uganda. The three main reasons we’re unable to fund these ventures though are lack of social impact, innovation or business model.

Social impact is very specific to EWB Ventures. We are impact driven investors. Impact for us at the end of the day answers the question, 'How does your product or service meaningfully change the life of the person using it?' Our focus is on reducing poverty and inequality. If the product does not contribute to that, it is not a fit for our fund but may be a good fit for another fund.

For us, innovation is defined as either a product or service that has never been tried before or a significant improvement on a solution that already exists in the market.  You could have seen a solution that's already out on the market but isn’t working because of some flawed processes and you think "You know what? I can take that same solution, and change it to make it better". That is innovation.  Many ventures we’ve rejected didn’t fit with this definition of innovation.

Lastly, we see some interesting ideas that do not have a strong business or revenue model. For example, there might be a mismatch between the customer and the pricing, such as selling a UGX 1M product to someone who makes less than UGX 1,000 a day. That tells us that you didn't engage with your customers well enough to understand what they are willing or able to pay.

These are the three main reasons we would turn down an application for funding.

SDA: When you said that you invested in Numida - a team made up of foreign founders, it reminded me of the report by Village Capital talking about investments based on pattern recognition. What are you doing to break the pattern?

RR: Absolutely, I read that report. And we have included internal Key Performance Indicators that take this into account. We are monitoring the percentage of local talent that we are investing in. It is not only local talent but the local talent in leadership positions as well. Who's making the executive decisions at the end of the day? We also monitor the number of female co-founders, since gender inequality is a big component of pattern recognition as well.

We’re also broadening the channels we use to find investible companies.  This includes attending more events based in Kampala, engaging with local organizations or associations. By being part of these events, I hope that EWB Ventures will attract and then be able to invest in more local startups.

SDA: To wind up, if a startup meets your requirements, how can they get to you? 

RR: We are an open fund, which means that we accept applications all year round.  If you’d like to contact me,  you can email me at with a pitch deck to showcase how your venture is aligned with EWB Ventures’ focus on social impact and innovation. I’ll then get in touch with you to discuss whether your company is a good fit with our fund.

Digest Africa


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