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Why Venture Capital model in Africa has not worked well enough – Ndubuisi Kejeh, founder, Mustard

Our criteria for investing our capital and expertise into an idea, in order of importance, are the following:

How do you intend to utilize the recently launched £4 million investment vehicle?

Most of the capital/money in the investment vehicle will go towards financially enabling us to build venture ideas capable of going global, with passionately aligned founders from the very beginning.

A typical institutional investor (VC) would make their ongoing money from a 2% management fee, and their future money by receiving 20% of the profits from their investments. Aside from their management fee, most of the money they raised would go to the investee companies, which – if early stage – would be used by them to hire a team (or consultants) to build their product and brand.

For our model, we do not take a management fee. Much of the capital we invest into are the ideas that will be used by these ventures to pay our fees because we are the cohesive, multidisciplinary team who will build the venture’s product and brand. Our fees will be fixed and heavily reduced in accordance with our sweat equity strategy.

Similar to VCs, most of our money will be made in the future if we are successful. If and when we sell our venture assets, we will take 25% of the profits and distribute 75% to our vehicle’s investors.

Are you looking to work with specific sectors?

We are currently sector agnostic, looking at B2C or consumer-based software. But broadly speaking, given our mission, we are more interested in the ‘globalisability’ of a venture idea’s story (and its commercials) than the specific industry.

We can definitely say that we are not focused on many of the popular industries receiving investment such as fintech and agritech.

There are many investors focused on building these industries, which we will leave to them. However, there are hardly any (if any at all) focused specifically on building global brands stemming from the continent. This will be our focus.

Why did you choose Africa?

Each person on the Mustard team is passionate about Africa, is a member of the diaspora, and/or someone with industrial experience of the region.

Secondly, we genuinely believe that Africa’s future will be strongly shaped by the brands it is able to produce, and if this does not happen over the next two decades, the region will struggle even more than it does now to progress in an increasingly digital and brand-centric world.

As stated by Thebe Ikalafeng of Brand Africa in 2020: “As was the case at the turn of the decade, there remains a stronger enthusiasm for building African brands. But the rhetoric doesn’t match the reality.” He believes someone needs to build these brands to illustrate to the world what they could look like. We are trying to do exactly that.

Do you foresee any challenges specific to Africa that could likely slow you down in the course of delivering Mustard’s objectives?

Yes, we do. In our opinion, there is little to no thinking and appreciation for brand building across the continent. Therefore, we often encounter case where people either disregard our objective and focus as trivial or think they understand/appreciate it until realising through their actions, thinking and focus that they do not when it actually comes to execution.

Building and sustaining a brand is a very detailed exercise, which must be continued over the entire lifetime of the company. It requires real believers in its power, and detail-oriented people to continually maintain it. Powerful brands have relationships with their audience, so nurturing it can be analogous to maintaining a human relationship, which we all know takes work for it to be meaningful.

We find there are few believers and even fewer people who can execute, so our pool is very narrow. However, we are fortunate to have got to know quite a few of these people through the networks we have built up over the years, and intend to find and influence more through the audience we hope to build around our work and content.

What’s your view on the current tech space in Africa at large?

I think the VC model as practised in Africa has not been working well, although we will eventually see the real numbers and returns as VC firms come to the end of their terms. I think we need to greatly increase our focus on the quality and multi-disciplined nature of teams, and work intensely on our brand communication and global ambition. I don’t know if our best entrepreneurs are really thinking and believing they can go global, as opposed to just pan-African. The best startups need to look outside to consumers in external markets much earlier.

Additionally, I think we desperately need to see more exits, to entice more investment from HNWI Africans and private investors. Until we begin to have serious noteworthy exits the space will continue to be propped up by multilateral and DFIs, which is not a long-term solution and, regardless of the media rhetoric, is evidence of a nascent ecosystem.

What is your five years projection?

Over the next five years, we are hoping to build at least one (but hopefully more) global brand that stems from a country in Africa.

We want the products of these ventures to be utilised by people in markets outside of the continent, and their brands to stir the emotions of audiences in multiple regions.

Also in five years, we want to have illustrated the power of our model and narrative-based approach, by exiting our investments and returning significant returns to our believing investors.



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