Early-stage investment across Francophone and Anglophone markets in Africa: Saviu Ventures
As part of our Voice of the CEO series, we interview experts from different sectors across Africa to understand their view on the different Technology ecosystems and how they see them developing. This week speak to Arthur Thuet, Co-founder and Managing Partner at Saviu Ventures and Co-founder at Kamtar, a logistics marketplace in Ivory Coast and Senegal.
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Arthur Thuet co-founded Saviu Ventures with Benoit Delestre in May 2017; Saviu Ventures is an early-stage VC firm that targets start-ups in both francophone and anglophone African countries.
Before launching Saviu, Arthur worked for Carmine Capital, a fundraising boutique in Paris, and for the ecommerce company, Jumia.
Arthur, perhaps you could give our readers a bit of an introduction to Saviu Ventures, what inspired its growth?
Saviu is an early-stage venture capital firm that invests in post-revenue seed-stage B2B start-ups. The idea took shape while we were exploring the investment space in Africa with my partner Benoit Delestre and realised the scarcity of early-stage investors, especially in french-speaking countries.
We initially gathered over 15 European and African business angels with relevant backgrounds and started Saviu Ventures as an hybrid investment vehicle, launching startups and investing in existing companies. Since then, we have onboarded new LPs every year and have made more than 20 investments in 11 portfolio companies, mostly in french-speaking countries.
Saviu Ventures describes itself as an Early-Stage VC that targets both French & English-speaking countries in Africa. What are (if any) the key differences working in these markets and how do you tailor your support?
Fundamentally, we do not have different ways of supporting English and non-English-speaking founders. However, it is easy to see that investment is not spread evenly across Africa. South African, Kenyan and Nigerian start-ups are currently dominating the VC space and we mostly hear about those. But the francophone Africa’s VC ecosystem is highly understated and will raise a big interest In the coming years, especially thanks to the ECOWAS (15 countries and more than 340m people) whose goal is to build an economic and trading union among its members, thus creating a great opportunity for entrepreneurs and investors who want to scale their business across different markets that operate similarly.
For now, english-speaking investors are not ready to get out of their comfort zone to support entrepreneurs in francophone countries.
The French speaking ecosystem is lagging behind in terms of VC Investment making it harder for start-ups in these regions to raise funds and scale up. We thus tend to push our founders in francophone countries towards reaching profitability before every new round of fundraising, to ensure sustainability in case a process gets delayed.
Key Market Trends and Significant Developments
2019 was a widely reported as a record year for investment. What are the key market trends that you are seeing unfold, and what do you think is driving them?
Saviu invests, among other things, in B2B start-ups in the mobility and logistics space. Maintaining good relations with customers and providing quality services are important success factorsin B2B businessesas your existing customers will tend to give you more and more business over time if they feel comfortable with your service.
In many African economies road transport is the main means of getting goods from A to B, but many players across the value-chain cite inefficiency in these traditional systems as one of their biggest growth challenges. The need for digitisation of that value-chain by integrating intelligent platforms and applications to the existing customers’ systems creates an opportunity for start-ups to innovate and disrupt the transport and logistics space.
The logistics sector is mostly informal and perhaps because of this some start-ups can solve problems that large corporates with less agility have so far not been able to address in African Markets. That phenomenon creates a huge potential for strategic partnerships between start-ups and large corporates in that sector where one can truly benefit from the other.
Thinking about some of the specific market deficiencies and needs in Africa, do you feel that they create unique market opportunities?
The transportation space is dominated by small-scale informal traders who are just starting to adopt digital solutions. Many users are illiterate and do not currently have access to smartphones, and those that do still experience poor internet bandwidth and the high cost of data. This poses a challenge to the digitisationof supply chain ecosystems. At the same time, it offers an opportunity for emerging start-ups to come up with relevant solutions at a given time and to then accompany the transformation of the habits without rushing.
As an investor, I would rather work with visionary entrepreneurs with unique solutions addressing the current market needs, even if this may take longer to materialise. Solutions that have been copied just because they worked in other markets are going to encounter difficulties. Without putting in necessary considerations to the unique market dynamics, even the most ambitious and funded endeavors are going to struggle.
Where do you see the largest potential for impact and what solutions are gaining traction in the market?
The African logistics space is either the first or last point of a global logistic network. Solutions that can create a global supply chain have high potential for impact. Solutions that leverage data collected from both local and international shippers to create a global door-to-door logistics network and tap into a bigger value chain will begin to gain more traction. These types of solutions are still missing in the African context, probably because there is still a lack of communication and partnerships between African innovators and international logistics companies or freight forwarders.
“we would rather work with a sustainable company that grows steadily than unsustainable company that grows very quickly.”- Arthur Thuet — Co-founder and Managing Partner, Saviu Ventures
Changing start-up needs
What are the key criteria you look for in prospective start-up investments?
We invest in early stage post-revenue seed-stage B2B start-ups. The first thing we look for is the alignment of founders’ interests to ours and expect total trust and commitment from both parties.
We also emphasise the need for profitability and sustainability in the businesses that we support. Saviu’s relationship with the founders is more of a partner than an investor relationships. We support our companies in business development, strategy and help to build out product road-maps. We have built companies ourselves in Africa and elsewhere and we like that thrill, so for us the fun starts after we wire the money to our entrepreneurs!
COVID-19 has exposed the strength and weakness of markets across the globe, and this has been particularly hard on founders. What do you perceive to be the enabling or limiting factors facing start-ups during this pandemic and how can investors help support start-ups throughout this period?
The reactions and impacts have been very different for every founder. Globally, we helped our entrepreneurs design “covid plans” and hopefully we got almost everything wrong. Our role has basically been to say “keep cash in the bank” as much as possible, because we know that fundraising rounds could be delayed significantly in the next few months and mess up with entrepreneurs’ timelines. But at some point, if things are actually not that bad after a few weeks, the iterations of your “covid plan” look less and less like a worst-case scenario.
Building sustainable businesses that can stand the test of time is ultimately where everyone is aiming, but the transport and logistics space was heavily impacted during lockdown. Factors such as the time required to transport and deliver goods has increased due to COVID-19 restrictions and guidelines. Therefore, start-ups have been forced to change their operating models to compensate for these added inefficiencies.
In terms of Investment, we respected our engagements towards our portfolio founders for four follow-up rounds and even signed two new deals with a Nigerian and a South-African company. I believe keeping on doing our job is the biggest support we can provide to the African founders in those troubled times.
Outside of the context of COVID-19, building a sustainable and resilient business is vitally important, however from a founder perspective the path to sustainable profitability may not always be clear. Perhaps you can talk us through some of your thoughts or lessons learned working with founders on achieving this? What areas in particular do you feel Saviu has most impact for founders?
I guess we made a few mistakes, like launching in a new market a bit too early or hiring some wrong people in early stages which make you lose some time and some money. But this is not what is going to prevent a solid company to reach profitability. We simply make sure that the entrepreneurs we back have the same mindset as us and are profitability-oriented; we love founders who have their feet on the ground and who believe in the budgets they send to us. We might miss some incredible opportunities but at least we have some quiet sleep.
There is no miracle recipe on how to break-even: try to work with big corporates or big SMEs while being frugal, make them happy and build your product via their feedbacks, get more and more business from them and it will help you reach a certain notoriety and grow organically.
As investors and board members, we support our portfolio companies with business development, strategic planning, and product development. We celebrate small wins together and work on our shortfalls. During Series A fundraising, we help our founders work on all the aspects of their datarooms.
“There is huge potential for consolidation in future. There are many talented companies working in the same space and this is something that makes me excited working with African start-ups”- Arthur Thuet — Co-founder and Managing Partner, Saviu Ventures
Changing Investment Landscape
Looking at the investment space in general, what long-term trends do you see playing out over the next couple of years, and what really excites you about the future of technology companies in Africa?
There is huge potential for consolidation in future. There are many talented companies working in the same space and this is something that makes me excited working with African start-ups. We should work towards creating synergies between them which would increase efficiency and create Pan-African groups without reinventing the wheel in every country.
Mergers will also enable start-ups offering similar services to consolidate their assets, reduce their operational costs and grab significant market shares thus creating value rather than operating individually in smaller niche markets. If companies want to move faster, the best option will be for them to merge forces and reduce unhealthy competition.
