 But best of all, you're still there and watching the breakfast on Plus TV Africa. And well, we're in an age of technology about how far we're exploiting and exploring that sector of our economy. And we know that there are some challenges that are being faced by startups and all that. So today we're going to be looking at the development of technology, especially in Africa and the availability of funding. That's a very, very important thing. How can people who want to, how can startups draw funding and from where? And what criteria do they need to meet before they get all this funding? And we're being joined from Johannesburg, South Africa, the CEO of Founders Factory Africa in the person of Bongani Sittole. Good morning and welcome to the program. Thank you very much. And thanks for having us on the program. Okay. Well, like I said, it's an age of technology, but we don't seem to have exploited that section or that sector maximally, even though we have the brains in Africa and all that. So we'd like to start with a background on why you think there is a challenge at all to this technology, harnessing whatever potential are there in technology in Africa here. Thank you very much. I wouldn't necessarily frame it that there's a problem with technology per se, but I'd rather say there are a lot of challenges in Africa that needs technology. We strongly believe that employing the services of technology in the challenges that we see across Africa, that can help us to scale quite quickly and of course impact the economy. If you look at the development of China in 30 years between 1972-2000, the employment of technology in how they transformed China, we strongly believe that if we can take that path, particularly baking technology-led businesses to essentially drive growth and scale across the continent is one of the paths that we strongly believe that we can take as a continent to be able to unlock growth. Yeah, but anything that needs to grow needs to be homegrown as well. How would you rate the level of homegrown technology that we have in Africa? I'm not talking about the one we import to come and help us solve the problems that we have in Africa. So homegrown technology, how would you rate it? 100 percent, and that is really what we should be driving because plug-and-play in Africa doesn't work, and the reason for that is you can see how West Africa can cooperate with South Africa or even East Africa. So for that matter, we have to develop local solutions with local founders to find innovation that is relevant to that local market. So and that is basically a thesis of existence as far as vector-afric. We strongly believe that locally you need two things. One, the skill sets that understands the local market, understands the users, and backing them with capital to be able to help build those solutions. And that is the, you know, to support your statement, we need to be able to do that as Africans across major markets. Let's look at these issues in debt that are central to the development of tech and availability of funds for that sector on the continent. So if you look at the startup sector, we strongly believe that it's underfunded, right, in many ways. To be able to back these founders, you need to have a lot more capital. If you look at last year, we had over 8 billion that came into the continent to support tech-led startups. But when you think about the magnitude of the continent, 54 countries, you think about 8 billion. It's not enough, right? We need more capital. In comparison to emerging markets, and you look at the global capital that is coming to the continent. There's 1.2% of capital flowing into Africa in comparison to the rest of the markets. So the question that we need to be asking ourselves is how do we increase that pie, right, by having more capital to be able to support a lot more grassroots founders, to be able to find these challenges and build solutions, bring innovation to be able to increase the size of the economy through technology. So you are right. We need a lot more capital. And I think we're starting to see a lot more VC growth because of the innovation that we see across different markets in Africa. Yeah, but who should drive this process of this funding? You talked about funding coming into Africa. Do you think it's something that should be left in the hands of government? Or is it a private sector thing? And how should it be done? It should be both. Let me start with government, right? So firstly, if you look at the four major regions in Africa, which is West Africa, driven by Nigeria, Lagos, East Africa, Kenya, and South Africa, and also Cairo and Egypt, one of the things that governments should be doing is to create what you call startup acts. So a startup act is a way in which a government is formulating processes to enable and support innovation in their local markets. So I think if a government can be able to channel capital through creating regulation on how they support startups, I think that is the first thing that a government should be focusing on. On the private sector side, I think we need a lot more capital coming from corporate, including companies like ourselves who are investing and building trust into local founders to be able to bridge the gap between overseas capital and local markets. One of the challenges in Africa as an emerging market is really trust, right? So if you have companies like Founders Factory Africa who can be able to bridge and break the barrier of trust between local founders and overseas capital to be able to direct that capital to weights needed the most, is really what we need to be able to drive, of course, with the support of government and private sector. Well, we are in this part of the world, with the advent consumers of tech services and products. Unfortunately, most of them are packaged and imported. Is that the case where you are in South Africa? There are solutions that I can say, if you look at them overseas, you can definitely figure out how you package them for local markets. But for the most part, what we're seeing is groundbreaking innovation that's driven by local challenges and local nuances. And we want to support those type of technologies. I mean, there are a few businesses, especially here in South Africa, that have scaled where it was literally an entrepreneur who saw a technology somewhere in the US that can be packaged to the local market. But in order for that to work and scale, you need to be able to figure out how you're going to package that for the local market because it's definitely not a plug-in play. Because how Africa operates is completely different to the rest of the developing markets. But what we want to advocate for is really driving new innovations coming from Africa and figuring out the way or ways rather to be able to package these solutions in other regions in Africa. And hopefully we can export it to global markets. Okay. Well, you did mention something just before this response that you just gave now. You talked about your own company, for instance, aiding startups. So forgive me if we zero in on what activities you do in your company because everybody would want to take advantage of that and see how they can get some kind of funding. So when you say you support startups, what kind of startups do you target? Are they specific ones that can access the kind of funding that you give in Founders Factory, for instance? Yes. So Founders Factory Africa is a pan-African, early-stage investor alongside our studio support. What that means is that we focus on early-stage, meaning that we start from a founder having an idea and they want to be able to build a solution that can be scalable to self-customers right up until Pre-Series A. So that in the world of VC is what we call early-stage and that's our focus. So how we're supporting these founders is through the department of capital and hands-on support. Hands-on support essentially means that we deploy people to work with these founders on a day-to-day basis to essentially find a scalable business model that can be able to be exported into other regions. So as a founder, you come in, you get capital, you get product support, you get growth support, you get partnership support to be able to find a path to scale your business. And we are currently about 60 people across three regions. We are HQs in South Africa. We also have an office in Kenya and an office in Lagos. The reason for local presence is, again, what I said, bringing local solutions to local programs through local understanding. And hence, that isn't why we hire people in these local regions to support these local founders. Okay, so you're not targeting a particular country. You're not targeting a particular region. You're not targeting a particular kind of tech. It's general. So there's two questions in what you've asked. One is we're targeting, so we're a Pan-African company. So what that means is that if you think about West region, whether you're in Ghana, you're in Nigeria, we are able to help you as a founder because you've got presence in Ghana, sorry, in Nigeria. If you're in East Africa, whether you're in Tanzania or wherever, we have presence in Kenya. We are able to support that entire region. So the Pan-African presence means that we are able to support companies across Africa. That's the first. The second in terms of our target market, we started over the last four years in three sectors, which was fintech, health, and architect. We've just recently gone a little bit agnostic, which means that we're taking opportunities that we think can scale across Africa beyond the three sectors that we have mentioned. So if you are a founder building solutions that are scalable in Africa, talk to us. We could be able to look at that and perhaps find you. What sort of development are we talking about with your agritech? I'm very excited about that because agriculture is something I have a passion for and I know that we can do more in the continent with regards to food security. What sort of tech are we talking about in agriculture? There's a couple of challenges in the agriculture space and maybe let me start by saying that most of the African countries, the contribution to GDP in some instances, 40% in some instances, 60% contribution by smallholder farmers to their local country GDP. If you think about that, it means that we need to be able to build efficiencies to support local funds to be able to produce more. Secondly, there's a lot of wastage because there's no efficiency in how you move crops or produce rather from harvest to market. Number three is that we still struggling to figure out how to connect local exports to global markets. So what we are looking to do first and foremost is to be able to one, digitize the smallholder farmers to bring them into trade and connect that end to end journey. Secondly, to provide capital that is needed to these smallholder farmers because one of the challenges the smallholder farmers don't have data. So if they go to a bank and asking for capital to be able to produce more, the bank cannot support them because they don't have data to back their credit line. So we build solutions like that to be able to solve those type of challenges. One, to give them capital to produce more. Two, to reduce wastage. Three, to be able to build that end to end journey to bring produce to market in a faster pace. And fourth, lead to figure out if we can be able to bridge the gap between local produce and global markets. When you talk about supporting startups, to what level do you support? I know you've talked about giving them support but where do you get to before you say they are independent, they can stand on their own or do you monitor them for life? So again, referring to the stages that we focus on take into conversation BC landscape. So we focus on pre-seed up until pre-seed is A. So that is our lifetime spend that we focus on. Post that we continue to monitor their growth and should they need us to help them with expansion into other markets or they need us to connect them to additional investors both locally, meaning Africa and global. We are able to do that. So our goal is to provide that support end to end but the actual hands-on support of building product and finding path to scale that business. Typically we do that in the stages that I've mentioned. So we provide things like, they could come to our office, they have access to about five to seven people in different areas of the building startup and literally it's hands-on support is not advice. Okay, so what has been your level of success like so far? So the way in which we evaluate success is to, well, let me put it this way. We have invested in about 55 startups in our of the last four years and then it's growing when you're keen to invest into more business in African. And over the last five and a half years we've started to see success and how we evaluate in that is the growth of valuation of businesses. So if we see that your business was valued at five million as an example, two years ago and our support has pushed your valuation up to 15 million, 20 million, that's how we are evaluating how we are supporting these businesses. Secondly, we look at customer growth and retention because a business is not a business if that revenue line is not growing. So if we're able to see that increase of retention and customer growth and also an increase in valuation that is a signal for us that the support structure that we provide into these businesses is actually quite favorable to the African farmers. Okay. Well, the tech sector is booming and so is our youth population on the continent. How excited are the youth in tech as it concerns agriculture? Are they involved in it or are they just more interested in tech as it relates to? Robotics. Robotics, cell phones, computers and all of that. Are they interested in tech as it relates to agriculture? So let's talk about what technology means, right? For us, the way we think about it technology means to an end, right? What that means is that you have to find a problem, you have to figure out what scale would look like and how to support more customers. Then you employ technology that is relevant to that problem. In some instances, AI could be a path. In some instances, it's digital transactions. In some instances, it's being able to connect agro dealers to farmers. In some instances, connecting farmers to the market. So when you talk about technology, it's a path to scale. In itself, it means to an end, right? So you have to find a right technology for the right problem. So in some instances we see founders trying to employ the buzzwords like AI in wrong problems. And the challenge with that is you never find a path to scale because you are employing a different or rather an incorrect technology for the problem that you have found. So what we strongly advocate for is one, figure out the problem, understand the customer's needs and figure out which technology would help you to scale. Right? So we employ technology in that lens as opposed to technology in itself being a driver. Well, you are Pan-African, but we are interested in Nigeria right now. So tell us the experience you've had in Nigeria and tie that, sorry, I'm giving you double barrier questions as it is. Tie that to, if you were given an opportunity, for instance, to talk to policymakers in Nigeria to make tech grow more than it is right now. What would you tell them? Interesting question. So if you look at the growing markets in Africa, Nigeria, probably followed by Egypt, they are the leading markets right in terms of that option of technology. Also in the VC space, if you look at number of tech-led businesses across Africa, Nigeria is one of the leaders, right? So that means that Nigeria in itself has seen a need to be able to bag, you know, tech-led businesses. And there are 55 businesses that we have over 30% of our portfolio is actually Nigeria. So in coming back to your question in terms of how we can be able to support a lot more founders in the Nigerian market, we strongly believe that a tie to the government and enabling policies for, you know, for startups to be able to thrive from techs to how you open up bank accounts, to digital transactions, to how we provide digital skill sets to unlock growth for these founders is actually quite important. And if you look at on the Nigerian market, there's a couple of activities that we've started to see where the Nigerian market is actually creating pathways to collaborate with, you know, policymakers in the technology sector, including companies like ourselves to find a pathway to unlock growth through tech-led businesses. So we're excited about what Nigeria is doing and hopefully can be able to be or rather at least build a blueprint across Africa in terms of how to support tech-led businesses to unlock growth. Okay, well, I'd like you to talk to startups in Nigeria or in Africa because they could be watching from any angle. Okay, so startups in Africa and, you know, things they need to look out for, things they need to avoid if that is possible because this is a lucrative sector of our economy right now and the future is tech. And so we need words of encouragement, words that will guide the people rightly when they want to venture into it. There are some people with ideas that are just under their pillow, they've been there for a long time and they don't know how to go about it. So just a word to them. So that's why we are here, right as Founders Factor Africa and I strongly believe that we need a lot more support structure like Founders Factor Africa across the continent that can, you know, build platforms to enable these founders to be able to build solutions. So in answering your question, as a founder, I think first and foremost, if you have found a program that you strongly believe that you can be able to solve, then look for companies like ourselves, right? Come in, you know, come share your ideas with us and let's figure out if we can be able to support you shape that into a viable business model. If you are a tech lead entrepreneur already with a business, but you are stuck and you're looking for capital, you're looking for pathways to grow, you know, business come talk to us because we are here to essentially unlock growth for these startups. So founders have to look for opportunities to essentially build their businesses. First and foremost, do they have to make sure that they don't necessarily employ technology to grow, they need to understand their customers, figure out what their customers needs are and then look for technology to be able to support. You know, that vision to unlock scale for that chain too, to solve for that local market. So in dealing with your startups, across the places where you are site situated, may I know the number of girls or women who are enrolling or who are getting involved in this? Are they sharing enthusiasm in tech? As they're... So, yeah. Yes, so that's actually a good question. When we actually look at the VC space just globally, right? We see that less than 5% of women founders are being supported. And as founders of factory Africa, we are making it intentional to actually support women. If you look at the space that you love, which is AgriTech, a lot of it is actually driven by women in the continent, right? There's a lot of participation in Agtech space. And it is our goal to be able to support women across the board and increase the participation. Our current statistics in our portfolio with the 55 businesses, in comparison to global statistics, we are over 20% in our women led founders. And that for us is exciting. And we want to look pathway to actually double that number over the next five years and how we can actually bring a lot more women into the space and supporting them. We know that across Africa, there's different limitations, challenges, cultural barriers that actually prevents women to participate. And we want to be able to find ways to break those barriers and be able to provide a lot more capital to women and support them so that they can be able to be in power with their male counterparts. Okay, Maureen, you've heard that. You had to bring women into it. It's suspected. We'd like to thank you, Mr. Sitole, for coming on the program today. It's really enlightening. And for the startups out there, please just look for Founders Factory Africa. Or if you have opportunity to get in touch with another company or another group that can give you the opportunity or that can give you the funding or can guide you, then do that. Which means, from what Mr. Sitole has said, which means there are opportunities all around. You just need to tap into it. But today, we found Founders Factory and we're hoping you are going to take advantage. Mr. Sitole, thank you so much for coming on the program. Thank you for having us. I really appreciate it. And before we go, we leave you with our quote of the day. Yeah, okay. The technology you use impresses no one. The experience you create with it is everything. The technology you use impresses no one. But the experience you create with it is everything. That's from Sean Garrett. Okay, we'd like to thank you for being a part of our show this morning. The last guest there was Bongani Sitole. And we're hoping that you have learned something and you are going to take advantage of that. Let's do it again tomorrow. My name is Nyam Gulu. I'm Gaji. I am Martin. I'm in no music game. Join us again tomorrow.