Musings from an Angel Investor: What can we learn from Nigeria?

I was in Lagos for three days attending the African Angel Investment Summit 2016. This was my third visit to Africa’s most populous country and I must say, with each visit, I get to learn more and see why it’s a force to be reckoned with. Estimates indicate that Nigeria has a population of over 200 million with Lagos, its largest city, having a population of more than 20 million. To put this into perspective, the East African countries (Kenya, Uganda, Tanzania, Rwanda and Burundi) have a combined population of just above 120 million; the largest cities in East Africa have a population of around 4 million.

Nigeria is a bit threatening if you are visiting for the first time. At the airport, what greets you is the hot humid air. Once you acclimatize to this, you go through passport control which is eventful in its own way. While in most airports you expect to find immigration officials in official clothing, in Nigeria a number of them wear plain clothes. For an outsider this is a bit confusing as you really don’t know who to trust and who to follow. As a Kenyan I can get a visa on arrival. Theoretically speaking the process of getting one is meant to be straight forward: land, get the visa and off you go.

Once you land, one of the officials collects passports of those who need visas upon arrival; this may take some time depending on the number of arrivals requiring visas. You are then required to collect your luggage, walk across the airport to the ‘Visa on Arrival’ offices, pay for your visa, then head back to immigration for your passport to be stamped. When visiting Lagos and require a visa when you land, plan at least an hour and half for this process.

This brings me to my point; Nigeria looks threatening from the outside; this perception has worked both negatively and positively for the country especially with regards to the growth of the early stage entrepreneurial ecosystem.

In this article I discuss the Nigerian entrepreneurial ecosystem and draw out lessons that Kenya, my country, would do well to learn and adopt.

Kenya prides itself in having one of the most open economies in Africa for an ‘outsider’ looking to set up operations in Africa. A couple of things contribute to this- the weather in Nairobi is quite moderate and most Kenyans speak English making for easy communication. Most public utilities work fairly well; you are guaranteed electricity and water (depending on where you settle of course), and for the most part, the road network works well sans the traffic. The World Bank Index puts Kenya at position 5 while Nigeria ranks at 36 in Africa on the ease of doing business index.

This has meant that Kenya has seen a significant number of foreign based organizations in non-governmental, private sectors and entrepreneurs out to curve out a niche. While on the one end this is a good thing, it has also had a number of negative implications on the ecosystem. Donor money, foreign based investors and foreign entrepreneurs (mostly from the Silicon Valley) have all combined to make the ecosystem substantially different from what you see in Nigeria.


First, valuations in Nairobi are rather high. Foreign based investors, especially angels and venture capitalists investing in Nairobi, come in with anchors based on what is happening in the West. As a result, they are willing to value start-ups which have attained paltry revenues and traction at valuations not grounded in reality. A week ago at the Angel Fair in Nairobi, I met a start up with total revenues of around $60,000 since its inception two years ago that raised funding at a valuation of $7,000,000! The surprising thing is that the company had already secured funding from foreign investors on the basis of that valuation. Nigeria has not faced similar price inflations; in the absence of many Western investors, the ecosystem has grown organically and entrepreneurs are more grounded on their valuation.

Secondly, the Lagos Angel Network remains one of the best case studies in Africa of an angel network that has grown organically and closes deals. While in Nigeria I attended a session where five start-ups were pitching to the LAN angel investors. It was fascinating to see a room of local angels most of whom were Nigerians taking on start-ups on the question of funding. Please note that Nigerians could alternatively invest in real estate, treasury bills and bonds, stock markets etc. but the angels have chosen to risk a part of their portfolios in angel investing given they believe it’s the only way to build their country- creating businesses that will create employment and contribute toward solving the problems they face as a country. (This is borrowed from the African Business Angels President, Harry Tomi Davies).

In Kenya, attempts to form angel groups have not been very successful; there are angel investors, some of them in exclusive groups where investing requires significant capital outlays. In LAN, you only need to put in $3,000 per round of investing.

The third point is how the absence of donor money in the ecosystem in Lagos has helped create a number of sustainable businesses grounded in reality. In Kenya, donor money channelled in through competition, grants, soft loans etc. has resulted in business models out to win one grant after the other for sustenance. Some of the entrepreneurs exist for as long as they can attract more grants. This has to some extent hampered the growth of the ecosystem by making entrepreneurs grant-dependant and thus reducing their ability to scale up.

Nigerian entrepreneurs have relatively fewer sources which has given them the entrepreneurial spine. A month ago, I interacted with a Nigerian entrepreneur in the private security industry at the Strathmore Business School in Nairobi where I teach the Owner Managers Program. He lamented over the multiple levels of taxes he has to contend with and the challenging operating environment with regards to infrastructure. He was visiting as part of an exchange program in partnership with Lagos Business School. His view of Kenya is that we have it very easy given the government allows entrepreneurs to be, well, entrepreneurs. He felt that the Nigerian government in most cases acts as an impediment rather than as a facilitator.

To conclude, while we have been lucky to have an open environment that has made it easy to set up and do business, we need to look at ways to turn this to our advantage. One of the key thoughts that came up from the angel conference is that in the next 5 – 10 years a number of investing opportunities in Africa will be too expensive for angel investors- this is the time to dive into angel investing despite the challenges being faced. With the openness of Kenya, a wait and see approach will lead to a case where investors will be too late for the ‘party’.

Entrepreneurs on the other hand need to realize that this is Africa, not in Silicon Valley! While there are significant opportunities for entrepreneurs to scale their businesses, the growth will be slower, taking more resources and require a lot of the local based knowledge and experience. This should push entrepreneurs to have more reasonable discussions with angels and even actively seek them for their businesses.

Vehicle to Grid Technology – My Ideal Vision 2030

By Grace Karugu, Group Accountant and Administrator

In approximately 14 years, my ideal Kenya will have integrated green and sustainable energy like plug-in hybrid electric vehicles. We will trade in our internal combustion engine based vehicles (which use petroleum to propel the vehicle and emit toxic gases, ultimately causing harm to the environment and human life) for clean and efficient electric-powered vehicles.

Vehicle to Grid (V2G) Power will allow my electric vehicle to power and be powered by the grid. I will charge my vehicle at times of off-peak demand (and therefore cheap tariffs), and either use that stored power in my ‘smart-home’ or at work (when electricity costs are higher). I will also be able to sell electricity back to the grid, generating revenue and cutting the amount of generation needed to meet peak demand.

This is how it will work:vehicle-to-grid-v2g

In the mornings I will drive to work and instead of my car remaining idly parked throughout the day, the on-board battery will be connected to a nearby electrical grid via appropriate communication devices. This can be fulfilled by utilizing the concept of ‘smart grid’; an electricity network capable of processing information, managing the electricity flow, and fulfill the end users varying power demands as well as provide communication between generation sources and end users. This concept works to balance the ‘off-peak’ and ‘peak’ demand, that is, charge during off-peak hours and sell it back to the grid during peak hours. Alternatively, instead of selling electricity back to the grid, I can choose to power the coffee machine at work or my TV at home.

The benefit of this will be a Kenya with cleaner power, lower energy costs, greater economic stability and increased overall productivity.

The major concerns are the high initial cost, lack of government subsidy and resistance to change, be it from manufacturers or people (particularly those with ‘fuel-lined pockets’). However my ideal vision is that the narrow and negligent persons will act selflessly and focus only on the future prospects of V2G.

The recent projects in the V2G implementation, for example by Nissan, have shown promising results and encourage further research in the field. As and when more durable batteries and cost efficient grid lines become common, V2G will become a widespread reality.

Note to my 2030-self: Do NOT forget to charge your car!

There is no Excel money!

Our Trainings

We offer customized training solutions for teams using adapted case studies to ensure that participants gets maximum learning from our trainings. With two trainers in each session, you are assured that no team member gets left behind.

The trainings typically start with an introduction of InVhestia and the trainers. The trainer then asks the participants what their expectations for the training are and to rate their modelling ability – this allows for the trainer to know what aspects of the content to focus on and how to pace of the training.

To create an understanding of what a FAST Standard financial model entails, the trainer expounds on the four aspects of the methodology, that is, Flexible, Appropriate, Structured and Transparent, with real life examples in order to imprint the importance of these aspects.

The beauty about our open course is that professionals from various institutions get to share their experiences in financial modelling, what approach they use and the challenges and merits of the same.

Before any training, we deem it important to explain to participants that financial modelling is not an end in itself.

What does this mean?

The purpose of a financial model is to give an optimized level of decision making by bringing in new/ different perspectives. Many err when they view financial modellers as people who merely build spreadsheet models instead of understanding that their role is essential in problem solving.

To the same degree, a financial model is a tool that helps in decision making. As in any problem solving method, it is important to understand the problem. When InVhestia engages with a client, we always ask the answer what three to five answers they are hoping to get out of a model. This is because clients often have in mind a picture of what they would like but may not know what questions a model can help answer. Our role therefore, through financial modelling, is to introduce various aspects that many do not usually take into consideration when checking the viability of an investment, project, valuation etc.

To do this, one needs to create a conceptual model and a checklist of the client’s needs. That way, when you finally get round to building your model, the model itself responds to what is happening on the ground and not abstract assumptions. And that is why you’ll hear the phrase, ‘Excel money is real money!’

Our advice to any person who wants to create a model, do not open the spreadsheet until you understand the business problem. Spreadsheets are just part of the process, not the entire process.

FAST Level 1 Certification

InVhestia offers FAST Level 1 Certification, evidence to employers and clients that one is competent in building financial models the FAST way.

What are the requirements to sit the FAST exam?

  • GBP 180* (KES 22,000 inclusive of VAT) – What does this get you?
    • The FAST Standard Level 1 test (one sitting only, no re-takes)
    • Our team to help you process the fee to the FAST Standard Organization
    • Two sample FAST Standard test questions complete with recommended solutions
    • 30 – 45 minutes session with one member of our FAST certified team to help you prepare
    • The free online introductory course to financial modelling to help you brush up on FAST

Why us?

Apart from our years of experience in building financial models and training participants using the FAST Standard methodology, we are currently the only accredited trainer and sponsoring body in Africa for test takers of the FAST Standard examination.

‘I’m convinced, what do I do now?’

  • Click on this link to register for the FAST exam. We will get in touch with you within 24 hours with the next steps.

In the meantime, you can read about our team’s experience on our blog.


Note: Holders of the FAST Standard certificate are eligible for Continuous Professional Development (CPD) points with various professional organizations in the accounting field.



By Jihan Haji, Intern

Imagine you are soldier in an army. What do you think is expected of you? What do you expect? I would assume that you have a strong desire to win your war and that you would go to any lengths to achieve that. Now imagine that you are a scout in this same army and ask yourself the same questions.  You would be in charge of going out into the battle field prior to combat identifying any potential obstacles or features that could be used to get a one up on your enemies. Your job is to understand and think rationally and have the most accurate information while that of the soldier would be to fight tooth and nail to win the war. Both are essential in an army and in war.

Let’s take a look at an event in history which will better help us understand this analogy.

In 19th century France, the trial and conviction of Albert Dreyfus became the most tense political drama in French history.  Albert Dreyfus was a French-Jewish captain in the French army. In 1894 it was discovered that someone in the French army was selling military secrets to the Germans.  At the time anti-Semitism was rampant and Dreyfus became an immediate suspect.

The torn up letter found in a dust bin was used to convict Dreyfus- it was said to have his handwriting, though modern handwriting experts don’t seem to agree.  They searched his apartment for any sign of espionage but came up with nothing. This meant that Dreyfus was hiding something. Further investigation was done on Dreyfus where his school teachers were interviewed. It was discovered that he learnt foreign languages in school, which of course meant he had a desire to conspire with foreign governments later in life (hint: notice the sarcasm). His teachers also said that Dreyfus had a good memory, which is essential when one is a spy. With such incriminating evidence (more sarcasm) Dreyfus was convicted and sentenced to life imprisonment on 22nd December 1894. He was taken to the town square, his uniform ritualistically ripped and his sword broken in half in what was called the Degradation of Dreyfus.

So why were the officers so convinced that Dreyfus was guilty?

One would think they were intentionally framing him but historians think otherwise.  On the contrary, they (the historians) think that the officers genuinely thought that their case against Dreyfus was strong. What does this say about the human mind? This is a case of what scientists call Motivated Reasoning.  This is a phenomena in which our unconscious motivations shape the way we interpret information. It happens in a way that some facts and information feel like our allies and we want them to win so we defend them, while others feel like our enemies.

A perfect example is in sport when your favourite team is playing and the referee makes a foul call on your team, you are quick to jump up and complain and point out how biased the ref is, but when the foul is on the other team you will take the referee at his/her word and won’t look further into the situation. Our judgment is strongly influenced by which side you want to win. This reasoning can also be called the Soldier Mindset.

Back to Dreyfus- we left him locked up for life. He still insisted on his innocence by frequently writing letters to the French army which was convinced he was guilty. A man by the name Colonel Georges Picquart, a high ranking officer in the French army believed, like most, that Dreyfus was guilty as he was also casually anti-Semitic.

It got to a point where Colonel Picquart began to suspect that maybe Dreyfus wasn’t guilty. He discovered evidence that the spying for Germany had continued, even after Dreyfus was imprisoned. He also discovered that another officer had the same handwriting as that of the discovered torn letter, a much closer fit than Dreyfus’s handwriting. He brought this information to his superiors even after his colleagues discouraged him. To his disappointment, they either did not care or come up with ways to justify what was happening.  They said that the only thing Picquart had managed to prove is that there was another spy who learned to duplicate Dreyfus’ handwriting and continue to spy for Germany even after Dreyfus’ imprisonment. Eventually Picquart got Dreyfus exonerated but it took him 10 years, time in which he was also imprisoned for disloyalty to the army.

What makes this story relevant is that even though Colonel Picquart was anti-Semitic, which gave enough reasons and prejudices against Dreyfus, he went beyond and above that and still managed to look for the truth and see Dreyfus’ innocence. This is what can be referred to as Scout Mindset.  This is the drive to not make one idea win or lose but to see what is really there, even when it is not convenient or pleasant.

Both Soldier and Scout mindsets are rooted in one’s emotions.  Soldier mindset may be affected by loyalty to a certain group while Scout mindset is more curious for facts and is open minded to situations. Those with the Scout mindset are intrigued when they find out something that is contrary to their beliefs. They are also grounded, in that their self-worth as a person is not tied to how right or wrong they are about a certain topic.  These traits are what researchers have found to constitute or predict good judgment. These traits are not in any way related to how smart one is or their I.Q. On the contrary it has to do with one’s E.Q. (emotional quotient) or emotional intelligence. This means that your mindset is governed by your emotions and how you feel.

To improve our judgment as human beings, we do not need direction on logic or rhetoric or economics, we need to change the way we feel. We need Scout Mindset. We need to learn to feel proud rather than ashamed when you find out you are wrong about something. We need to learn to be intrigued rather than defensive when we encounter information that contradicts our beliefs.

The question I want to leave you with is; What mindset do you have? Do you have the mindset of a Soldier or that of a Scout?

This article is based on TED talk by Julia Galef : Why you think you’re right….. even if you are wrong.