Are Congolese start-ups a sustainable feed for a local Venture Capital industry?

Financing possibilities of the DRC economy are scarce.  Similarly to the entire Sub-Saharan Africa, DRC is a market mainly attractive to bankers for transactional purposes likely to be sustained by the large amount of prospective clients.

In view of local bank’s timid funding strategies, looking at the country for the potential it holds to host attractive venture opportunities is seldom the rule.

This is especially true for start up companies which most scholars believe remain a significant component of the solution to the region’s development issues; despite their high-risk nature.

I therefore borrowed key note speaker star Josh Linkner’s model for disciplined dreaming and asked myself his three key questions concerning the subject matter: Why? What if? Why not?

Why?

The reason why start ups firm fail to develop in the Congolese context is often attributed to a vicious circle citing lack of financing as the main reason.

But do we have what it takes to sustain a viable venture capital industry locally?

I have explored three main factors that I judge essential in developing any business:

-       Creativity

We clearly have it. The country is home to tremendous raw creative talent from arts to engineering or commerce roaring to be exploited.

The issue however at this point is the raw status of this talent.  Those attributes often remain as they are: RAW. Opportunities to polish skills or develop capacities are scarce.  That alone can hardly make a business sustainable.

-       Management

A management thought process is clearly lacking here. What that means is a capacity to bring a project’s idea to life and to continuous productivity. This thought process includes project development, funding and marketing strategies.

The limited projects that see the light are mostly discovered by more management able minds mainly by spotting the remarkable talent of their promoters.

-       Attractive environment

 How attractive is an environment host to 70 million souls? That’s probably the question many Multinationals present in the country provided a positive answer to.

The question that should follow should be : to what extend this creativity is able to create a need of the product promoted.

Telecom companies have clearly managed to answer that one.

Why not?

There’s a reason why any and every one of those elements is constrained in the Congolese context.

Creativity is either shuttered or discouraged by an environment where the most basic facilities too often lack.

A permanent Internet connection remains a treat while the country cries for decent libraries or bookstores that would, in any case, remain hardly accessible for the vast majority.  Needless to mention the limited level of business and finance related TV and radio broadcasts and the lack of up to date, environment and context linked business teachings in either universities or business schools (to the extend the later really exist).

The result is a vast majority of start-ups remaining in that “just another” category; nothing really sets them apart, little to no revolutionary, life changing idea in an environment where everything is to be built.

What if?

Can a single venture capitalist change all of that? Certainly not.

The rare financiers present locally run away from start-ups focusing on banking like types of financing (mainly short term working capital in nature).

But…. What if venture capitalist could look harder?

What if they could attempt creating the next breed of entrepreneurs by sourcing creative talents while focusing their participation on jointly molding projects and ensuring profitability within the limits of local constraints?

Ugandan billionaire Ashish Takkar’s Atlas Capital is somehow heading towards that direction. Its Atlas Mara investment holding in partnership with former Barclays CEO Bob Diamond raised capital through their London IPO to: “provide Africans with access to capital through new models.”

While hoping it will be possible to hold them to their promises, I believe that the ability to attract foreign financial investors convinced of a positive balance between creative potential and local shortages will go a long way into bridging the current financing gap for DRC based start ups.