Perceptions and realities are a part of the human experience. Before we experience something firsthand, our thoughts, views, and opinions about that thing are usually based entirely on secondhand knowledge and circumstantial experiences — including what we read, see on TV, hear from friends and experience in other settings.
While my career as a banker and investor required that I become familiar with the realities of investing in markets across the world, I viewed Africa as an undeveloped market, not yet ripe for investment — a view largely based on secondhand knowledge and circumstantial experiences.
That all changed on my trip to Kenya with Euler Bropleh, founder of VestedWorld.
Before arriving in Nairobi, I was full of doubts with respect to investing in Africa, including the following: Can you even exit an investment in a private company in Kenya? Isn’t it difficult to repatriate capital gains? Is the socio-political and economic environment favorable for private debt and private equity/venture capital?
I was quickly educated.
On my trip, it became clear to me that Kenya has a marketing problem — it deserves a different label than “Emerging Market.” Perhaps “Underserved Market” or “Fertile Market” are better descriptors. The country possesses a tremendous amount of natural resources, and an eager workforce hungry to climb into the middle and upper classes. So, what is missing from rapidly propelling this country, region, continent into developed world status?
It’s pretty simple actually — access to capital. This became blatantly clear as I progressed through VestedWorld’s guided but unfiltered, five-day crash course on the entrepreneurial ecosystem in Kenya, where I met over a dozen companies and 20+ entrepreneurs, investors, executives, advisors and journalists working across industries from manufacturing, to agribusiness, to financial access, to education and even film production!
We met company after company that serve as innovative keystones in logistics and distribution, each seeking capital to hire and expand. One company is reimagining the logistics of the humble banana and other produce, increasing the profit to the farmer and lowering the cost to the retailer. It’s a yield play: if you can manage to salvage 25% of the total sellable product through careful storage, handling, and transportation of the produce, you can increase profit by, well, 25%!! It’s a no brainer. However, they’re constrained by the size of the warehouse and the number of reefers — refrigerated shipping containers — they can buy.
We met with several companies in this position — capturing and cornering markets with improved yield, reach, and margins. Collectively, they could create enormous amounts of jobs and kick the local economy into a different gear, if they could only access private capital.
Take, for instance, Mobius Motors. Founded and led by entrepreneur Joel Jackson, a British computer science graduate, Mobius is Kenya’s only domestic auto maker. In 2009, Joel noticed that the biggest obstacle to connecting rural communities with the country’s economy was immobility. The economic impact of being able to physically move goods and services over the rough and unfinished roads outside of the city center can indeed be measured in dollars. But who is there to furnish short- and long-term working capital for an ambitious company that has clearly demonstrated proof of concept and demand for a product: an on- and off-street legal, affordable vehicle, built to last?
The new Mobius II has experienced strong sales before production even started. Making the vehicle accessible to the working class is the company’s primary goal. It is now working on making cost effective and flexible financing options available for its customers, which is ironic because Mobius cannot easily access those same options for itself from the financial infrastructure currently in place in Kenya. After driving the vehicle, I must admit, its reach and growth will only be limited by the people who can tell the Mobius story.
So many of the companies we met with, both with and without physical collateral, could benefit from accessing capital for expenditures related to growth. These are high growth companies, not startups. No one is inventing new technology here. This is not venture investing as we’ve come to know it in the U.S.
These are businesses that, if not for their physical location, would have countless options with respect to financing. In Kenya, the options are limited, and tragically take an entrepreneurs’ energy and attention away from growth and management, and unnecessarily places stress, time and attention on raising capital.
Earlier, I mentioned that the trip was guided but unfiltered. While we met with many people who were very optimistic about the economic prospects in Kenya, we also met with several who spoke candidly about the challenges they’ve faced in building their businesses — corruption, uncertainty, lack of access to capital, dearth of a true middle class, difficulties in finding talent, challenges importing/exporting goods, and poor infrastructure. I appreciated hearing about these issues. I didn’t leave the country feeling as if I had only seen it through one lens. Those differing points of view helped me contextualize everything I heard and contributed towards shaping my views on whether Kenya is a place where I should invest.
The people we met with were all highly educated and could be working in a more developed market and living a life that is “easier” in many ways. However, each person (even those that had experienced significant challenges in Kenya) said that they decided to stay in the country because they believe that there are real opportunities to build viable and profitable businesses that will help make them wealthy.
Regardless of whether risk is appropriately priced, capital, and the access to it, remains unnecessarily restricted — presenting, in my opinion, a greenfield opportunity for the right investors to bridge performing assets and companies to higher growth trajectories. These investors will be handsomely rewarded.
As a “Family Office Delegate” from the United States, where margins are compressed in every financial instrument and facility there is, I seek risk-adjusted returns where, quite frankly, access and imbalances like the ones mentioned above can be exploited.
From what I saw, and from the conversations I’ve had with the VestedWorld team, I believe that VestedWorld is well-equipped and prepared to be one of those investors who will reap the benefits of being an early mover in markets like Kenya.
VestedWorld identifies both short and long term investments, using traditional developed market investment prudence, technology, experience on the ground in the market, and their own GP commitment…they put up their own capital, a hallmark of confidence and due diligence. By targeting early stage companies that create jobs and fuel economic development, VestedWorld is committed to reflecting their values by providing access to prosperity for those who want it.
Nowhere above have I mentioned social impact. This is not a social impact exercise, it’s the practical application of capitalism. The social impact is a healthy byproduct of people and organizations making money and spending it. Fast moving consumer goods, food, sanitary products, and even chewing gum provide not just discretionary pleasures and basic human requirements, the consumption of such goods provide jobs. High quality entrepreneurs, creating jobs, and elevating a population to the middle and upper-class within a generation is not just good for the region and the world, it’s good for the investor. For those with an asset allocation sophisticated enough to have a tranche of capital that is patient, long-term, and seeking competitive returns, you’d be well served by having a conversation with VestedWorld.
I’ve gotten too carried away and haven’t said enough about the exhausting, yet life-changing, trip that the VestedWorld team organized — I’ll have to save the rest of my stories for another time. I will say that Kenya is a beautiful country, full of hope and opportunity. We concluded our trip with a 3-day visit to Enasoit Game Sanctuary, with thousands of acres of preserved and conserved land, populated only by wild and majestic animals. It was a great place to rest, reflect, recharge, and take stock of my station in life.
My life is checked and balanced by a healthy respect for creating value and creating choice. In Kenya, some perceptions were dispelled and a reality affirmed. It is a market ripe for investment capital and opportunity to create and develop wealth. It’s an economic story worth telling. You should visit for a compelling story of your own to tell.
Peter Braxton is Managing Director and Chief Operating Officer for DOM Capital Group, a private investment firm that invests in emerging consumer businesses. He is a serial entrepreneur, seasoned investment professional and decorated Air Force pilot. Peter lives in Chicago, Illinois.