As part of an on-going series, the Wheeler Institute’s DigitalxScale research team interviewed experts including practitioners, policymakers and investors to understand practicalities and perspectives on scaling digital technologies across Africa. In this interview with Ruby Nimkar, Principal at Greenhouse Capital, WIBD learns more about Greenhouse Capital’s work not only as an investor but as an ecosystem builder for Sub-Saharan Africa’s digital ecosystem and beyond.
Thank you for your time. Can you begin by telling us a bit about GreenHouse Capital?
RUBY NIMKAR: Greenhouse Capital invests in leading fintech start-ups across Africa and the Middle East, but we are so much more than a typical VC firm. GreenHouse Capital is a platform to connect startups, corporates, and investors that are driving innovation in Africa. We invest in disruptive startups, accelerate promising entrepreneurs, design innovation programs for forward-looking corporates, and so much more. This is all based on the deeply held conviction that exponential output for the future of Africa requires participation from all market players.
There’s a lot of discussion about the potential of Africa’s fintech ecosystem and many of these discussions focus on scale at the company-level, but people seem to have different interpretations of what scale might mean. How do you think about scale in the context of fintech companies? How do you define it? Is it important for us to think critically about measuring scale?
RUBY NIMKAR: In Africa scale is an important topic of discussion because, like many emerging markets, there is often a lot of idiosyncratic risk, so achieving scale is a way to de-risk your business and remain competitive. Scale usually is measured through expansion into either new countries or product lines. There are often major differences in valuation when a start-up expands to a new customer base and even more so when entering a new country, especially one of the big 4 markets (Nigeria, Kenya, South Africa, Egypt). Thus, start-ups are incentivized to scale quickly to target new customers. As an investor I am excited to see a start-up scale in these ways and often help them in doing so, but it is also important to understand the difficulties that may arise when trying to deploy a new product or grow in a new cultural context.
In the last couple of years, GreenHouse Capital has backed some of the fastest growing fintech companies in Africa. As an early-stage investor seeking to back companies with the potential for scale, how do you make this assessment? What do you consider to be the major driving factors for scale?
RUBY NIMKAR: At GreenHouse Capital we don’t just back companies, we back founders. We look for strong teams with the right combination of resilience, expertise and insight that will allow them to continue to grow even when faced with challenges…and believe me there are many that just crop up out of nowhere! Early on, this can be demonstrated when start-ups show deep experience serving a particular customer, or early traction filling a key need for their users.
From our scale index and analysis, we find only 5% of fintech companies (37 out of 716) currently operating on the continent have scaled. Is this number surprising to you? How does that compare to what you’ve seen across your portfolio of current and potential investee companies?
RUBY NIMKAR: Although I wish this number was higher, it is not entirely surprising as there is quite a bit of difficulty scaling across the continent. Africa is not one ecosystem, instead, it is 54 separate markets with unique user needs and market context. Often times successful companies can scale by finding strong partners in the regions they want to target. We have found this to be imperative for scaling in Africa; however, finding the right partners to assist with an expansion can be time consuming, nuanced, and difficult. Fortunately, more than ever there are resources such as increased availability of data and open access to API integration that will make scaling easier.
GreenHouse has made investments in companies across 7 countries in Africa, including Nigeria. In the span of just 5 years, Nigeria has established itself as one of the leading fintech powerhouses on the continent. What have been the major drivers of this? What are a few other countries that you think are very promising or exciting for fintech at the moment?
RUBY NIMKAR: Having200 million people that are young and largely excluded from financial services makes building scalable fintech solutions very attractive. The large population makes Nigeria an exciting market for companies especially given the growing access to smartphone technology by the population. Fintechs also benefit from competition amongst established banks which are looking to partner with fintechs to keep their edge. Furthermore early players like Interswitch and Flutterwave helped build much needed infrastructure that the local tech ecosystem continues to benefit from. In addition to the immense opportunity in Nigeria, our team is really excited by the opportunity broadly in Francophone Africa. The 14 countries using the CFA have remained relatively underserved when it comes to financial services and consumers are craving innovative solutions. In addition, the unified language and currency makes the path to scaling clearer even with small individual markets.
In 2018 GreenHouse launched GreenHouse Labs, Nigeria’s first female-focused tech accelerator. Can you tell us more about the program and why it’s important to GreenHouse Capital to provide such a platform?
RUBY NIMKAR: The GreenHouse Lab program was born out of our own drive to create a gender balanced portfolio. It’s a platform for female entrepreneurs to tap into a vibrant international community of founders and mentors, resources and capital. This program was something the ecosystem very much needed, GreenHouse Lab combined mentorship, access to capital and world class programming to support women led start-ups. Last year less than 20% of VC backed start-up founders were women in Africa, and so there is a long way to go to bring gender parity to the African venture and start-up space. Since our first program in 2018, GreenHouse Lab has continued to evolve. This year we are planning to hold 2 cohorts, one which will continue to be female focused and a second that will be fintech focused. We are also implementing exciting changes like expanding the geographic scope beyond Nigeria to be pan-African and to directly fund start-ups that are accepted into GreenHouse Lab. We believe the revamped GreenHouse Lab will better serve the ecosystem as well as enrich the pipeline of female founded companies in Africa.
Surabhi (Ruby) Nimkar is a Principal at GreenHouse Capital, a Nigeria-based early-stage investor focused on the Sub-Saharan Africa and MENA regions. Ruby is primarily focused on Fintech and Enterprise Software, and is actively involved in GHC’s investment decisioning, having backed market champions such as Flutterwave, Helium health, Migo, NowMoney, Indicina and several others.
Ruby’s efforts at GreenHouse Capital also include running a women entrepreneur acceleration program (GreenHouse Lab) that not only provides women founders with capital and resources, but a 250+ -strong network of women leaders globally. The program was the first of its kind on the continent of Africa to be backed by Google for Startups. This led to Ruby co-founding a syndicate vehicle that supports under-represented, immigrant founders globally.
Prior to GHC, Ruby was a Management Consultant at Accenture, operating across New York and London to drive digital strategy for financial services clients. Ruby earned a BA in Economics and Finance from Boston University and was recognized as a part of the 2021 Kauffman Fellowship Class.
To learn more about GreenHouse Capital visit their website.
DigitalxScale is a collaboration project with the Foreign, Commonwealth & Development Office (FCDO) and the Wheeler Institute advancing our understanding of the factors which contribute toward or inhibit the scaling of digital fintech companies in Sub-Saharan Africa.
Nick Hughes, Executive Fellow at the Wheeler Institute, co-founder and Chief Product Officer at M-KOPA and founder of M-PESA. Dr Hughes has been at the forefront of mobile commerce activities in emerging markets for over 15 years, pioneering digital fintech solutions that solve real problems.
Rajesh Chandy, Professor of Marketing, London Business School; Tony and Maureen Wheeler Chair in Entrepreneurship and Academic Director, Wheeler Institute for Business and Development.
Wheeler Institute DigitalxScale project team:
Robert Smith MBA2021, Jovin Pizarro MBA2021, Federica Andrisani MBA2021, Zaineb Amin MBA2021, Stephanie Bandyk MBA2022, Catherine Phelps MBA2020, Vilma Nunez MBA2020 and Hamant Maini MIFFT2021.