ShEquity is an early stage investment firm supporting African women entrepreneurs. We speak to founder and managing partner Pauline Koelbl about the company’s investments and business opportunities in sectors ranging from fintech and agribusiness to healthcare.
ShEquity recently backed Nigerian digital banking startup Owoafara. What was the motivation for this investment?
Owoafara’s mission is to provide financial access to Africa’s underserved population by creating platforms that its partners use to offer savings, credit and transactions that help them grow and earn a better living. In particular, Owoafara aims to provide a financial inclusion solution for the 65% of people in sub-Saharan Africa who live in low-income communities and lack access to basic financial services. Many informal traders in these communities operate profitable but more cash-based businesses, with over 90% of the $2 trillion generated by SMEs being made through cash or offline payments.
Faced with competition from other digital banking and lending platforms, why does ShEquity think Owoafara will succeed in the Nigerian market?
We know that around 58% of the population in Nigeria do not have access to adequate banking and financial services and the majority of them are women. The first reason we believe Owoafara will be successful is the team’s track record of demonstrating the ability to respond to customer needs and sustain its growth. Although Owoafara had not received any institutional investment at the time of our investment, it had completed $1.1 million in transactions.
Second, the team is locally rooted and has a good understanding of the needs of the larger segment of their customers, women. Around 80% of Owoafara’s current loan portfolio is women.
Third, there are proven statistics showing that most credit scoring models have unconscious biases that do not favor women. As a company founded and run by women, Owoafara’s algorithms are designed to avoid the same biases and give women a better chance of getting credit. Nigeria is a huge market and women are the most underserved.
Ultimately, success depends on how Owoafara will continue to captivate target customers, and the team’s strategies seem to be working well. Owoafara’s strategy relies heavily on bridging the gap, particularly for women in the informal sector.
What other areas of the fintech industry do you think offer untapped opportunities for startups?
The untapped opportunities are related to the distribution of last-mile financial services such as health insurance, pensions, and remittances, particularly P2P remittances. As far as remittances go, most of them cut off the last mile because they don’t have access to internet-enabled phones.
Another ShEquity holding is Ecodudu, a Kenyan company that uses the black soldier fly to make organic fertilizer and insect protein for animal and fish feed manufacturers. What prompted this investment?
The nature of the business, the talented team and the sustainable solutions they bring to the market. As a circular economy company, Ecodudu wants to feed the future with insect protein. In doing so, they address two problems: access to natural proteins and waste disposal. In addition to providing natural protein, they also produce organic fertilizer at the same time.
Ecodudu’s business model is to work with small farmers and train them to also become part of the value chain of insect protein production and waste management. The environmental impact of Ecodudu is excellent as insect proteins are the best alternative for feed manufacturers that normally use fishmeal. This has great potential to address the problem of overfishing. Additionally, Ecodudu is a great example of a company that focuses on doing good while doing good, and this is right in line with ShEquity’s business philosophy.
Can you provide an overview of ShEquity’s investments in the healthcare sector and the challenges these startups are facing?
We have invested in two healthcare companies, Medsaf and Wazima Health.
Medsaf is focused on providing accessible, quality medicines to developing countries and currently operates in Nigeria. When it came to market, Medsaf’s main goal was to tackle the problem of counterfeit medicines. In solving this problem, the team recognized the need to support the entire healthcare system value chain in Nigeria with high quality and affordable medicines. Medsaf bills itself as a “one-stop shop for hospitals, clinics and diagnostic centers to use technology to purchase, manage and track their critical drug needs.”
Wazima Health offers an integrated telehealth platform for healthcare providers. It provides integrated all-in-one smart diagnostics and telemedicine patient and health management software as a service (SaaS) for NCDs, including point-of-care screening, access to rapid diagnosis, follow-up, referral, monitoring and support for ongoing care. Wazima currently operates in Nigeria, Ghana and Mozambique.
Wazima addresses the following challenges:
- Non-communicable diseases will be the leading cause of death in sub-Saharan Africa by 2030: diseases such as hypertension, diabetes, cancer, respiratory diseases and kidney diseases affect an estimated 270 million people in sub-Saharan Africa.
- Inadequate and inaccessible ongoing management: 60% of sub-Saharan Africans affected by NCDs are either undiagnosed or poorly treated. The lack of follow-up care, clear communication and medical contact leads to a poor prognosis and a high mortality rate.
- Poor access to medical and supportive community: Most sub-Saharan Africans have limited or no access to quality support on their journey to healthcare. The majority have no medical records. They struggle to pay for their healthcare, most of which is paid for out of pocket.