In this interview with Nosa Alekhuogie, the head of Madica, Emmanuel Adegboye, speaks on pre-seed technology companies, the importance of including women in Africa’s technology space and the opportunities his programme offers women on the continent. Excerpts:
Can you provide an overview of Madica’s investment programs for pre-seed-stage technology companies?
Madica is a structured investment program for pre-seed-stage technology companies in Africa. It seeks to address the structural gaps undermining innovation, entrepreneurship, and wealth creation across the continent. The programme aims to empower mission-driven founders by broadening access to world-class companies building support available today to only a few well-networked entrepreneurs.
Madica also incorporates a structured programme that is focused on helping startups achieve their set objectives over a 12–18 month period and is put together in a convenient way to ensure the right balance is struck to ensure founders have ample time to focus on executing their day-to-day tasks.
Madica’s sector-agnostic approach invests in tech businesses across various industries. As a pre-seed investment program, Madica will be prioritising founders who will not be raising funds during the program and those with whom a US$200,000 investment will make a significant impact in achieving their goals within 12 to 18 months.
Our main focus is African companies led by local founders, women and those focused on frontier sectors to shore up gaps in funding on the continent.
What criteria do you consider when selecting companies to invest in at the pre-seed stage?
To be considered for the programme, we look for mission-driven tech startups that have a minimum viable product (MVP) with the traction of some paying customers, founders who are engaged full-time, received little or no institutional funding, and must have a base in Africa.
How do you evaluate the potential of a pre-seed-stage technology company? What factors are most important to you?
As a pre-seed stage investment programme, we invest very early in a startup’s life cycle. At such an early stage, we look to determine the potential of a startup: a mission-driven team, founder with a unique insight into their market and a strong desire to succeed. Although, at this stage, startups will usually have an unproven business model, we do a simple analysis of the model to determine how viable it is and whether the solution has a strong product-market fit solution. We also take into consideration the month-on-month momentum. So once a company has made an application on Madica, the first stage of our evaluations typically takes a week, bar any backlogs. If successful, the startup gets invited to a second stage where the Madica team would liaise with the founder(s) personally to learn more about the team, business, solution, and the space being operated in. Subsequently, Madica will undergo a thorough due diligence process, including a data room review and correspondence with customers and partners to thoroughly evaluate the company and make an investment decision.
How do you approach risk assessment and management when investing in pre-seed-stage companies? What strategies do you employ to mitigate risks?
The team is crucial in pre-seed stage investments. We assess the founders’ experience, expertise, and commitment to determine their ability to execute the business plan successfully. Additionally, we conduct extensive due diligence to evaluate the market potential, technology, team capabilities, and competitive landscape of the pre-seed company. We review the business plan, financial projections, and intellectual property rights to understand the potential risks and assess the company’s chances of success. Perhaps most importantly, we take an active role in supporting the pre-seed company beyond just providing capital. We also offer; Curriculum where training and support on products, go-to-market strategy, building teams, fundraising, etc., by industry specialists, take place.
Additionally, we offer a chance to be part of a community with hands-on mentorship by exceptional founders and access to global experts.
Lastly, we have continuity in targeted interactions with prospective investors to ensure that the continuum of later-stage capital is available as companies grow
How do you see the landscape of pre-seed-stage investments in technology evolving in the coming years? Are there any trends or developments that you anticipate?
The funding available for pre-seed-stage startups is expected to increase in the coming years. This is due to the increasing number of angel investors and the growing number of venture capital firms focusing on early-stage investments. A new milestone was set in 2022, with 1,149 unique investors investing in Africa, cementing the growing global interest in African startups.
Still on the topic of diversity, we can expect that investors will be increasingly looking to invest in startups with diverse teams and founders. This is due to several factors, including the growing recognition of the value of diversity in the workplace and the increasing number of studies that show that diverse teams are more successful. Based on the growing awareness of climate change and the increasing demand for sustainable products and services, we can anticipate an increase in the number of investors increasingly looking to invest in pre-seed-stage startups working to solve environmental and social problems. Also, considering the growing popularity of AI and Machine Learning, we can expect data-driven decision-making by Venture Capital.
What are the main challenges or barriers women face when pursuing careers in technology in Africa, and how can these be addressed?
There are several challenges faced by women when pursuing careers in technology in Africa and these are all contributing to the gender disparity in the African tech ecosystem. There are not enough female mentors and role models for women to look up to. The scarcity of female mentors and role models within the tech industry is presenting a significant barrier and deterring young women from pursuing careers in technology. The absence of visible representation has limited aspirations and perpetuated the notion that tech is a male-dominated field. Another factor is the limited access to tech education and resources for women. We can also point to the fact that there is insufficient encouragement for women to pursue engineering and technical fields in schools and at home. There is a need for more effort that focuses on challenging stereotypes, promoting Science, technology, engineering, and mathematics (STEM) education among young girls, and highlighting the diverse career opportunities available within the tech sector.
Lastly, we can’t ignore the challenges women face in balancing work and family responsibilities, especially in African society still growing out of the historical patriarchal makeup. The absence of flexible working hours and inadequate parental leave policies presents a challenge for women in the tech industry who strive to balance work and family responsibilities.
To address these, there is the need to engage girls early on and provide mentorship programs that can foster their interest and confidence in pursuing tech-related studies and careers. Targeted intervention by governments, NGOs and the private sector is also required, such as providing scholarships, mentorship programs, and fostering partnerships to expand educational access and empower women. It is also important to highlight and celebrate successful women in tech, promoting their achievements as inspiration for the next generation.
How does the lack of gender diversity in Africa’s technology industry impact innovation and economic growth?
The lack of gender diversity impacts Africa’s technology industry in so many ways. For instance, the absence of gender diversity hampers the industry’s ability to leverage diverse perspectives, experiences, and insights. By excluding women from decision-making processes and innovation cycles, the technology sector misses out on valuable contributions that could lead to ground-breaking solutions. There have been so many reports which point to how gender-diverse teams bring different approaches, problem-solving techniques, and creative thinking, which foster a culture of innovation.
Also, the underrepresentation of women in the technology industry limits the sector’s understanding and responsiveness to the needs and preferences of a diverse user base.
Women remain key drivers of consumer behaviour, and limited involvement from them in product development and decision-making roles affects a company’s potential to effectively tap into this critical market and efficiently cater to a broader customer base. By promoting inclusive policies, fostering diverse inclusive work environments, providing equal access to education and career advancement opportunities, the industry can unlock the full potential of women professionals who will contribute substantially to sustainable economic development.
As far as VCs go, the 2019 Moving Toward Gender Balance in Private Equity and Venture Capital study by the IFC showed that VC and PE portfolio firms with gender-balanced management teams receive higher valuations. Additionally, these teams demonstrate improved decision-making and governance, better risk management, higher employee retention rates, and a broader customer base. With such clear advantages, it is in a VCs’ best interest, whether African or otherwise, to actively seek out and invest in diverse startups for the prosperity of the larger ecosystem.
What initiatives or programmes are being implemented by Madica to encourage and support women in entering and advancing in the technology sector in Africa?
At Madica, we firmly believe that achieving gender parity in the tech industry is not only necessary but possible. While acknowledging the root causes of the current gender gap, we are fully committed to proactively addressing these issues. As a company, we are setting a positive example by actively seeking out and partnering with women entrepreneurs and leaders. We recognise and highly value the massive contributions they bring to the table and are enthusiastic about the significant positive impact they will undoubtedly have on our portfolio companies and the industry as a whole.
By fostering an inclusive culture and providing opportunities for women to lead and succeed, we are not only supporting gender parity but also driving innovation and progress in the tech ecosystem.
These partnerships and opportunities span across our portfolio investments and hiring processes where our interests are skewed towards bringing onboard the best female tech talents. Also, considering that the ecosystem can do with some more representation, Madica strategically incorporates a larger percentage of female mentors into the program to help provide female entrepreneurs with continuous hands-on guidance that goes beyond one-off advice. We also work with a wide array of accelerators on the continent to find the best female tech talent who needs support to steer their businesses to success.
How can companies and organisations foster a more inclusive and supportive environment for women in the technology industry in Africa?
I think that, rather importantly, companies need to embrace flexible work arrangements, implement supportive parental leave policies, and create inclusive workplace cultures that value work-life balance which will enable women thrive in their careers while maintaining fulfilling personal lives. Companies need to scrutinise their recruitment processes and ensure equal opportunities are provided to women.
What strategies or approaches can be employed to increase the number of women in leadership positions within African tech companies?
Primarily, we need to change the way we think about leadership. We need to move away from the traditional view of leadership as a male-dominated field and embrace a more inclusive view of leadership that recognises the value of diversity. Next, one of the simple and most important things that tech companies can do to increase the number of women in leadership positions is to create a more inclusive workplace. This means creating a culture where women feel welcome, supported, and valued. It also means providing opportunities for women to develop their skills and advance their careers. It will be a welcome development for tech companies to start setting public targets and goals for increasing the number of women in leadership positions. This will help to create a sense of urgency and accountability for the course. Lastly, tech companies can do more in providing training and development opportunities for women to develop the skills and knowledge they need to advance their careers. This can include training in leadership, management, and technical skills.