Angel investor helping tech start-ups take off

Vishal Agarwal is like the patron saint of start-up entrepreneurs on the continent. A zoom call with him might turn some small unknown start-up into a multimillion business in a matter of months.

This year, tens of start-ups who made the call caught his attention and their owners are eager to see him do his magic, add value to their proposition, link them up with the contacts off his rolodex and help them raise funds and scale.

Even the Covid-19 pandemic has not slowed down Mr Agarwal who says in this era of technology he sits in Nairobi and through just a Zoom call, he has been able to make investments across the world.

In this past year, Mr Agarwal and his partner Raj Kulasingam did 33 deals – across Africa, in Silicon Valley, in the UK, and Indonesia. In Togo, Senegal, Egypt and South Africa. They are not fund managers – they are active investors.

“Believe it or not I listen to three hours of pitches a day on a zoom call, make decisions on Friday. On Monday we wire the money, and the cycle continues,” Mr Agarwal says.

In his past life, Mr Agarwal was a senior partner at PwC in Kenya, and General Electric in Africa.

He left the corporate world after 24 years, and joined up with his old friend Mr Kulasingam, senior counsel at international law firm Dentons in London, and now leads a proprietary investment company Full Circle which has a portfolio of about 50 companies including four investment funds.

In his office, where it all happens, he keeps a small RVR train and “deal toys” that tell of previous victories in a past life as a deal maker.

“Infrastructure and privatisation was hot, the KenGen deal took a year to prepare and we did the Rift Valley Railways deal the following year. I was an active deal maker at the start of that bubble but that market has since moved. The full circle of my life is, I would like to believe, I am an active change maker at the early stages of the African venture capital space,” he says.

Together with his partner, he has helped create multimillion dollar companies from scratch including Kuda, OmniBiz, SWVL, Smile Identity, RescueMe, Wello, CredRails, OnePipe, FinAccess, Cassbana, Semoa, Lifestore Pharmacies and BlotOut.

He says tech companies are creating overnight million-dollar businesses overcoming barriers faced by traditional businesses and offering solutions by disrupting inefficiencies from issuing digital credit cards, correspondence banking, Sacco digital interphases, Know Your Customer to onboarding new clients.

“A young Kenyan comes back from Warwick University and tries to open a bank account and it takes him weeks to open an account. So he says ‘this can’t be I have got to be able to open a bank account online in three minutes’,” Mr Agarwal says.

“And he creates this business called Fingo with a few friends and through Y Combinator accelerator today in six months since its launch they are a $20 million company,” he says.

He says the work of local investors is very pivotal in the early stages, helping the founders through licensing, scaling, recruitment as well as mentors, “as a guide and as a sounding board”.

He actively helps cross-pollinate his portfolio and recently joined up Kenya’s RescueMe which is an Uber for ambulances and South Africa’s Wello that helps the sick order home care services online.

They are also giving a European founder of a digital credit card company access to customers in their portfolios in Africa including Saccos in Kenya and Ghana and merchants in Nigeria.

He started making investments in start-ups early since being in PwC he could not buy into quoted stock due to conflict of in the regulated space.

Years of experience, losing money, making good and bad bets has schooled him on how to identify the good deals.

“I made enough mistakes, lost money in the early years. My wife has shouted at me a sufficient number of times - I call that the tuition of life,” he says with a laugh.

Start-ups do not allow for a lot of due diligence due to their size and need for faster decision-making. So he has relied on his experience through his corporate days, through fund managers and his passion for helping mentor entrepreneurs.

He says while there is a lot of innovation in fintech, health tech, and logistics there is also a lot of copy cats.

He also sees that valuations are out of control. They come up, he says, with a short deck of slides and funds and say they want valuations of tens of millions of dollars on day one.

He advises investors to watch out and preferably follow the likes of angels like him who have built a reputation over a period of time and know what to look out for.

Mr Agarwal says founders also have to understand how to navigate changing their innovations into a business, which is an education process.

“The venture capital game is such that as you start the business, say with two founders where you allocate each other shares, then in future you allocate employee share options, create a vesting programme and put some shares and invite external investors to come in, then do a second round and in no time you have a tiny fraction of the business left as the founders,” he says, noting that it is a fairly complex venture mathematics and most founders do not know “how to make that spreadsheet work so they should ask for help and learn”.

He has seen founders issue all manner of instruments to raise money and then some day an accountant will sit them down and they realise they only own 19 per cent of that company.

“Good investors understand the need for founders to have skin in the game. My partner and I will not invest where the founder does not have substantial holdings.

“We also will not invest in a company where the founder is overly greedy, wants too much valuations, is worried about dilution, and does not want to give value to investors,” he says.