Venture capital firm debuts on Rwandan market

A venture capital firm has entered the Rwandan market seeking investable enterprises to inject capital into. Venture capital is financing that investors provide to startup companies and small businesses that are believed to have long-term growth potential. Venture capital generally comes from well-off investors, investment banks and any other financial institutions for a stake in the in the start-up firms. The firm, Sobek Capital, will invest between $10,000 and $250,000 in qualifying startup firms and enterprises. Rwanda has an almost non-existent venture capital industry with the main sources of business capital being banks which have often been accused of having traditional financing mechanisms. The venture capital firm will be seeking to work with firms across various sectors including ICT, fast moving goods, media and consumer goods among others. Beyond availing capital, the firm will work to improve the structure of firms and provide advisory services. Sean Obedih Ndiho, the founder of the firm says that their initial assessment shows that a majority of firms in Rwanda are lacking in terms of structures and are not investment ready. He said that often, firms have not been in position to attract venture capital as they have failed to adopt practices that venture capitalists look out for. “For instance, you find that a majority of enterprises do not have good book keeping practices, strategies or lack advisory services,” he said. He noted that a large number of emerging enterprises lack professional practices which makes it hard for them to access capital. “At the moment, by our observation, the biggest problem in this market is not capital but the quality of businesses. If these funds had structures and proper practices, they would have multiple alternatives in regards to capital sources,” Ndiho added. The process to make a firm investable, he said can take between 12 and 18 months but would be guaranteed to stimulate investors’ interest. Ndiho said that the firm will also work to mobilize venture capitalists and angel investors in the local market to build an ecosystem that allows such activities. With improved practices among firms, he said that there is a chance that the local venture capital sector could improve in coming days to become a reliable way to raise revenue. editorial@newtimes.co.rw

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Venture capital firm debuts on Rwandan market