On Funding African Female Entrepreneurs and Innovators - A NEW Conversation with Pauline Koelbl

Episode Transcript

Claire  00:00

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Claire  00:26

Hello and welcome to a new episode of Narratives of Purpose, a place for conversations with inspiring leaders that is all about amplifying social impact. I bring you unique stories of changemakers, stories of people who are contributing to make a difference in society. By showcasing these individual journeys I would like to inspire you to take action. If you are tuning in for the first time, my name is Claire Murigande, I am your host on this podcast. In this new season, I am welcoming back previous guests to find out how their companies and their organisations have grown since their first feature or narratives or purpose. On today's episode, I'm catching up with Pauline Koelbl. Pauline is based in Switzerland, she is the founder of a Shequity, a Catalyst Fund that provides smart investments for innovative and impactful African female entrepreneurs. The key driver of inclusive socio economic growth. Shequity's vision is to reduce the gender funding gap in Africa. Please take a moment to rate and review our show wherever you listen to your podcasts, this will help other listeners find Narratives of Purpose and further amplify the stories of change we bring on our show. And for now, let's listen to how Pauline's mission to empower women owned businesses has evolved.

Pauline  01:46

So innovation is a tool to solve challenges, right? To solve many challenges. You start by creating and inventing, and then you have an invention, and then you transform it into a solution that actually can be tested on the market. Once you manage to commercialise your innovation, you create new opportunities, including jobs. Having empowered youth, for me, means that the human power will continue to innovate and create more opportunity for future generations. In terms of female empowerment, you know, I'm gonna throw out the statistics here; you probably heard about the fact that women represent more than 50% of the world population, and they raise the remaining 50%. So if you take this in perspective, don't you think it makes sense logically that we actually empower women? Because if we empower women, we empower the 50% of our people, but also we empower 50% of people who have the power to influence the remaining 50%. So then you wonder why we are not doing this? So I wanted to just use Afriprospect to bring about those promising businesses, innovative businesses that have a potential to grow and scale, and then connect them to a global market. And the second part was basically addressing the problem I just mentioned around the fact that women struggle to access the capital they need to basically contribute to the society, as I just said, and so that's how I set up Shequity, because right now in Africa, there is 42 billion funding gap when you compare women and men while actually there are many women embarking on entrepreneurship in Africa than anywhere in the world as we speak.

Claire  03:58

That was a short clip of my first interview with Pauline almost three years ago. She was featured in the very first episode, which was released back in December 2020. I encourage you to listen again to that conversation to hear about Pauline's incredible journey, and what motivated her to start Shequity. Like every guest I have talked to on the podcast, I have been closely following Pauline's work since we first spoke. I caught up with her a few weeks ago, to learn more about Shequity's growth, but also about her personal journey as an entrepreneur. Take a listen. So good afternoon, Pauline. Welcome back to Narratives of Purpose, I'm really happy to host you again on the podcast and I remember you were my very first guest... that was close to three years ago. How are you doing today?

Pauline  04:52

Good afternoon Claire, I'm doing great. Thanks so much for having me back. It's hard to believe it has been three years already. Wow.

Claire  05:00

Exactly, yeah, it was really at the heart of the pandemic, if I could say. So before we jump into Shequity, can you please just remind the listeners in a few words what exactly is Shequity?

Pauline  05:14

Yeah, sure. Thanks, Claire. So Shequity is a gender-lens fund. What that means is a fund that is intentionally backing female founders, so businesses owned and led by women on the continent. Obviously, the definition of a gender lens is broad, but this is our definition. Basically backing businesses owned and led by women in the African continent. And we do so by taking what we call it an ecosystem approach to investing, and so that concretely means combining the accelerator we have launched called Shequity Business Accelerator which stands for SHEBA and our fund. So basically, we pride ourselves by saying that we don't just go for the 'best businesses' that already exist there, of course, we want to invest in the existing businesses that are the best, but also, we actually work with the founders, to support them to become investment ready. So down the road, they can also be those kinds of founders with the companies that everyone is rushing to invest in. So we think that this is what is really needed to address the gender funding gap in Africa, which is still 42 billion US dollars. It hasn't changed since we spoke, which means we still have a lot of work to do. Unfortunately, people who are outside of Africa and who are not Africans tend to have perceptions as if Africa is 'too risky'. So their perception of risk is quite high when it comes to Africa. So this means we still need to do a lot of work to showcase that actually investing in Africa is not too risky compared to investing in any other market, the difference is really around understanding the risk, and designing risk mitigation and a strategy to intervene, and then finding the right businesses to back and then having a team that is ready to execute.

Claire  07:34

So speaking about the right businesses, I remember when we spoke the first time, you had already invested with Shequity in three companies. And these companies were covering, if I recall correctly, the data analytics, there was affordable renewable energy, and one that was also based in Kenya on waste to value. So can you tell us now, what does your portfolio look like? So which businesses are you supporting currently? And especially are there some specific sector activities you particularly want to focus on?

Pauline  08:11

Let me start with the last question, so in terms of the sectors and activities, we remain at the highest level of interest in backing innovative, impactful and scalable businesses that are owned and led by women in Africa, and based on that, we follow opportunities in the market. However, we also have a keen interest in sectors that we have seen to be basically having a high impact and potential to scale. And those sectors include any healthcare related businesses, we're looking at any tech enabled businesses that are solving real challenges, we don't really care much about the technology, we care about the solution. And also believe that with technology, then it's easier to scale the business, right. And then agriculture, in fact, is as I said, initially we're combining SHEBA and Shequity, agriculture is emerging to be one of our key sectors just because by coincidence, about 70% of SHEBA participants are come in through agriculture. And we didn't set out to say "We just wanted to focus on agriculture, on the majority of businesses coming from the agriculture sector." It just happened that this is where a lot of innovators and entrepreneurs are needed to basically feed the continent. And guess who's doing this? Women. Fast moving consumer goods is also emerging as another sector that we're seeing a lot of potential. And of course, anything that links to climate; mitigation, change, so we have this category as 'Climate Smart Solutions.' So since we spoke, we went from three companies to actually nine companies now. So to our portfolio, we have added two healthcare companies, one is called MEDSAF. So this is a company operating in Nigeria, and addressing issues around access to safe and accurate medication. And we have another one called Wazima Health; that is addressing issues around supporting healthcare providers. So what they do is provide an integrated tele-healthcare platform where healthcare providers can service the patients remotely, but also be able to follow up easily and efficiently. We have added another company in South Africa, that is informal retail. So basically, supporting companies in the slums to be able to access better prices. And we have also added, a company in FinTech - financial inclusion - that is addressing issues around making sure that people who are running businesses they are actually able to access financing, because the existing financial systems usually tend to leave behind those who don't have bank accounts, who don't have a collaterals, and again, you can guess probably already who is the majority in this group - the people struggling to access financing at the bottom of the pyramid - You probably already know.

Claire  12:05

Women of course!

Pauline  12:06

Exactly. And actually interesting enough OWOAFARA by coincidence as well, they realised that at the end, the majority of the people in their portfolio, the people they are lending to are actually women. So we invested in OWOAFARA at the end of last year, this was our last investment in our SPV structure. To date, they have provided more than 170 loans to SMEs in markets in Nigeria and they have impacted over 10,000 lives and created about 10 jobs directly and more than 1000 jobs indirectly. So again, this is also another thing that maybe I didn't mention how Shequity is not just a gender-lens fund, it's also by default an Impact Fund. Because when backing those solutions that are impacting lives down the stream.

Claire  12:36

Exactly. And that's also something I was thinking of asking you, you just previously mentioned that you started three companies three years ago, now we have nine. What is the impact down the line? Do you have some numbers there or something you can share?

Pauline  13:21

Yeah, we track our impact because that's the reason why we set up Shequity because we believed we can actually back entrepreneurs who want to generate financial return to their investors while also solving real challenges. So the key numbers, one is starting with the Sustainable Development Goals. As we're speaking right now, you have a UN General Assembly happening in New York, and the discussion is about SDGs, how we are behind. So the founders we have  invested in and the business we have invested in collectively have contributed 14 SDGs. And as you know, there's 17 of them. And actually, when you start asking questions around, "which ones are not included?", for example, there’s one on a partnership, but actually we realise each one of them is actually having some form partnership. So this number in essence is quite conservative in terms of what they're doing. Job wise, because that's another thing like, "hey, how do we create a job for younger people who are finishing school?" But also knowing that creating jobs is a pathway also to enhancing the good livelihood for different people. So they have created more than 560 jobs collectively. And in terms of broader impact, collectively, all the companies have impacted more than 30 million lives across the continent. So that's really what gives us energy to keep working to believe that if many of us were backing this kind of businesses, again not as charity but businesses that will generate financial return, that they are motivated by... they wish to solve challenges they face every day. And also knowing that those founders, they know better how to solve those problems than anyone else from anywhere else. So we can actually really achieve those SDGs. And we can impact more lives and end poverty.

Claire  15:45

Exactly. I was just thinking about that when you were mentioning the numbers, and this is only Shequity's impact. So imagine if there's like 100 of these companies like Shequity, the difference is really, I mean, it's enormous right? You can really make a difference. 

Pauline  16:01

We can make a difference and that essence of also being for Shequity, because we believe like when it comes to catalysing actions in Africa, you better show than tell. Because I think there's a lot of talking, but when you show people that this is what it is, you're going to go and check yourself and then it becomes clear that there's a pathway for anyone who wants to take actions. And also for me, as an African woman who lives in diaspora, I believe Shequity is also an opportunity for all of us in diaspora to actually contribute in a meaningful way, and be able to share those examples in different communities where we belong. Because again, remember, Claire, one of the key reasons many investors are shying away from investing in Africa is because they think it's too complex. They think there's so many risks, so you and I understand the real risk, and also the risks that are not really 'risks'. So we can work with people from all over to support moving the capital to back women, because by coincidence, many women, when they start businesses, are not just about starting a business. It's about solving a problem.

Claire  17:22

I want to come back to something you said in the very beginning, when you were speaking about Shequity and how things have evolved in the past three years, you mentioned SHEBA, so the business accelerator. Can you explain a bit more about that and how it's structured, and especially why you put that in place, in addition to having the investment part?

Pauline  17:41

Right after we launched Shequity, we started talking to people about our vision, about how we really want to contribute towards causing the 42 billion gender funding gap. And how we are bullish about backing female founders. The first question that I kept receiving was "How are you going to find a pipeline?" "How are you going to find women who have businesses that if you invest in them, you can bring my money back?" In essence, the whole perception about when you invest in women is a charity, because you're just a nice person, you're helping women. At that time I realised we needed to address this question. And not just by saying, "Hey, yes, we know where they are, we can find them." But also intentionally making sure that we're growing the pipeline, like we actually were identifying those women, those founders who are working really hard, but somehow we believe, if they were to knock on the door today, to want to talk to an investor, the investor will find a lot of issues within their businesses. And that will be a reason why they will not continue the conversation, so it won't be about the founders ability to do the job. It will be more the whole business. Because as a business, you need to hear your financial and material governance, you need to have your team, you need to have all the policies in place. You need to have your finances audited. All of the things I have quite a lot if you are bootstrapping, right? So that's when I did one thing that I know how to do is find partners. Because I believe it's always better when you partner with people who know how to do things, and they combine efforts so you can go faster together. So I reached out to this friend of mine now who is a business partner, Anna Samaké who is based in Ghana. And she's originally from Mali, and she has been running accelerators before. And I said "What if we were to run an accelerator just focusing on women with just one intention, to get them ready for investment?" We're not doing capacity building. We're not doing anything else that everyone talks about because those women know what they're doing, but they need hand holding to polish what they have done. So when they present it, it meets the expectations of investors. And we wanted to design this as investors. So because we know what we look for, we know what kind of businesses were turned down even though we liked the founders, right? So that's how we did. We just sat down and looked a the existing business models and put together a module, that basically if you are a founder, and they go through this programme, and you show up every day, you take advantage of the fact that you have a mentor and you have a coach, you can take advantage that we are all available if you have any question. By the time you graduate, you will be way way ahead of the game in terms of being able to pitch to negotiate for yourself. This is another thing that people don't really discuss is how we don't necessarily as women, especially African women, negotiate well for ourselves. And most importantly, at the end, you have a chance to be selected among the top five, who are sent to the Shequity with a team for investment consideration. We realise having this as a feeder to our fund, not just another accelerator but a strategy to build a pipeline, a trusted pipeline, will allow us to actually have access to the best businesses run by motivated founders. Because we will have also observed them during the 17 week programme. So this is not just an overnight programme, it's a 17 week programme where the founders have to show up to do their homework and come and contribute, sharing what they have learned. So this also shows you the ability for a founder to be coachable, but also to execute, which are part of the things that any investors look for. So fast forward, it was funny because we were like, "Okay, we know what to do. Now how do we do this?" We are fundraising, we need it to be refined and if we do this, it's gonna be too much, people will be saying "You're doing too much, you should focus" because that's what you hear quite a lot. But we are African women and we understand if you just do one thing, and we hope that something is going to be done, it's not going to happen. So when we are dealing with this and basically again, leveraging who we are - African women who are multi-tasking, but also leveraging our network. So, we just reached out to different people we knew in our network, and then we launched the first cohort with volunteers. And I remember when we were almost towards the end, people were like, "Wow, how do you do that? Where do you get money to do this?" and like - This is us basically leveraging what we have to make the point to prove that this can be done, and there's a need for it. And there's a way to do it. So before we completed this cohort, we started a conversation with USAID Trade Hub West Africa. And within a year, they came on board to support us to accelerate 120 women in West Africa, and basically be the pipeline but also go beyond the usual, which is usually the Anglophone side. Because we knew that the Francophones founders also could probably benefit even more from this programme than anyone else, but we didn't have the means to do it. So when we started the conversation with USAID, they were also interested in us having a cohort focusing on Francophone countries, especially Sahel countries where most of the time investors don’t go to Sahel countries because of the perceived risk, but also the headlines. The headlines are always on the negative side, right. So now we are proud to say that by the end of this year, we will have supported 150 women coming from the West African region, including Francophone and Anglophone speakers, and now we're also getting interest from other regions, people reaching out to us saying, "can we scale SHEBA in those regions?"

Claire  24:26

And how many were you able, within these two years, to also invest in with Shequity? So you said that the top five are basically considered as businesses that Shequity will invest in? How many have made the leap or the jump into Shequity?

Pauline  24:36

I'm glad you asked this question because that’s one of the questions I got from some investors, who had concerns about the fact that if somebody comes from SHEBA, is it automatic that they get investment? So the answer is no. Coming from SHEBA, it just allows a shortcut to get to the desk of the investment team. And the investment team have to go through the same process. Our process involves more than 10 steps, including going from zero, reviewing the documents, talking to the founder, and assessing all aspects of the businesses and other checklists that we have for our investment. So at the end, as we speak, we have only invested in one company that came from SHEBA. So that’s OWOAFARA, and even with OWOAFARA when she graduated, it took us more than six months to go through the whole process, because there are a few things that she still needed to address in the business. And because we have worked with her, we were there supporting her to address those before we can move this company to the investment committee. So as we speak, we're reviewing the most recent 10, so they are in the process. And I cannot tell you how many we're investing because at the end of the day, it's not my decision. The shortlisting is done by our investment team. And then the decision for investment is made by the Investment Committee. And this is made by independent experts, which is important to reassure investors that we're not just being emotional when it comes to investing.

Claire  26:25

So looking back at these past three years, what are, for you, some key learnings that you would like to share with either an aspiring entrepreneur or any other person in this field would like to start their own venture just like you did? What for you is the key to take away from these three years?

Pauline  26:43

So the first one is probably not necessarily encouraging, if I can be honest with you. And I think it's important that we all are honest with each other, all entrepreneurs. It's hard. It's hard. And I think also it has been harder because we started during COVID time. Even though COVID is no longer everywhere the way it was that time. I think there's still some issues, the macro economics are not back. So, the market hasn't really followed quickly. So when you are raising a fund during a time like this, focusing on Africa, and then focusing on a group of people that people tend to think are a high risk category. So it requires a lot of convincing. What I have learned with this is just realising this is not a sprint, it's a marathon. That also you really need to believe in what you're doing. Because, the reason I'm saying it's hard is just if you're looking for an easy way or think being an entrepreneur is cool or sexy, "I'm gonna be one!" I will say think twice. I think being an entrepreneur is having a conviction that you can support solving a problem. You can solve a problem and create value for yourself and for everyone that is involved. And then be willing to roll up your sleeves and do what needs to be done.

What I have learned as well is that there are so many people who are actually ready to do good. And also more and more that people are realising that making money alone is not enough. Because at the end of the day, how much money do you need, right? But if you can make money and change lives and you use your money to multiply it by changing lives, then the pathway to success actually is very clear. During this journey of fundraising, I'm happy to always meet these kinds of people. So they might not write a check right away, but being able to interact with them is really cool and inspiring.

And the other thing I have learned as well is realising how many of us Africans, whether African diaspora or Africans anywhere are now conscious that you need to be driving the change that we want to see. I used to be surrounded sometimes by people complaining about life and things that don't work. And it's inspiring that I could now be surrounded by people always looking like "How do I solve this?" "Who do I talk to to join me solve this?" and that energy, Claire, that's what perhaps I would say if you want to be an entrepreneur that's what you should look for. How do you reinforce that energy? And also realising ourselves as Africans, how much we can do together right. I wanted to also thank you, Claire, because you were one of the people who actually believed in me initially, when I made SheInvestment and I was saying, "Hey, this is what we can do. This is what I need" That level of sisterhood that goes beyond words. I think this is what I'm learning as well, that we need to connect, we need to collaborate. But as Africans, we need to be leading by actions.

Claire  30:26

And I couldn't agree more. And also, to come back to a few things that you said you learned. I think it's the same for everybody, wherever you are on this planet money's not the end of it. You need to also find the purpose basically, why do you want to get this money? Can you help other people and I think humankind humans, in general, is inherently also, what drives you is to help someone else, right, this gratitude you receive in return. And if you can bring that to business, it's even better. So honestly, I think that learning that you had, I can only agree with that. And the other thing that you were saying is that, having this energy and having people around her also solving issues. As an entrepreneur, I know it can be very difficult and very tough. And that helps you a lot. But to that point, is there something else that keeps you going? Because obviously it's very hard, but do you still have moments of doubt or some challenges that you think :"Okay, this, I'm not going to be able to manage it." How do you go through that basically?

Pauline  31:26

Yeah, to be honest. Yeah, the moment of doubts, they come and go, I just learned how to kick them out quickly. Of course, you have been working so hard, you pitch and you think you're gonna move through and to get that check. And, you already have a good pipeline, you have a vision of what you're gonna do. And then people say, "No, this is not the right timing." Of course, we are human, you're not gonna go home and start dancing right? And then you question whether you could be doing something else different. But now for me, I realise what I'm doing is what I want to be doing. There is no going back. But I'm also open to learning more and more whether there's a different way I can be doing this right. That's what I have learned as well, working with entrepreneurs, the last 12 years and now myself and being one. It's not so much about how many challenges you face, it's about you learning how to deal with those challenges and learn from them. But also you realise that challenge that you face. And if you learn from it, and you stick to your vision, you can also be humble enough to go back or reassess "Could I be doing things differently to achieve my vision?" So at the end of the day, it's about the vision, how you get there, and you always do what you know how to do. But mostly, I think what's driving me, what keeps me going is really the inspiration I received from those women who we are backing, realising that whatever challenges I am facing here, fundraising for Shequity or anything else, it's nothing comparing it to a woman, somewhere who created a business and who was not even able to get the first check to prove what they can do, right? So that then pushes them into saying, "Hey, I have to keep going. Because there's someone somewhere if I am successful, I can allow the dream to actually flourish." And the other thing that I'm also reminded every day is that when you see any problem in Africa, there is an entrepreneur somewhere who's trying to solve the problem. You know, you can complain about it, you can talk about what the government should do, or who is not doing what they should do. But also you can realise there's someone else who's trying to solve this problem. What if you were to just enable them to do that? And that's, for me, the case for really backing local entrepreneurs.

Claire  34:05

So the Shequity vision is still alive and strong right?

Pauline  34:09

The vision remains, and it's is stronger than ever but now I have also found many different ways to the to deliver on the vision, so when I started off working from my office during COVID, the strategy, whatever is different today and because we have a team. By the way, the other good news is I have a partner so Edith, she's based in Ghana she's amazing. So I guess for me, that was a confirmation that people who are super smart, who have options, they realise that being a part of Shequity is what they want to do. And so I'm super humbled to see that people are realising that we can really impact many lives while also supporting investors generate the financial return in a way that I think no one else is really gives you other than when you back African woman entrepreneurs.

Claire  35:09

It's been a pleasure to have you again, Pauline, thank you so much for taking the time, do you have any parting words that you'd like to share?

Pauline  35:15

I just want to thank you again and Claire, for your support, your sisterhood, and also this show. I have listened to many shows that you have hosted and many people who have  interviewed, and I think it's really good that you're giving voices for people to share what they're doing and why. On my side, I am committed to doing my contribution towards impacting lives on my home continent. I believe Shequity and SHEBA is a unique business model to deliver value for everyone who's involved. And I really invite anyone anywhere who wants to amplify the impact to reach out, whether they are philanthropic or for-profit investors, we have options to collaborate with everyone. And for the founders out there, especially female founders in the continent, reach out and believe in yourself, many people know that, that's why they talking to you

Claire  36:28

Needless to say that 42 billion US dollars is an incredibly huge funding gap for women led businesses compared to their male counterparts on the African continent. And as Pauline said, it's a great opportunity for investors to bring about change by closing this gap. Just like what Shequity is contributing to, by backing up African female founders and innovators. Find out more about Pauline's work with Shequity on the website, shequity.com. The link is available in the show notes. Thank you so much for tuning in today. I appreciate you taking the time. That was episode 60 a new conversation with Pauline Koelbl on funding African female entrepreneurs and innovators.  Join me again in two weeks, we'll shift gears to talk about artificial intelligence in healthcare, and developing open source technologies with another returning guest, Bart De Witte. Make sure you leave us a review everywhere you listen to podcasts and if you like what you're hearing, remember to share this episode with a friend, a colleague or even a family member. You can also connect with us through our website at narratives-of-purpose.podcast page.io. The link is in the show notes or through our social handles @narrativesofpurposepodcast.

Until the next episode, take care of yourselves, stay well and stay inspired.