On September 14, 2019, Harambeans Founder, Okendo Lewis-Gayle, revealed at the Vatican that MAX and Releaf Group were the two inaugural co-investments of the Harambeans Prosperity Fund. Alongside YCombinator, Yamaha and Breakthrough Energy Ventures, Harambeans Prosperity Fund invested $100,000 into each Harambean-led startup. Seeded by Cisco, with a multimillion dollar gift, the Harambeans Prosperity Fund is a rules-based co-investment vehicle, which aims to accelerate the growth of Harambean-led ventures, build a coalition of like-minded investors and secure the long-term financial viability of the Harambe Entrepreneur Alliance.
Lewis-Gayle remarked that the name of the Fund is a nod to the book, The Prosperity Paradox. Authored by Harambean Efosa Ojomo H’17 and Harvard’s Karen Dillon and Clayton Christensen, the book argues that enduring prosperity for many countries will not come from fixing poverty. It will come from investing in innovations that create new markets within these economies.
Robert MacPherson, Harambeans Prosperity Fund Lead, explained that the rules-based model of the Fund was designed to build a coalition of investors and entrepreneurs committed to market-creating innovations throughout Africa.
As such, qualifying ventures supported by the Fund must satisfy key requirements to be considered for investment:
- Ventures must be founded by at least one Harambean.
- Ventures must secure reputable co-investors and be in a fundraising round of at least US$1 million.
- Ventures must exhibit potential to deliver tangible impact and market-creating innovations.
MacPherson observed that “the most exciting ventures in Africa, both financially and socially, are those focused on serving a customer demographic or region that has otherwise been entirely overlooked or underserved. Many of these ventures are already Harambean-led and their focus on creating viable new markets will strengthen the foundation for future economies. Inevitably the result will be greater dynamism and resilience in economies throughout Africa.”
Photo: Left to Right, Tae Yoo & Mary de Wysocki, Cisco, Founding Partner Harambeans Prosperity Fund
Tae Yoo and Mary de Wysocki speaking on behalf of Cisco, founding partner of the Harambeans Prosperity Fund, noted that “Cisco is very comfortable with early stage solutions, so it made perfect sense for us to focus some of our investments in an organisation like Harambe where many Harambeans are in the very early stages of their ventures. We wanted to invest in a fund within Harambe where the returns on all the investments go back into the Harambeans Prosperity Fund so that over time the more successful these entrepreneurs are, the larger the investment fund, which will allow Harambe to invest in even more ventures.”
Lewis-Gayle acknowledges Cisco’s leadership in getting the Fund off the ground. “Cisco has been a loyal supporter of our Alliance and we’re delighted that they’ve taken the time to understand our model and had the foresight to kickstart H-Prosperity. Their donation will enable us to invest $100,000 in at least 20 Harambean ventures, which will give us the momentum and track record required to grow the Fund and ensure that we continue to support African innovators and their dreams of scaling businesses and creating prosperity for their communities. While this may not be popular in some quarters, I am also grateful for our lawyers who helped us structure and set a solid foundation for Harambeans Prosperity. K&L Gates was founded by Bill Gates Sr. and has been a true partner in this incredible journey. ”
In line with the rules of the Harambeans Prosperity Fund, MAX and Releaf Group were co-founded by Harambeans. MAX was co-founded by MIT graduate Adetayo Bamiduro H’15 while Releaf Group was started by Ikenna Nzewi H’17 and Emmanuel Udotong H’16, respectively educated at Yale and Princeton.
MAX (Metro Africa Xpress) is an Uber-like moto-taxi company in Nigeria. The company’s app-based platform coordinates motorcycle taxi and delivery services for individuals and businesses. MAX has completed over 1 million trips and is one of the largest delivery partners in West Africa for Jumia. The start-up has plans to expand across 10 cities in West Africa and is targeting an $80-billion market across sub-Saharan Africa. “The immediate benefit for MAX as a beneficiary is the credibility that Harambeans Prosperity brings by virtue of what it represents. In the long term, this investment will enable us to unlock more capital in the future to not only build a business that provides economic returns, but one that delivers social benefits to Africa. It’s win-win and a partnership that I’m very excited about!” said Bamiduro.
Releaf is a venture solving the quality raw material supply problem for Nigerian food factories. Agricultural supply in Sub-Saharan Africa is dominated by smallholder farmers and middlemen who make up 80-90% of food production. Smallholder farmers are decentralized and have variable quality while the middlemen are unreliable and deliver inconsistent quality. The end result is factories competing over a limited amount of raw material and not being able to run at full capacity. Based on the premise that ‘Industrialization has moved more people out of poverty in the shortest period of time than any other phenomenon’, Releaf saw an opportunity to overcome the supply shortage resulting from manual pre-processing, by developing Africa-focused pre-processing machines to scale the supply of quality raw material. Releaf has used new technology to access raw materials before they get to traders and other factories and has absolute quality control over them. They provide raw material access to other factories, serving as the raw material backbone for existing factories. They are looking at building factories to process the raw materials they monopolize, which will allow them to maximise their value extraction. The results have been consistent quality, access to 80% more raw material, a close relationship with farmers thereby eliminating the middlemen and increasing margins and factory capacity.
“We’re honored to have Harambeans Prosperity in our cap table” noted co-founder Emmanuel Udotong H’16. “This investment allows us to prioritize and not just scale. We can focus on cost efficiencies by making investments into energy and logistics, which will help us to bring down our costs. The long-term benefit for Releaf is that when we’re ready to raise Series A, we’ll be able to leverage the co-investment network of the Alliance and show how profitable we are.”
Jeremiah Gordon, the General Counsel and Chief Compliance Officer of Google’s investment arm CapitalG, has worked with several Harambeans and been a steadfast supporter of the Alliance. He recognizes the importance of access to capital, especially for start-up ventures. “Young entrepreneurs such as the Harambeans are the key to developing and having Africa prosper. Both inaugural Harambeans Prosperity Ventures are led by first rate entrepreneurs who understand how technology and scale work and who have a deep and lifelong commitment to Africa – the future looks bright!”