More and more veteran entrepreneurs are over time, taking on the responsibility of nurturing new entrepreneurs and helping them grow their businesses. This is can either be through offering mentorship to them or investing in their businesses. However, some people like Lawrence felt like they could do more. With his business partner, whom he met as they did angel investing, they formed Nest, a venture capitalist firm that does more than give you money.
“We made a discovery with my partner. I do not have all the skills necessary to help a startup, you need a team with different complementary skills to do that and furthermore, the whole process is very passive. You give money to a company and they run off with it then you get a call 2 years later that they have either been successful or have lost the money.” This was the start of Nest, a move away from passive investing to adding some kind of value.
Lawrence always wanted to be an entrepreneur from a young age to the extent that he wanted to quit school at age 16, but his father would not let him. As most of our parents would say, his father told him that education is an insurance policy for the future. This did not completely discourage him as he was a part time entrepreneur while pursuing another career. Entrepreneurship, he says, is not easy. He says that there isn’t a structured way of starting a career in entrepreneurship. “You just have to jump off a cliff and build a plane on your way down.”
The foundation of Nest comes from a genuine passion to grow businesses for Lawrence. “I love building businesses. We love helping startup founders grow their business. I do this for free, I am simply passionate about helping startups grow their business. We want to provide structure for people who have entrepreneurial talent and want to go out and express it, but don’t know how to go about it, or what pathway to follow.”
“It might sound crazy, but the biggest service we provide is just a sounding board. When you start a business, you are a one man band and often you think you are doing it right but you are not too sure. We can provide a second opinion, we almost act like your psychiatrist. We provide structure on how you can plan and grow your business and once entrepreneurs go through our methodology of explaining their business and expansion strategy, they are usually grateful. They say that just going through that process and offloading issues and problems by writing them down helps them find solutions.
In short Nest is here to hold the hands of entrepreneurs and be a partner for startups. “We buy equity in promising startups, not in exchange of services or support or help, we give that for free. We hope we are smart capital, not just investors”
“We see Nairobi as the spring board into Africa. It is a base for expansion into Africa…plus problems being solved in Africa are also the same problems that Asia is trying to solve.”
Founded back in 2010, it is based in Hong Kong and is now eyeing Africa, having opened a base in Nairobi earlier this year. Why Nairobi? “We see Nairobi as the spring board into Africa. It is a base for expansion into Africa. It is a gateway for seeing interesting opportunities present in the continent.” Additionally, he said that the problems being solved in Africa are also the same problems that Asia is trying to solve.
“Africa is experiencing huge urbanization. China is experiencing the largest urbanization movement in history. It went from a 30%- 50% urbanization rate and is moving rapidly to 60%-70%. This has not been seen since the industrialization of Western Europe in the 1800s. With this, several problems arise; pollution, density problems, energy and waste management issues. It doesn’t matter where you are, whether it is Lagos, Shanghai or Beijing, these are problems that we all face so if there is a wonderful solution to one of the problems in Africa, why not bring this to Asia, adding value immediately”
Mutual Benefit
“The innovation coming out of this part of the world is at an inflection point and will rapidly expand. We are at the start of a great roller-coaster”
So does Nest plan on exporting Africa to Asia? Not exactly. He sees it as a mutual trade. “There is creative talent in Africa. People are good at innovating here. A lot of impressive solutions are coming out of Nairobi that the Asian market is interested in. As Nest, we want to get in at the ground level. The innovation coming out of this part of the world is at an inflection point and will rapidly expand. We are at the start of a great roller-coaster. The eco-system is improving day by day with many co-working spaces and hubs coming up. We are also keen on bringing interesting Asian businesses that want to expand into Africa. We see it as a mutually benefiting relationship.”
They would like to work with the government as they are a big part of the startup ecosystem. “We partner very closely with governments, an example being how we worked with the Hong Kong government in restructuring the Visa system for foreigners.
The ICT Authority here has a strong willingness to grow the market and want to put a lot of resources behind it. They want to make Nairobi the hub of innovation and startups, which is the same thing we want! We have strong partnerships with corporates, therefore we can bring in the private sector. We know startups. We know that having the right team is more important than having a brilliant idea. We can bring a lot of value into this partnership.”
So what kind of startups do they look for? Lawrence says that they look at everything, from a pure idea scribbled down on a napkin to a considerable business that is heavily funded that just wants to enter a new geographical market. “We invest in the hundreds of thousands of dollars, not the millions or the very little amounts, something that we refer to as seed capital investing. Any startup can approach us. Aaron, our Managing Partner in Nairobi probably sees 30-40 new business plans each week for consideration. We think about how we can add value in the companies. It might be the best startup in the world, but can we actually add value?”
Corporate vs Startup
“Entrepreneurs see big companies as the enemy. They want to disrupt, displace and destroy them. Corporates on the other hand dismiss startups, seeing them as being too small to bother with, up until they aren’t.”
Asked on the successes Nest has seen over the years, he says that the partnerships they have formed with corporates and startups is something they are very proud of. It is not a secret that entrepreneurs are not too keen on the whole corporate culture. “Entrepreneurs see big companies as the enemy. They want to disrupt, displace and destroy them. Corporates on the other hand dismiss startups, seeing them as being too small to bother with, up until they aren’t.
They won’t think that when all over sudden, the startups are taking their customers and their brand value away. We are positioned between these two. We speak the language of entrepreneurs having been entrepreneurs ourselves, we know the pain and struggles. But equally we can say that you should stop considering these corporates as your enemy. They actually have everything that you don’t have, they have resources, they have networks, and they know the industry very well because they have been operating in it for years and years. We can bring this two together.
Being in Nairobi for a while, what does he think that we have to address? Lawrence ended the interview saying that a few of the things that we need include a wide pool of developer talent. “It has been difficult finding a lot of developer talent here. We end up bringing people in to teach startup founders on skills to build the tech part of their product or service or to teach the general employee base so that can now be hired by the startups.” According to him, specialized development training schools like Moringa School are a great step forward. Additionally, he noted that the presentation skills he has observed from the founders are hugely varied, ranging from someone who can sell you anything, to one with a brilliant idea that can’t articulate it. People need to learn that how you pitch to investors and to customers are two different things.
It is clear that Nest is here for the long run and wants to do more than just handing out money. Adding value to your business and scaling it is something that they are clearly passionate and enthusiastic about. If you have an idea or a business, it will not hurt to approach them. Maybe you will be the next household name!
