In November, Samuel Frank, an investment associate at Sahara Impact Ventures, an Africa-focused VC firm with a climate and gender lens, sat before a room of students eager to break into Africa’s venture capital industry or improve their understanding of the sector. In a few minutes, he would judge their final presentations and offer pointed feedback on how to improve.
For Frank, it was a full-circle moment. Just months earlier, in April, he had been on the other side of the table, presenting his own final project in the same course. There’s rarely been a more compelling time to pursue a VC career in Africa. Local firms are raising larger funds, specialised VC training programmes are multiplying, and a growing cohort of young professionals now sees venture capital as an appealing gateway into tech and finance.
But while interest has surged, job openings have not. Most African VC firms manage relatively small funds, often under $20 million, and, due to fund economics, only around 20% of that capital can be used for operations. After salaries, rent, travel, and events are covered, very few firms have room to hire large teams.
The result is a brutally competitive job market where many find it difficult to break in, especially those without industry relationships or direct access to the tight-knit networks that shape hiring in African VC.
For this week’s Ask an Investor, I spoke with Frank, who is one year into his role at Sahara Impact Ventures. After recently breaking into the VC industry himself, he shares advice for people hoping to follow a similar path, the misconceptions he held before entering the sector, the skills required to land a role, and how his firm invests in and supports startups.
This interview has been edited for length and clarity.
What drew you to venture capital, and why not traditional finance, operating, or a startup role?
My first role in finance was at an investment advisory firm, and I was supporting the finance and operations teams of startups. Besides doing all of that, I was also involved with helping them set up their data room, communicate with investors, prepare board meeting memos and board packs, and even help them with preparing their pitch decks and investment memos.
Every single time, I was really curious to find out: who are the people giving these guys money? As that question just kept ringing in my head, it led me to find out about a particular book called Venture Deals.
I took the course based on the book first. It was a very short course, and then I read the book. That opened me up to the industry of venture capital, and after reading the book, I understood more of what’s happening in the VC space, and that piqued my interest in wanting to work there.
How did you get your current job, and what were the things that you think you did that made you stand out?
I think working with startups helped. However, I already had the skill set to work in VC, from deal sourcing to analysis to what goes on around portfolio support and things like that. I had those skills, and so it was to find the opportunity because roles in venture capital are so limited.
Some people think they need basic financial skill sets or technical skills in finance, but how you’re able to tailor them to the industry you want to work in is really important. Whether it is to know how to do powerful presentations or Excel spreadsheets, or work around a model, it’s how you tailor those skill sets to fit the industry you want to work in.
Has your view of VC changed since you started working in VC? Was there any misconception you had before joining?
There are some views that have changed. I thought VCs, especially in Africa, were looking to do 20–25 deals every year, but I’ve realised that everybody’s doing three, four, five, six, or seven deals a whole year.
Another thing that has changed is the fact that when I think about exits for VCs, it was always just about IPOs. But now, working in the space, I understand a lot more about secondaries and self-liquidating instruments. Now, I see a lot of VCs who are just finding ways to ensure that they’re able to return the fund. Everyone is concerned about being able to raise more money after you’re done with your first or second fund, because being able to raise more is about whether you’re able to return the money you have raised previously.
I thought that due diligence is extremely critical in the VC industry, especially at the early stage, but I have noticed since coming in that quite a number of these investors are not so eager about due diligence for pre- and seed investments, keeping all the due diligence for Series A.
It has caused a wide gap between companies that raise pre-seed and companies that raise Series A. Because of that long timeline of no due diligence, companies are suffering now. By the time they want to raise a Series A, all of the things that they could have set up by the time they were raising pre-seed and seed are not set up, and then they have to start afresh for Series A, and it becomes a tougher problem.
Another misconception is that a lot of people say, “Oh, when you’re working in VC, VC pays a lot.” But it’s always just around your fund size. If your fund size is big, there’s a higher chance of earning more, but if your fund size is not big, you’re not earning as much as people think.
If someone were trying to get into VC, what background or skill set do you think is most valuable?
I think basic finance skill sets are important. Being able to do financial modelling and analysis, prepare a PowerPoint presentation that is exciting to read, and write an investment memo are basic skill sets that anybody who wants to get into VC would need.
Another one is being able to analyse financial statements because you’re going to be interacting with a lot of companies, and sometimes you have to make certain decisions on the kind of financing instrument you’re going to invest in a particular company, the kind of exit you plan to have, or whether you would even decide on investing or not.
If all you ride on with the company is just top-line numbers—what your revenue is, what the EBITDA is—and you don’t understand how to read through the three financial statements for startups, you would struggle in the role, and obviously nobody wants to have that kind of person on their team.
The other is being able to network. I think networking is a big skill in VC because VC is a people industry. Your success and your failure are always dependent on the kind of people you know.
Deal sourcing is another one; you must have your feet inside the ecosystem to know what’s happening so that you can get the right deals for your company. A lot of investors are eager to know if the people they are bringing on board have ecosystem knowledge. Can you tell them the companies that they can actually look into that are very interesting? If you’re not aware of what’s happening in your ecosystem, then that’s a problem.
Sahara has a gender lens and climate focus. What drives that focus at a time when VCs typically prioritise fintech or more traditional tech investments?
For us at Sahara Impact Ventures, we are trying to unlock an inclusive economy for everyone. When you talk about an inclusive economy, you can’t leave out empowering women to be owners and empowering women to be drivers of this economic growth.
The green economy is booming, and because Africa is a net receiver of the dangers of climate change, Africa’s economy over the next decade needs to have more businesses that enable the continent to be climate-resilient.
It’s with this ideology that the fund was formed, where we can invest in businesses that would ensure inclusion and, of course, allow us to deal with these environmental issues we face.
When we look at investments or we look at deals that we want to invest in, we’re trying to understand how women are empowered or how the solutions are tackling a real challenge for women, as well as empowering the continent to be much more climate-resilient.
This is how we look at a deal: whether it’s a female-led business or not, we are interested in seeing how women are empowered through the operations of that business, and that sort of guides our view towards investing.
Given the sectors that you target, how do you prioritise between climate impact, gender equity, and financial return when you’re evaluating deals?
The sectors we’re backing at the moment are food systems, clean energy, and what we like to call increased access. Increased access for us is increased access to education, financial services, and healthcare.
Now, within these sectors, we pick businesses based on their ability to enable us to make the most impact and still allow us to deal with the issues of climate change.
For food systems, we look at businesses that are involved in the entire value chain. In food systems, you see that there are more women involved in that value chain than men, from smallholder farmers to people who most likely work in food processing factories. Investing in this kind of business eventually empowers women.
On clean energy, it cuts across renewable energy, clean cooking, and e-mobility. Cold storage is also part of it—solar-powered cold storage. When we look at renewable energy, we’re trying to see how these businesses are supporting or enabling female-led MSMEs to access clean energy and grow their businesses.
Increased access for us is where we deploy more around pure equity investments because these businesses, especially in the increased access sector, are asset-light. We are heavy on female representation within the teams and how their products are empowering women, and obviously, how, in the middle of the operations, they are not contributing more to the climate issues that we’re trying to deal with.
We see the opportunity to return the fund using increased access, rather than on food systems or clean energy at the moment. And so this is how we can balance creating impact and eventually ensuring that our LPs receive their funds back with an interesting multiple.
What gets you excited about a founder or a company besides the usual metrics?
It’s the climate impact and the company’s ability to empower women to be inside their operations. That’s what excites us. That’s honestly what excites us about any deal we come across.
What are the top three red flags to look out for when you are screening early-stage startups?
We are always eager to know how big the market size is. If they are playing in a small market, it’s not something we want to get involved in.
The second one is the team. If the gender representation doesn’t speak to us, we are not eager to invest. It’s a red flag for us.
The third one is for maybe businesses that are in their seed stage, where the pre-seed funding they raised didn’t catalyse any growth in the company. It becomes a concern about the company’s ability to be capital-efficient.
You talked earlier about due diligence. How do you conduct due diligence?
We conduct financial, operational, legal, and tax due diligence on companies that we want to invest in. But before we do that extensive level of DD, we also do an internal one, and the internal one enables us to review the team end-to-end, to look at their past experiences, and to understand what led them to where they are.
We try to understand the business model with a deep dive into the product, into their supply chain, into their consumers, and the demand for what they are building. We also do a deep dive into their financials internally, trying to understand what has happened over the years, trying to understand the current stage of the company and what their potential use of funds will look like, with a view to seeing how we can be a part of their growth in the near future.
This happens before we get into extensive due diligence with our external partners because we bring in external partners to carry out due diligence on the startups after they have gone through our internal one, and we are okay with proceeding with the transaction.
What kind of support does your firm provide to startups after you invest?
We carry out what we call a value creation session with each of the startups before capital is disbursed to the companies. Now, this is because we want to understand the needs of the business that can be solved both with money and without money. When we understand what can be solved with money, we find out if it’s part of the current use of funds.
If it is not, and it can still be solved with money, for each of our startups, we have what we call a technical assistance facility that we use. It’s 10% of the entire size of the fund. As we’re raising a $30 million fund, we’re also raising a $3 million technical assistance facility to support our startups.
We also have office hours with them. Every quarter, we are trying to understand what their strategy is and how our TA facility can help, whether it’s to hire a venture partner or to support with bringing on a recruitment consultant to help with hiring. Whatever the need is, we are able to address it with the venture-in-residence facility for each of our startups.
We also create partnerships that would allow them to scale, giving them market access.
What do you think, from your experience so far, are the challenges facing Africa’s tech ecosystem?
I think one of the biggest challenges, and I think it will continue to remain a challenge, is the fact that innovation precedes regulation. We find a lot of market regulators who would rather ban before they talk. I don’t think it’s encouraging the ecosystem.
Another challenge that we are dealing with in the ecosystem is the fact that capital is finite. With few resources, we’re trying to see how we can support as many entrepreneurs as possible. There are a lot of people who lack resources.
We also don’t have a certain level of risk capital on the continent, especially from top financing institutions, whether it’s banks or pension funds. We don’t have the level of risk capital that can allow early-stage businesses to build and scale before they return the capital.
The fact that we don’t have a lot of exits is not encouraging more funding to come into the ecosystem, because when capital is returned, then capital can be recycled back into the ecosystem. That’s a real challenge that I believe, if we deal with, would unlock greater funding for early-stage businesses and allow them to build without the fear of having their backs constantly watched to see when they are returning the capital.
What’s one thing you want to tell Africa’s venture capitalists?
I honestly want a lot of investors to start thinking introspectively about how we can make it easier for exits to happen. Over the last two weeks, I’ve been in liquidity conversations and in these liquidity conversations, one thing is clear.
A lot of companies are overvalued, and because they have been overvalued, it becomes a problem for natural buyers to see them and be interested in purchasing, because where we’ve seen a lot of corporate M&As in Africa is in South Africa, and companies are being bought for 2x, 3x, or 4x their revenue.
But investors are now getting involved in companies at 12x, 15x, and 20x, and it doesn’t help because by the time these companies have been valued at this point, they don’t want to be acquired for anything at 20% of that number, because it means that all the investors who have come in across all the rounds will lose their money.
I would love for female fund managers to raise as much as their male counterparts. I think that maybe this is a conversation for limited partners within the space to see how they can back more female-led fund managers, reducing the time it takes for them to raise their funds.
When female fund managers are backed, it obviously means that female-led businesses are the ones that are going to receive more support. And if female-led businesses receive more support, chances are they’re going to support more female users or small businesses. It’s a chain reaction. We’re eventually going to see an inclusive economy.
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