Africa focused venture capital (VC) funds deployed in the continent’s markets should result in a “trickle down” effect that addresses issues around poverty and provides underserved communities with access to vital services. This was the position of Tokunboh Ishmael, co-founder and managing partner at Alitheia Capital, captured as part of a series of case studies and podcasts produced by Disrupt Africa, commissioned by Boost Africa Technical Assistance Facility and financed by the European Union under EDF Thematic Blending and Cotonou Investment Facility.
Female fund managers are very much in the minority worldwide. In the US, only nine per cent of decision makers in the VC space are women. In Africa, no definitive numbers are yet available, but female fund managers are hard to come by – a big mistake for the VC world, as data clearly demonstrates a direct link between gender diversity in teams, and increased profitability. The Diversity dividend: Female fund managers in Africa series looks at firms that recognise this truth, and put diversity front and centre.
One such company is Alitheia Capital, which recently started deploying its US$100 million Alitheia IDF gender smart fund – actively looking to back female-founded businesses and companies serving female consumers. Co-founder and managing partner Ishmael was born in Germany, and grew up in the UK, but studied in Nigeria as she looked to connect with her parents’ roots and eventually returned full-time heading up a fund management firm.
Witnessing firsthand the extent to which prosperity and poverty exist alongside each other in Nigeria raised some important questions around venture capital models and social development.
“When I moved to Nigeria and I started working, and it was the first time I had been in Nigeria as a working adult and productive member of the economy, I couldn’t really believe the cheek-by-jowl nature of prosperity and poverty,” she said.
Responsible for deploying millions, even hundreds of millions of dollars, she asked: “If we’re deploying this kind of capital, how is it not trickling down to solve these problems or provide access to some of the essential services that these people really need?”
“Is it true that in addressing those needs you were being charitable, or could you address those needs by deploying capital and still drive for returns by also being intentional about the social and developmental returns. That’s really what struck the desire in me.”
In 2007, Ishmael co-founded Alitheia Capital alongside Jumoke Akinwunmi, with the intention of addressing the twin pillars of financial and developmental returns. The firm is proactive and intentional about supporting female founders and colleagues.
“By investing in diverse teams and being inclusive of female founders we can achieve superior returns. It has been shown that companies that have diverse teams are able to achieve over 20 per cent above the average company in terms of their returns,” Ishmael said.
Alitheia does not just invest in women for the sake of being women, but rather focuses on finding where there is an overlooked opportunity, and where money is being left on the table. The case for investing in solutions targeting female consumer spending is substantial, Ishmael said.
“If over 30 trillion dollars of consumer spend globally is decided by women, you need to be thinking about how they’re thinking, and you want to make sure you have the right people in the right seats to do the right sorts of innovations that will address their tastes and preferences. So you can’t be homogenous and think that you’re going to have the best innovation in the market. You need that diversity to ensure that,” she said.