Innovative Financing Solutions for African Biotech Start-Ups and SMEs
One writer’s take on the BIOAfrica Convention Session FI002 on August 24, 2020.
By Seth Young, B.S.
This webinar was moderated by Mr. Mohan Vivekanandan, Group Executive of Strategy at the Development Bank of South Africa, and it included the following speakers:
Ms. Polo Leteka, the chairman and founder of IDF capital
Dr. Nick Walker, the cofounder of OneBio, a biotechnology investment group
Mr. Fredell Jacobs, CEO of the South African Startup Index and Chief Startup Officer of StartupSupport South Africa
Ms. Jain Vithubi, a representative from the U.S. government as the Regional Director for Africa in the Development Finance Corporation
Mr. Hilton Lazarus, business unit head of the chemical, medical, and industrial minerals for IDC
The session centered on the lack of available capital to encourage development of the biological sciences in Africa, despite the wealth of well documented and impactful research in the region.
Dr. Nick Walker began the session by highlighting what he believes to be the three most important factors in the success of a biotechnology company: good science, appropriate ecosystem, and early funding. The science must be well researched and verified; the intended ecosystem must be able to support the business; and adequate sources of early funding must be available to get the company off the ground. This third point constituted the major point of discussion, as Dr. Walker proposed that the science in Africa is generally strong and the ecosystem has room to expand with the continued success of new start-ups in the market.
Ms. Leteka focused on the African Venture Capital incubator that she co-directs. This incubator receives shares in companies in return for investments in new biotechnology. The program supports those it funds with a 9-month support period prior to graduation and potentially 1.5 million Ren. Fifty businesses have started the program and achieved a 20% graduation rate.
Mr. Fredell echoed Dr. Walker regarding the importance of early investing in biotechnology companies. He stated that most failed endeavors arose from lack of capital and not from market issues. He emphasized Africa’s many unique resources, even outside of South Africa, including a wealth of genetic sequencing data and native flora and fauna. The principal market concern he addressed was in the area of regulation.
Mr. Lazarus also agreed with the need for early investment into biotechnology companies in Africa. He asserted that African biotechnology companies will likely play a major role in the international community. Such companies must consider their unique resources when expanding into international markets. He underscored that biotechnology companies must have a vision for expansion to launch themselves successfully and set the precedent for a thriving ecosystem.
Ms. Vithubi closed the session by providing insight into the factors the U.S. seeks when investing in African biotechnology startups. The U.S. Development Finance Corporation has interest in investing after companies have completed “Series A Funding” – that is, after companies have successfully used both seed funding and a first stage of outside financing. In general, the U.S. aims to fund proven technologies that are being implemented on the African continent with a particular interest in innovations in genomic sequencing and the study of the human genome.
This seminar successfully painted a picture of an Africa bursting with ideas, especially in the biotechnology sector, that just requires the economic push to fully realize its potential. Africa benefits from a wide array of unique scientific resources that, with responsible research, could be used to benefit both the continent and the globe. The speakers in this seminar indicated that South Africa will likely be a major hub of African innovation from which other countries can learn. Once large biotechnology companies start taking hold in South Africa, they can foster further investments in biotechnology across the continent. However, foreign investors seem interested in companies with some established market, so African innovators may have to turn towards African investors to help establish themselves. African incubators such as Ms. Leteka’s African Venture Capital and Mr. Jacob’s Startup Support may be just the answer.
Mr. Young is an undergraduate student double-majoring in Chemistry and Biology at Emory University in Atlanta, GA, USA. In addition to working as a research assistant in Dr. Dennis Liotta’s lab, Mr. Young is also a nationally certified emergency medicine technician.
Mr. Young has no financial involvement or interest in the Bio Africa Marketplace or products mentioned therein or elsewhere within the BioAfrica Innovation Hub websites. His role in the Scientific Resource Hub does not constitute endorsement or recommendation of specific products or suppliers mentioned within the Bio Africa Innovation Hub websites.