Meet the Investor: Brian Odhiambo, Novastar Ventures

A failed entrepreneur turned pretty successful investor, Brian Odhiambo is West Africa director and part of the leadership team at Novastar Ventures, which manages more than US$200 million across two venture funds, with 22 companies in its portfolio.

Odhiambo grew up in Nairobi, and after a childhood spent travelling between boarding school in Kenya and his father’s home in Dar es Salaam was accepted into Yale to study Political Science and Economics. Via management consultancy, he wound up working for an original African tech titan.

“In college, my friends and I often said that we were the people who were going to change the continent, but when the time came to take the leap, we all drifted into consultancy and banking. I was in NYC pursuing a career in consulting, when an old contact asked me to come to Lagos and join him as part of the founding team of a fast-growing consumer startup that wanted to be “the Amazon of Africa”. I jumped at the chance and we built what became Jumia,” Odhiambo said.

“It was a difficult grind but also great fun – we worked every day until late in the night, lived paycheck to paycheck, slept in the office and ate suya and Indomie for breakfast, lunch and dinner. This experience was a crash course on how to run a business, build a team and raise capital.”

While Jumia was no doubt chasing a big opportunity, Odhiambo said he had always felt more motivated by solving fundamental problems facing a majority of Africans, and not just a select few.

“I left Nigeria to set up a renewable startup, which was an idea I’d been exploring with some friends from college. We raised around US$0.5 million and moved to Zambia. We grew the business across Zambia and had great commercial success, however we failed to gel as a leadership team and the company failed after 1.5 years,” he said.

“I then moved to Kenya and ran another early-stage retail business, expanding its presence across Nairobi. At this point, I was beginning to reflect on my experiences and where I would provide most leverage as a half-successful entrepreneur. That was when my path with Novastar crossed.”

Readily admitting, then, that he became an investor because he failed as an entrepreneur, Odhimabo saw an opportunity to help others build from the ground up and become a financial and strategic partner to entrepreneurs who were going to shape the future of the African continent.

Novastar Ventures was six months old when he joined in 2015. The firm was borne out of the idea that venture capital could be used to drive significant impact for people and planet while simultaneously achieving attractive commercial returns for investors.

“However, unlike traditional financing houses, we’ve built a firm that is a reflection of the founding teams we seek to invest in – entrepreneurial, pioneering and constantly learning and evolving, all underpinned by deep passion for our mission which is to identify and catalyse Africa’s new entrepreneurial stars building innovative solutions to the biggest challenges in the region,” Odhimabo said.

The firm now manages more than US$200 million across two venture funds, with 22 companies in its portfolio and teams in Nairobi, Lagos and London. In May 2020, it closed a US$108 million fund for investments in East and West African startups, while it recently became a partner in the open-sourcing initiative around the African Tech Startups Funding Report 2021.

“Novastar is a generalist fund – we are sector agnostic but segment specific. While I cannot claim to be an expert in any specific industry, I enjoy spotting patterns across different sectors and companies. This allows me to apply learnings across our portfolio and help entrepreneurs avoid repeating mistakes. It’s also a risk diversification strategy for the fund, which works well for us,” said Odhiambo, who currently sits on the boards of a healthcare company, a mobility platform, a fintech business, and a weather app.

Though he says all of Novastar’s investments are standout in their own way, an example of an investment that helps quantify what “makes Novastar special” would be Nigerian mobility platform MAX.

“We joined the business early, leading its Series A. At the time the mobility sector was very heated and I’d seen many “similar” companies in Uganda, Kenya and Nigeria. We had a thesis about what we thought could work for mobility in Africa but hadn’t seen anything that was the right fit both in the business model and from a team perspective,” Odhiambo said.

“MAX was the first company that seemed to understand what it would take to win in the market and was approaching the problem innovatively. In addition, we liked the team’s value-driven approach to business and their openness about mistakes and lessons learnt. My first meeting with Tayo, one of the co-founders, was in Domino’s in Lagos and he took half a pizza home! We always talk about the importance of shared values between Novastar and our entrepreneurs including: pioneering, humility, courage, heart for customers and employees, grit and the ability for us to build a trustful long term relationship.”

Other key Novastar investments include mPharma, TeamApt, iProcure and Poa Internet. Odhiambo said the plan has always been for Novastar to establish a local presence run by predominantly local and locally based team members.

“Nairobi was hub one, Lagos is hub two. I can’t overstate the importance of being on the ground and we plan to continue to follow the places entrepreneurs congregate. We have lots of conversations with our East Africa-based companies who want to grow to West Africa and are looking for introductions to local partners, and vice versa. Being locally based allows you to see beyond the headlines,” he said.

“For example, there’s currently a huge buzz around fintech in Nigeria, and for good reason, they are fixing some important problems, but there’s a lot more innovation happening in other sectors. If you are flying in and flying out, don’t have that deep local network or those informal conversations regularly, you’re not going to see what else is happening until it hits the news and it might just be too late.”

Odhiambo believes interest in Africa is growing – and “it’s about time”.

“It’s unfortunate that it has taken this long for people to realise the potential and even then, I don’t think we’re quite there yet in terms of how people view the market opportunity. The share of investment capital flowing into Africa is still in the lower single digit percentage realm,” he said.

“We want people to see there is genuine opportunity here for private capital that will drive entrepreneurship, long-lasting impact and the economic growth that countries on the continent need. Seeing year-on-year growth of capital coming in looking for genuine returns and backing companies that can transform the continent, that’s progress. What we need to unlock now is local sources of capital so Africans can back Africans at scale. This would be the panacea of a mature investment environment in my view.”

Due to COVID-19, Novastar spent most of 2020 concentrating on ensuring its existing portfolio companies were in a good place.

“We slowed down new deals because we really place a premium on being able to meet people face to face. We decided we weren’t going to do a deal unless we were able to meet that entrepreneur in person,” said Odhiambo.

“Now that markets are reopening and vaccines are available, it’s great to see face to face meetings picking up again, and we’ve had a very busy H1 2021 with more on the way.”