Venture capital is built around finding outliers: the one company in a portfolio capable of returning an entire fund. But when you apply that logic to Rwanda, a landlocked market of fewer than 20 million people, and, as Magnifique Ishimwe puts it, no startup fits the profile.
Their revenue could be growing, but a billion-dollar exit is unlikely, so most investors walk away. While the company is investable, the venture capital model was wrong for it. Ishimwe, a fund manager at Development Bank of Rwanda, is trying to build a different model.
Based in Kigali, he runs a microfund with roughly $4 million in assets under management, deploying non-dilutive cheques of up to $100,000 into Rwandan startups. He is now structuring a larger venture debt fund to test a broader thesis: that debt, rather than more equity, is the missing piece of investment in frontier African markets.
The proposition runs against much of conventional venture capital thinking. Instead of searching for the next billion-dollar company, Ishimwe wants to back a concentrated portfolio of businesses capable of reaching $20 million and $50 million valuations, provide them with patient debt financing, and leave equity investors to support the next stage of growth.
