Secha Capital August 2017 Update: New Investment & New Hires
Summary
The two key themes of todays update are: 1) How were refining the Secha model and 2) Updates to the Secha intern/extern team.First, weve learned a lot and refined the way we provide patient capital to established African SMEs in the missing middle and how we address the management gap.In terms of where we apply this patient capital, we are convinced that the large, fragmented FMCG and agribusiness sectors are the right place to focus, but weve added a macro filter: Secha pipeline SMEs should be in verticals that can be described as either niche, growth or dormant, with an opportunity to invigorate.Our first two operating companies represent these two buckets: nativechild, natural haircare for ethnic women, is part of a niche, growth vertical in a large market. And we can grow the brand via nascent channels where authenticity can win out Stoffelberg, biltong that South Africans can be proud of, is executing a customer loyalty strategy in a gigantic snack market beloved by South Africans but where consumers have been taken for granted by the large incumbentsThese companies went zero to one because they had great product/market fit in a large market. Together, we can go one to ten in part by focusing on the opportunities inherent in the topologies described above.Second, we have witnessed human capital arbitrage in action. Secha has welcomed the skills and training from the likes of Bain, McKinsey, Duke, SAB and Pick n Pay. When our team applies the knowledge and skill-sets from large corporates at nativechild and Stoffelberg, and when its dovetailed with the capabilities of the opco entrepreneurs, it creates immense, tangible value.This key change in the flows of human capital, getting high-powered human capital to forego MNCs and instead to join SMEs, will become a sustainable force multiplier for job creation in Africa.