Kenyan operator Safaricom is apparently planning to set up two venture capital firms with the aim of buying into promising technology start-ups. According to local press reports, Safaricom wants shareholders to approve the establishment of the two firms during its annual general meeting on 28 July.
This plan – to buy into seed-stage and growth-stage start-ups – may be well-timed. Although the Kenyan start-up ecosystem has a good reputation in Africa, there’s been a funding drought has reportedly seen dozens of Kenyan start-ups close.
According to the East African news service, the incorporation of the two special-purpose companies will mark an operational shift from the Spark Fund grant that Safaricom unveiled in 2015.
Its aim was “to grow a portfolio of strategically aligned tech-enabled start-ups for deeper commercial partnership and/or acquisition by Safaricom whilst transforming lives”. However, it does not seem to have got back as much value as it put in.
It’s not entirely clear what will happen to the earlier scheme, but it does seem that one of the two proposed companies will take over the Spark Fund, but as a wholly owned subsidiary of Safaricom (Spark Fund was run by an unincorporated trust); this will help strengthen administrative and governance processes.
The other limited liability company pitched for incorporation will be investing in growth stage start-ups and initiatives that are strategically aligned with Safaricom’s mission for a financial return. Thus, any gains from the portfolio of investments will be capitalised back to Safaricom.