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A few weeks ago, I had the privilege of attending DEMO Africa in Casablanca, Morocco. DEMO Africa is a yearly event that brings together entrepreneurs and investors from across the continent of Africa. This was my first time attending and it was a great primer into the African entrepreneurship ecosystem.

My favorite session was the infrastructure summit which was hosted by the US State Department.

In it, we discussed some of the core systems underlying the African tech ecosystem and an overview into what infrastructure projects have succeeded (and failed).

I came away from the conference with the following insights that I’m planning to keep in mind when evaluating investments across the continent of Africa.

Many Telecos Don’t Connect to Google/App Stores
I talked with an entrepreneur who built a coworking space and accelerator in Morocco. He exclaimed that while Morocco has a number of trained engineers, it was difficult to advise them to build apps when many consumers don’t have app stores. I was so surprised — how does someone get a phone without one of these app stores built in? Through research, I realized that the only reason our phones can operate app stores is because we provide them with financial information. App stores don’t work without credit cards.

Most telecos that operate across Africa have different financial payment plans to fit their users more effectively. These innovative systems don’t yet cooperate with Google Play and the App Store.

This is slowly changing though. Orange just launched direct billing in Egypt allowing the market to access the app store. We’ll see how this continues to evolve.

Why this matters: The “traditional” application ecosystem is stifled across the continent. This is a huge opportunity to invest in an alternative ecosystem.

Data Storage For Most Consumers is Extremely Limited
Unlike in the US where unlimited data plans are the de facto option for many cell phone owners, large data plans in many African countries are still relatively abnormal. This has made consumption of entertainment (especially in Nollywood!) difficult. Many of Nigerian soap operas uploaded onto YouTube went unseen by Nigerians due to their data plan constraints. To combat this, Google created YouTubeGo which allows users to download videos when connected to wifi to consume later.

But first, the phone has to come equipped with the YouTubeGo app because (as I mentioned before), many phones do not have Google Play or App stores.

Why this matters: Investing in high-data usage tech companies will likely shrink your market size significantly.

Getting from One African Country to Another is Hard
DEMO Africa featured entrepreneurs based in Togo, Coitivoire, Ghana and others. I learned that their travels into Morocco were really difficult! Multiple shared that it was cheaper for them to fly to the US/Europe than across Africa.

When digging into this, I learned:

“The continent is home to roughly 12 percent of the world’s population and will be responsible for most of the global population growth over the next three decades. But it accounts for just 1 percent of the world’s air travel market. The flights that do exist are often more expensive than routes of similar duration elsewhere in the world.”
Many African countries are mired in protectionist policies that make traveling across the continue extremely difficult.

Why this matters: If you are hoping your company will expand across the African continent, take into account that each country operates very separately.

No Great Customer Acquisition Channel
One of the most common concerns that I heard from African investors was: access to market. The word on the street is that Jumia, despite it’s critical acclaim online, is not experiencing great traction. There is still a lot of distrust in ecommerce. So a focus from investors has turned to B2B. Many consumers are excited about working with large African enterprises to improve experiences.

Why this matters: If you are investing in a consumer company, go really deep with the entrepreneur on their G2M strategy.

Repatrition Just Getting Started — Long Way to Go
Another common concern I heard from investors was: there are not enough African entrepreneurs are investing in Africa. On the other hand though, I was surprised by (and excited to see) that many of the startups at DEMO Africa were launched by Africans who have recently returned to the continent after living, studying and working abroad. But there is still a long way to go.

Why this matters: The lack of investment in African startups by African entrepreneurs is felt mostly on the angel/Pre-Seed side. This has ripple effects across the ecosystem.

I hope this helps others get more information on the African ecosystem. I’m extremely bullish on investing in this fascinating and rich continent. Precursor has made two investments here already — Tastemakers and Buycoins!

I’m plotting my next trip to the continent soon. This time to Lagos! If you are hosting a tech conference in Nigeria, let me know. I’d love to make it!

I spent last week in Washington, DC getting to know their startup scene. We, at Precursor, have yet to invest in a company based in the nation’s capital so we don’t have much exposure to the area. I wanted to get to know the scene to better understand the dynamics to prepare us for future investment.

It was a fun and packed trip! Along the way, I met with founders at the Pre-Seed stage all the way up to the Series D stage. I met with ecosystem builders and investors. I traveled across the entire city from U Street to Capitol Hill to Arlington.

Here are a few of the things I observed:

1. Tech looks different in a city that runs well.
In a city that has a higher population density than San Francisco with only about 200K fewer people, it was remarkable to see how smoothly things operated in Washington, DC. I saw this show up in almost every technology I used.

When I got to my AirBnB in DC, two things were surprising to me. The 1st was that it was so large. I didn’t actually need to use a coworking space at all because I had enough space to do work at home. (And the few times that I ventured out to a coffee shop, I was able to find space to charge my computer and could use the bathroom without a code (*gasp*).) The 2nd was that it was a public housing unit. Compared to public housing units in the bay that can immediately be recognized as tier 2, this public housing unit treated its tenants with respect and dignity. I felt like I was staying in a luxury high rise! Think of how different AirBnB could look and feel if people from all income levels had attractive homes to rent out on the platform.

When I pulled up google maps, it was almost always quicker for me to take public transit to my destination instead of ride hailing. Over the course of my week in DC, I took a Lyft twice and both times were frustrating due to how slow they were. Between the bus and the metro, I was able to get places quickly and conveniently. Consequently, the rides on Lyft seemed to be steeply discounted. It cost me $13 to take a 30min ride in DC, whereas in San Francisco, it costs $13 to take a 10min ride.

When I saw people on Bird & Lime scooters pass me by, I saw young black men riding them near Howard and old white women riding them near Capitol Hill. The equal distribution of access to technology is remarkable compared to what I see in San Francisco where Birds are wiped with poop in the Tenderloin. Howard also is home to one of the few accelerators called in3.

2. Tech is still “weird” here.
I got the sense that the folks who are building tech companies are still seen as outsiders. The “cool kids” were able to secure the illusive Legislative Assistant role for the Congressman of Georgia. I describe these jobs as illusive because they really are. When I was an undergrad at Duke, my dream job was to work as a Legislative Assistant for anyone! I applied to over 100 jobs and didn’t get one.

For the folks who can’t secure these really competitive jobs, they could always work for a startup. They are risky yes, but so is joining a political campaign. In DC, the entrepreneurial spirit is alive and well, it’s just dedicated to the political arena. The successful, DC based later stage startups that I met with told me that many of their recruits came from San Francisco and I assume it is to combat the selection bias that can occur when your industry isn’t the hottest one in town.

I get the sense that people in Washington, DC are still traditionalists who look to change the world through the system that is already in place. They do not yet see tech as a real system and if they do, they don’t see it as a place to impact society in a positive manner.

3. Nobody cares about San Francisco.
This is actually my favorite trait of DC. Nobody there seems to know about or care about what is happening in the valley. I know many folks knew this already as is pertains to our Congresspeople (*insert Facebook Congressional hearing here*). But this seemed to be true of a wider variety of folks. For example, somebody asked me in earnest if I knew what was Upwork.

For companies that are building in very competitive industries, this naivete is terribly destructive. For companies that are building in industries that are either 1) extremely revolutionary or 2) taking advantage of DC’s unique traits, I think this mentality is invaluable.

Take FiscalNote for example. It might have been able to have started in San Francisco, but it couldn’t have grown as fast and as large as it has without its location. It sits 3 blocks away from the White House and <10 from Capitol Hill. It is able to attract the best and brightest who are committed to changing the world because it is building a tech company that works within the legislative system. These are the types of companies that will continue to succeed in DC. And I think the country — especially right now — is ripe for them. With accelerators like Higher Ground Labs, people are starting to build tech companies that can change city, state and federal government and I’m excited to see what comes next! So can unicorns grow in DC? Which gets me to my conclusion. Can the next Unicorn get started in DC. I say yes. It is a city full of entrepreneurs looking to change the world. They are just not sold that tech can fulfill that promise.