Zakaria Hersi is an Investment Advisor at UNDP and a Managing General Partner at Chama Ventures. He has over 15 years of experience in building and scaling businesses in emerging markets. His mission is to drive impact and innovation in Africa and beyond. Zakaria Hersi supports entrepreneurs, organizations, and communities in solving the most pressing challenges of our time.
As the former GM of Africa & Middle East at Truecaller, he grew the company’s top five markets until its IPO. Zakaria expanded user base, revenue, and partnerships across the region. His experience includes setting up and managing operations, teams, and ventures in Kenya, Colombia, Mauritius, Sweden, and Nigeria. He has worked across various sectors and industries. Zakaria Hersi is also an active angel investor and co-founder of Framtid, an investment collective. Framtid backs promising startups like Nothing, Dema, Sava, and Qopla.
Through this article, Zakaria Hersi shares his journey and his lessons about the how-not-to’s of angel investing.
Highlights
Tell me, how do you actually get into angel investing?
This question trails me wherever I go, echoing within the circles of friends, colleagues, and followers. Even my good friend, Kim Fai Kok, once penned down his thoughts on this elusive subject. But today, I’ll take you on a different ride—a journey through the how-not-to’s of angel investing. Through my stories, I hope you gather not just knowledge, but the wisdom to weave through the intricate tapestry of angel investing.
The Allure of Crowdfunding
It was April 18th, 2015. Bitcoin was trading at $235, having fallen by 3% that day. While the world was gripped by the enigma of this new digital currency, my grasp on it was tenuous at best. Instead of delving deeper into understanding Bitcoin, I got enticed by the world of crowdfunding. Enter Safello, a startup on a crowdfunding platform that promised a daily-use platform to exchange Bitcoin. They made it to an IPO in 2021. Sounds like a success, right? But here’s the kicker: had I directly invested in Bitcoin instead, my returns could have soared by 10-20x.
Mistake: Jumping into crowdfunding without a deep understanding.
Lesson: Due diligence is paramount. Understand where and why you’re investing.
Conclusion: Platforms might change, but the foundational principle of investing remains—know your game and even better if you can be hands-on.
The Nigerian Fintech Wave
Back when Nigeria was on the brink of a fintech revolution, I was immersing myself in building a marketplace. Word was out about two emerging payment startups looking for funding and some of my friends in the game got to invest very early on in: Flutterwave and Paystack. While opportunities knocked, I decided to fund my cousin’s fashion marketplace as I assumed they had experience in fashion that would translate to building a digital marketplace for fashion. Fast forward, I missed the fintech train and got caught in another investment debacle with a different fintech platform, one that involved not just my money but also my family’s trust and was because of hype from family friends and FOMO over losing a chance to jump on the next boom.
Mistake: Letting emotions dictate investment choices.
Lesson: Separate business from personal relations and emotions. And if people so far off the business are aware of a boom, then you probably reached the peak.
Conclusion: Investment decisions should be driven by rationale and research, not by FOMO.
Digital Remittance and the Tale of Hawalas
2015 was, it seems, an eventful year. I was introduced to a group of young visionaries aiming to digitalize money remittances between Sweden and Somalia. Curious, I sought advice from a family friend in Dubai who ran a significant “Hawala.” His skepticism was evident; he believed they would need more than $2 million to get off the ground. Fast forward again, his Hawala went bankrupt, and those young visionaries? They founded TransferGalaxy.
Mistake: Relying on disrupted industries for insights on potential disruptors of their own market.
Lesson: When a startup is a category maker with product-market fit, it’s wise to back them.
Conclusion: Visionaries often see the horizon that many can’t. Their passion and belief can sometimes be the best indicators of their potential. Always have love for the TransferGalaxy team and their biggest fan.
The Co-working Space Betrayal
Flash to 2020, the pandemic year. A VC friend from our shared co-working space in Nairobi excitedly pitched a super app company. The assurance? Many other “smart” investors were already on board, and to them, I was already on board, so they should be on board. So expedited and signed a SAFE. But reality unfolded differently. The founder vanished, leaving behind unpaid rent and a trail of unanswered emails. The crowning jewel was an audacious request for more funds for a new venture two years after saying that he used our funds to launch this new venture in a new market.
Mistake: Basing decisions on others’ choices without personal due diligence.
Lesson: No matter who’s investing, always conduct your own research.
Conclusion: Trust but verify. It’s essential to have a personal touch in every investment decision.
The Phone Case Chronicles: A Bonus Tale
2015, again. In Cape Town, amidst Swedish entrepreneurs, a casual pitch about a phone case company took place. While I thought, “Who’d opt for fancy cases when they’re cheaper in China?” One of them invested and made a fortune with “Ideal of Sweden.”
This doesn’t carry a lesson. It’s merely a testament to my journey—imperfect, filled with misses, hits, and lots of learning.
In retrospect, my investment journey has been a roller coaster. With over 17 investments in startups and an investment fund since these stories, I’ve learned the importance of community. Collaborative efforts like Framtid, where diverse competencies blend, are where the magic happens. Staying true to your investment philosophy is crucial.
