Omar M. Khateeb 0:00
Steve, welcome back to the show everybody from beautiful Dana Point, in my favorite conference of all time. Every year I look forward to at the LSI emerging medtech Summit. We're here in Dana Point. It's 2024 and I'm joined by my good friend, so Steve, towia, who's the managing partner of a very interesting fund. It's called Rift Valley Ventures, correct? And essentially what you're doing is, and again, it's a beautiful name that I really love. You're bridging the gap in medtech and biotech to bring investments and fund companies in Africa, absolutely
Sewu-Steve Tawia 0:30
first. Thank you very much for having me. Really made a 20 hour trip to come over. It's really an honor to be here with you, Omar on this podcast. So maybe to give you a bit of insight, Jaza means in Swahili to bridge rift was usually for the Rift Valley, but also for the risk for investment in early stage investments across the continent. And the whole idea is really to support companies in the pre seed to series a stage in digital health, med tech and biotech on the continent. Fantastic,
Omar M. Khateeb 1:00
fantastic. So let me start by asking you this the thing that, if you look at macroeconomics and geopolitically in the world, Africa's GDP is on the rise, mainly because of the, you know, the resources that are in Africa, the population there. And more importantly, while it's a very diverse country, there's, you know, a diverse continent with a lot of different countries there, right? Culturally, there's this interest to launch a new company and bring innovations to Africa. Absolutely,
Sewu-Steve Tawia 1:29
absolutely, I think what, what transpires most of the time is that when you're out of Africa, and even within Africa, and we don't know our respective countries that much, so imagine somebody who's out there and you talk about Africa, they think it's one country, right? It's 54 countries, really,
Omar M. Khateeb 1:46
and very different, even within their own country, absolutely,
Sewu-Steve Tawia 1:49
absolutely. And so what we realize is that for us, one of the key reasons why we believe long term, 1520, years from now, we can build a an investment company that will be very successful is that there's really four mega trends that are really driving growth, despite, I would say, global recessions sometime and crunch in terms of capital, there's a huge underlying opportunity, a wave, or mega trends, I call them, that really makes The continent very interesting. One is massive population growth. So today we're 1.4 billion. It is expected to be 2.5 billion by 2050, and one, 50% of the population is urbanized as of today, and that's going to increase going forward. But guess what? The most striking number is really that Africa has a median age of 18 years old, median
Omar M. Khateeb 2:48
age. And compare that, compare that to the other places in the world. Yeah.
Sewu-Steve Tawia 2:52
So when you look at that, maybe United States, probably 47 right? Europe, 51
Omar M. Khateeb 2:59
and essentially, most populations there, I don't want to say they're dying off, but they are dying off, and that's and it's a huge issue, right? But in Africa, you don't have this issue, right? The population is growing,
Sewu-Steve Tawia 3:09
absolutely growing, population more than double the next 30 years. And the whole point is, the mega trend is really supported by that youth bulge. Hopefully it's not going to risk that's positive, right? And so all these young people need jobs create, you know, jobs and have jobs going forward. The other major trend that we see is digitization of the economy, right? Not as fast as other areas like the United States, but there's a huge trend in digitization across major industries, and one of the things that does is that we can leapfrog so instead of having to build rails, and we still actually need to, but that's another story, but having to build infrastructure the way it has been built so far, guess what a company like Starlink is enable anybody in The Bush, in remote areas to get access to 100 megabyte second internet. Now we bring in solar energy, right solar powered energy, that means that in a remote area can have a thriving ecosystem. People who have used solar power get data and then start developing innovations right there and then. You don't need to have the infrastructure that a lot of the more developed countries have had to develop to get there. And the last point is the the fourth major trend is the fact that, contrary to doom and gloom during covid and after where, you know, we're saying, oh, African economies are going to go bust, etc, etc. It has come down, but not because of covid, really, but more because of the cash crunch that happened after where, when the US interest rates went up, a lot of the money that was in emerging market was sucked in back to the US, right? And so today, when you look at the fundraiser. Amazing. Venture capital on the continent went from one point 2,000,000,005 years ago to the peak at 4.6 billion. Now 2023 venture capital investment on the continent went out to 2.4 depending on the numbers and which database you're looking at. And the trend is back up this year. So going forward, when you compare that to global fundraising and investment in tech, we're just bound to grow youth bulge digitization and also mobile using mobile youth bulge, and then urbanization, and these are the key metrics. So microeconomically, what we believe as Desiree ventures, is that we sitting on the cusp of a massive growth in digital health because of access to more data and devices, medical devices, homegrown and international, ones who can help, essentially help us achieve what we call, we call, better healthcare For all
Omar M. Khateeb 6:00
that's fantastic. Now let me ask you for Jaza rift, tell me a little bit about the team. You know, you guys are trying to convince, you know, LPs from around the world that they need they're going to park their money. They should park money with you, because you'll be able to deploying it. Tell us a little bit about the team, and a little bit more about the fun thesis in terms of not just the four trends you mentioned, but the kind of
Sewu-Steve Tawia 6:18
companies you look at. Sure, sure. Sure. Thank you very much for the question. So I'll our thesis is very simple. Today, if you're at home or in the office or in transit in between, if anything happens to you, we should be able to bring healthcare to you and take you to a healthcare facility when it's needed. So that means that when we look at the three verticals that we work on, digital health, metech and biotech, there's an opportunity to create some sort of conveyor belt between all these solutions to bring healthcare to you. And we have a number of example and so are really our thesis is to invest proof, 40 to 50% of our portfolio into digital health solutions, telemedicine, EMR, EHRs, ensure tech, helmet, mental health, etc, etc, are solutions that are driven by digital and then in medical devices. Our key criteria are around affordability, quality. They have to be us, FDA, CE, mark or local FDA approved, and also accessibility to make it accessible for all. And so our thesis is really revolving around investing 200 to 2 million in pre CC to series A startups on the continent that help us achieve superior returns across the continent by scaling those companies, but also through healthcare, positive healthcare outcomes.
Omar M. Khateeb 7:47
Fantastic. Jaza Rift, where are you guys headquartered right now?
Sewu-Steve Tawia 7:50
So we are a gplp in Delaware. Right Delaware structure. We're raising $50 million and the whole idea is to have an advisor in Kenya that advises the company and the GP and infrastructure in Delaware, so we're fully compliant going forward with most of the regulations that are in Delaware.
Omar M. Khateeb 8:11
So for the show, I'm very grateful that, you know, we've had more family offices and private investors, you know, listening, because, you know they may be coming from different industries, but they're interested in medtech. In the United States, we think about like medtech, biotech, and I know I might leave some cities out. So for my audience, don't get offended by some naming the big ones we think about the industry in the United States. A lot of those companies are concentrated in San Francisco, Bay Area, Southern California, Boston. Now one of the emerging ones is Miami, and then I would also throw in there, Houston and Austin. We look at the continent in Africa, when he when it comes to the medtech scene, biotech scene, where do you see a lot of the pockets of innovation emerging? I
Sewu-Steve Tawia 8:50
mean, I'm really great that you mentioned that it's really depending on, again, digital health, medtech or biotech. Let's
Omar M. Khateeb 8:57
start with medtech, medtech, and let's do biotech, and then digital health.
Sewu-Steve Tawia 9:00
So on the metech side, I would say for me, the top three or four clusters of really deep metech experience started with South Africa. South Africa has two main clusters from my experience. One is around Johannesburg, and then the other one is the cluster Stellenbosch and Cape Town, where there's a lot of innovation hubs around medtech and biotech, but a lot of medtech with partnership with international organizations. So South Africa is one with Joel, Cape Town, Stella, Bosch clusters. The other one is actually Kenya. So around Nairobi, there are a number of solutions that are being organized, and for the audience, we're organizing transforming African method conference in Nairobi, Kenya, 28/30 of August. So do reach out you want to if you want to participate. And then the third one, I would say, and the fourth one will probably be Ghana, to some extent, Nigeria, I would say. Again. And Nigeria is kind of the same level. But very clearly, Egypt has a huge opportunity in metech on the continent. Fascinating.
Omar M. Khateeb 10:07
What about in the biotech side? How does that disperse? Oh,
Sewu-Steve Tawia 10:11
biotech, by far, South Africa and the cluster killed, Stellenbosch, Cape Town is the dominant so there are a lot of and they've been at it for a long time. And funny enough, not many people remember when covid hit. Some people were saying, Oh, this South African disease. We're hearing that. Yeah, I remember that. But actually no, because South Africa has a long history on producing top level research, and they were able to detect the strains up front and
Omar M. Khateeb 10:44
your infection rates, I think, were lower during covid as well, because there was a period that people were saying, like, why? You know, if you look at Africa, especially South Africa, the infection rates were really low. And then that's where, like, a lot of theories came out, like, is it because, you know, Western they have higher higher vitamin D, for example, these kind of things. It's
Sewu-Steve Tawia 11:05
really because it was mature detection thanks to the deep biotech knowledge in South Africa, right? And so South Africa number one on biotech. I would say there's a kind of challenge between Egypt, Tunisia and Ghana, to some extent, but I would say that are quite leading companies in all these, these three countries. Notably, I don't know if you know, but there was a major exit on the continent. Last year, biontech bought for seven, $50 million Insta deep of Tunisia, and that was a major exit, but as a major one, not many people talked about it. They would always prefer to mention FinTech and other sectors, whereas there were major exit. And so I would want to mention couple of companies that I feel really are pushing the needle on the biotech side as well. Within Egypt, there's now a scientific really doing great work. There's remedy also in Egypt. And then in Ghana, you got emachi biotech and revna Biosciences doing great things. In Nigeria, it's coming, but I think they went through a few challenges, so I'm waiting for a few new companies to come out. Finally, maybe on those point medtech, biotech and some digital health. What I've noticed over the last four years is that actually founders who were maybe in FinTech, ecommerce, retail, tech led reg tech, a lot of them are actually with clear insight coming to healthcare. And so I'm seeing more people, founders, second, third time founders who are actually thinking, actually, I could make money in healthcare on the continent, and they're setting up companies to do so. I have a very striking example from Kenya, Ghana. I want to
Omar M. Khateeb 12:55
hear this. I want to hear the example. Tell me, oh, no problem.
Sewu-Steve Tawia 12:58
So there's a company that came up to me, and the founder exited from trips, which is a logistics company between Nigeria and Ghana, and he started looking at the healthcare ecosystem, talk to me about it, wanting me to come as an angel to set up rivian healthcare. And so he launched a company. But these gentlemen doesn't have any healthcare experience, right? So he's a second time founder, and they build a team to support a healthcare facility, and they build a whole solutions around it. So, and it's not the only one, as I said, the number of people who are coming to me. So actually, I know you're a healthcare fund. Can you tell me about this model or this idea I have, and I'll just give them a feedback, right? One key thing that is critical to understand is that now people are realizing that they cannot copy and paste a model from outside and bring it to the continent. So for instance, in biotech, and I'm using biotech, usually loosely in my conversations, because when everybody thinks biotech, it's really life science clinical trial drug development over a number of years, until you get one out of maybe 1000 molecule that's going to make it right? We're actually thinking more tech bio, so data driven research based on the data we collect through the various companies that we have that really going to fast track the drug development down there, but really driven by data science machine learning to collect the data and calculate probabilities of success of one molecular over another before you get to the wet labs. Fascinating,
Omar M. Khateeb 14:38
and so that that's interesting, because, at least for an investor, rather than having 1000 molecules, which is going to put a longer time on, maybe 10 years, maybe you have half that, maybe even less, with a much shorter timeline. Because I think in the biotech realm, the acquisition part is so important, because you need acquisitions to happen. Because, you know, you. Lot of these larger companies like Mark Pfizer and everything, are the ones who can fund these, like later phase trials to get these to market. Sometimes your next trial is going to cost $500 million a billion dollars, right? Yeah, absolutely. That's nice, and that's the first time I've heard that, which is tech bio, but it makes so much sense. Look,
Sewu-Steve Tawia 15:18
I don't know why I've been talking about tech bio for more than a year, year and a half, and suddenly I even know that tech dot bio domain name has been bought, and so many other people are talking about that. But for us as a fund, what we thought was that if we were going to do really life science, biotech, instead of being a $50 million fund, which should be 500 right? And again, as an emerging manager, to convince lps on one Africa, healthcare in Africa, early stage healthcare in Africa, where you're doing digital, med, tech and biotech, right? I know it's hard bogging, but I'm convinced that the investment opportunity is there. That's why we went at it. And so for us, when we look at for we're investing in revenue Biosciences in Ghana. Revna is has built a level three facility in Ghana, one of the only ones in West Africa. They're doing CRO work. They're developing top notch level of clinical trials with different organizations. There's even a news that came up. They're working with AstraZeneca, for instance. And the whole idea is to build a data set, sorry, a data set with African data to start driving drug development down the road. But data true, it's not biotech, it's tech bio, yeah, and it
Omar M. Khateeb 16:42
makes sense to, especially in the last couple years, you know, chat GPT really popularized things, but with these LLM models coming out, and the way that AI can essentially be applied, you know, very small teams can essentially use these to, you know, essentially scale things out. And I think using it on on molecules, is one area, but the other is just, you know, managing the company SOPs these things, because Absolutely you stretch this dollar out. Yeah, exactly, that's right, exactly. Actually.
Sewu-Steve Tawia 17:07
Can I tell you why biontech bought Insta deep, please. Insta deep was created by Karen beguerre, a Tunisian French gentleman, went to the top schools in France came back to Tunisia. Co founded the company, studied with some friends and started working on machine learning, AI models for different industries, one of the biggest actually customers the German government to manage all the trains, logistics, like all the way the trains in Germany synchronized with each other, managing the whole thing. And so they started in vertical, different vertical industries, but where they got a breakout was during covid. Biotech was looking to try to develop a new drug fast, and they had been working with instability on a regular basis. But essentially it's because of the data science, machine learning deep expertise that instadeep has, that biontech managed to develop their job much faster and then say, look, actually we need to buy your house. That's the story. And for us as a fund manager, we actually have a internal project that is also looking for grant funding called Project mileso melezo in Swahili, means information or detail, and the whole thesis is to say, Look, why don't we build an internal tech team that's going to be machine learning and data driven to one help accelerate our investment process As an investor, but also have that backbone to support our companies, to use AI machine learning to accelerate their growth. And so that's where we're also working on we believe that with, as I mentioned to you, with the technologies available, we can bring healthcare to you faster and bring you to healthcare facilities that is needed, and by doing all the work we're doing on the machine learning AI side want to do internally, we can string companies faster, identify their potential, faster risk also, but also help them transform the self using machine Learning. AI for if it's digital health, identifying much faster, maybe cataract issues with machine learning and AI med tech, same thing we can identify maybe medical device as a service or software as a medical device, rather also and then all same thing on tech bio. Now that I've defined tech bio, I can talk about it. Yeah, no, absolutely,
Omar M. Khateeb 19:41
absolutely. You know, your your fun thesis is very interesting in the sense about, you know, within Africa, finding ways. And it's not just Africa, by the way. I think the one thing that happened during covid Is that we all got used to doing things from home, including our healthcare. And so when that, when that was done, nobody. Has the interest to go to a hospital for anything, not even a clinic, yeah, for myself, even one with my primary care. Every time I have an appointment, every year, I ask, can we just do this virtually? I don't want to. I don't want to leave even some of the blood draws that I did, I had somebody come to my home. I don't want to go anywhere. So knowing that when you look at the African population and all the different problems that can be solved in Africa and applied to the rest of the globe, right? Because the problems in, you know, in here in America, whether it's in a rural area urban, is the same as it is in Africa. There's so many different ways to problems to solve absolutely so what are some areas that you your fund is looking to invest in in terms of problem solved, feel free to mention companies by name. No, no
Sewu-Steve Tawia 20:46
problem. So look, it actually illustrated the one of our thesis in terms of building for Africa but also for the world. So that's what I realized also, is that once we started talking to people about this thesis, people reached out to us, said, Look, don't you have a medical device that is CE Malco, USD, usfd approved. That is quality and is affordable, that we actually can take transfer to the US. What does it tell you that means that the solution we're developing for low resource environment actually applicable anywhere else?
Omar M. Khateeb 21:24
And you said something very in a low resource environment? Exactly yes. Because even in the US, that's the one thing, whether it's a strategic or investor, is trying to understand, is that, okay, this problem that we're gonna solve, can it be done in a low resource environment? Absolutely, right, absolutely because, considering all the macroeconomic factors happening the world these days, I mean, you know, it takes a lot of money to take a medical device to market, yeah, but you want to be as efficient with that capital as possible.
Sewu-Steve Tawia 21:48
Absolutely, the dollar, the unique economics around all the things is very critical. And I think you mentioned one of the things that also we advise with the partnership we have with Phil Gora Africa, who has deep expertise into the regulatory approvals. We help companies locally go through that regulatory approval process and help them navigate and figure out, okay, how should I apply to any of the local regulatory approvals, regional ones, but then have a pathway to hack to international ones as well. And so usually, for instance, if you're a company from Kenya, you've managed to have local regulatory approval and then Regional One, we advise you actually go and get cumark or usfdo or ISO certification before you get any of those ones, because that prepares you for scaling even on the continent. So once you get a new SFDA, when you go to Nigeria and they say, Oh, my product is USFDA approved, they don't ask you that many questions, right? But if you say it's just Kenya approved, just it's Kenya approved, they say, Okay, do we have a partnership? Do we go? They ask too many questions. So it helps us fast try and go to market for a lot of these companies. That way interesting.
Omar M. Khateeb 23:00
I have, let's say, a hypothesis, and I want to present it to you, but I want you to see, I want to see what your thoughts are on this. So in the past, for medtech companies, it was always a common path where you say, you know we have to, again, be capital efficient. You know you want, you need to raise money, but you want to keep you don't want to keep raising money and diluting, right? So the thought is, you take your device, you do your clinical trials in Europe, get CE marketing, get some traction, some some quick ones, everything, and then use that as a bridge to come for prime time in the US do well, and then you get bought out. The problem today, no offense to Europe is that CE marking is now just as difficult as getting, you know, getting through the FDA, it's, it's, it's, it's gotten more complicated. Yeah, do you feel that leaves an opportunity for medtech? If we say, You know what, we should go to Africa to do this right? Or even investors say we should invest in Africa, but we can accomplish the same things faster in a low resource environment, yeah? And then either, at that point, we can partner up with an acquisition from a strategic Yeah, or make it an easy move over to the US,
Sewu-Steve Tawia 24:10
yeah? I think that it has to be a two pronged approach. So I'll explain why. A lot of times these the opportunity set, because of the modernity of the US market is much bigger, right? Because if I have a device that is usfd approved, it can go from New York to San Francisco to Portland to Houston. It's not going to make a difference, right? It's the same same product. The challenge we have in our continent is that unless you're already usfd approved or CE mark, which is indeed harder and harder, because that's also the feedback I've had, then it's easier for you, obviously, to scale to Africa, because you have the usfd approval, right? The key thing you have to understand, though, is that. That if you have USFDA, you come to Nigeria, two 20 million people, you have a pretty sizable market to go after, which is great. Next one is for each country, you still have to go through the local process. Even if you have UFC, it fast tracks it, we still have to go. What I've always said is that if we can have a Pan African body that gives us approval. So if you have usfd, you go through the Pan African body and they're working on it that says, okay, usfd or CMR, and then you come to our own Pan African body, up, you know, that says, okay, you've done that. There we are loose resource environment. Is it affordable? Because your prices cannot be ours, therefore we give you approval on that basis, so that that means that it's much faster to scale going down the road. And they're working on it, I must say. But I think there's a pathway that has to look at maybe on the pathway. I mentioned something that we have. So today, Jas is ventures advisory and labs, and I'll explain what. So the Ventures is the fund, typical GPL, B, 10 year fund, etc. You know, like vanilla advisory is transactional advisory, where we provide hospitals, clinics, specialty care centers on the continent with fundraising transaction advisory. So if any of those entity want to raise $5 million plus, we can help them do transactional advisory. The third one, which is desert office labs, is really for us, our internal but also more and more external idea generation engine, where we have in the venture studio raising money for precise, a launchpad, and generally what we call a corporate Vc as a service. And I'll elaborate so the Launchpad is really for any company. Let's say you're coming from South Africa. You want to launch in Kenya. With the partnership with V grow, we can help you one have initial customers, have do introduction, help you to local registration, etc, to launch in Kenya. Same for Ghana, say, from a few other countries that we're working with. That's the launch pad. But it's not only for companies in Africa, but also international ones. So I've spoken to a number of companies here who are interested in bringing their solutions to the continent, and I said, Okay, fine, we can help you. But you come to us, we help you launch the same way. So if it's Ghana, we're going to set you up, do local registration, get you through approvals, get you to initial customers. And the last one is corporate Vc as a service. Essentially, we had different conversation with, you know, conglomerate in some you know, strategic investors who are saying, Look, we don't have time to do early stage. We give you the money. Or we help us set up a corporate, internal VC fund, corporate VC, where you bring us the deal, and we invest with through an investment committee as a service. So, you know, they pay us to do deal sourcing according to the mandate, and we help them find deals that correspond to their to their objective. And then within that also, we're doing more and more advisory on, you know, the big farmers who are interested in coming to the continent or already there, but want to diversify the relationship to see if the other markets that can tap into, and also we're doing that market entry, fantastic.
Omar M. Khateeb 28:30
And what I love is that you know, while your name jazz riff indicates you're bridging a gap and bridging the Rift, absolutely, but you're essentially serving essentially as a central hub to Yeah, to Africa for all these different things. I know you love all your babies, but you know, in kind of wrapping up, and again, I appreciate you coming on and spending time with us. Which one, which one are you most? I don't want to say excited. You're excited about all them, but you know, of what you just mentioned, what's kind of like the big, the big initiative for you this year, in 2024 all of them, of course, yeah, but tip of the spear, so
Sewu-Steve Tawia 29:04
no, no, for sure. For sure, 2024 is I want to close my $50 million fund. That's the main objective, right? Essentially, because I believe that with more than 4700 unique companies were different across the continent. We just talked touched tip of the iceberg, and this is for us, just scraping data, having relationships, etc. I believe that this number can be double or tripled in next two to three years, instead of in terms of investment opportunities for homegrown startups. But also I strongly believe that if any companies from out there wants to come to the continent, we can be the investors to support them, to scale right, preferably preceded series A beyond that, that would mean we need to raise another fund. But for now, let's focus on the task at. Work and build the ecosystem around that fantastic
Omar M. Khateeb 30:01
and then just just a few questions about that fund. You're trying to raise 50 million, you know, what? What kind of investors are you looking for? What check size?
Sewu-Steve Tawia 30:10
So I think for us, minimum check size for, you know, high net worth, neutral family office foundation is going to be 100,000 the institutionals, depending on if they're strategic or not, we can take as two as a million, essentially, and really for us, we want alignment of interest. And people are truly interested in, you know, funding a more commercial venture with a I don't want to know name myself an Impact Fund, but we truly want to create better, healthier outcome. Our tagline is just our adventures better healthcare for Africa and the world. Well, just
Omar M. Khateeb 30:56
in sort of wrapping up for anybody who wants to learn more, where can they learn more? Where can they learn more? Where can they connect with you? I know you're active on LinkedIn, absolutely
Sewu-Steve Tawia 31:03
no, yeah. So connect me with me on LinkedIn. Go on our website. jazarift.vc. Yeah, J a z a r i f t (dot) v c .
Very soon we're going to launch a new one, .com (jazarift.com) .
Omar M. Khateeb 31:29
I'm so happy that we became friends, and, oh, met each other. I'm looking forward to having you back on the show to give updates on the fund on the on the venture side, and, of course, get some of your portfolio companies on our shows.
Sewu-Steve Tawia 31:40
The really appreciated. Thank you very much for the time. Omar, my pleasure. I really appreciate absolutely thank you. You.
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