Novastar responses to IDC questions on BII

1. How does BII’s strategic outlook compare with that of other comparable overseas institutions?

·          Novastar Ventures has Limited Partner (Investor) relationships with six other Development Finance Institutions (DFI’s).  Like all such institutions, BII struggles to marry the frequent changes in political priorities with the long-term investment cycles most likely to deliver desired outcomes, thereby compromising strategic efficacy at times. Comparatively however, BII’s approach is at the more flexible and pragmatic end of the spectrum, and in our interactions with them they have been better than most at moderating the tendencies of DFI’s towards bureaucracy - maintaining transparency and trusting their team to make decisions rather than reducing them to functionaries.  As a consequence, BII demonstrate a better strategic understanding of markets and operating environments than others, helped by their footprint on the ground and recruitment of international staff with relevant lived experience of those markets.

2. What due diligence does BII undertake prior to making investment decisions and how does this compare with best practice?

·          We have experienced BII due diligence on both fund investments and direct co-investments.  In the case of the former, they manage the diligence process well, identifying key risks and using this analysis to guide their effort towards the most relevant questions.  They try to reduce the friction of the general hygene due diligence.  On co-investments, we have found BII to be more effective than their DFI peers, making quicker decisions and concentrating their diligence work on an analysis of the human factor risks (which is the most relevant risk in venture investing)

3. What current investments does BII hold?

·          Within our funds they are invested in Novastar Ventures East Africa Fund I, and Novastar Ventures Africa Fund II.  They are current direct investors in 4 of our current portfolio companies: TeamAPT (MoniePoint), mPharma, TradeDepot, and Iprocure.  They were previously an investor in New Globe Education, but have now exited this investment.

4. How effectively does BII manage funds following its initial investment?

·          At fund level they do this better than many of their peers amongst DFI’s in our experience, encouraging their fellow LP’s to adopt the most commercial and practical approach.   However, in direct co-investments, they are risk averse in the face of negative publicity or political pressure, wanting to pull back in unhelpful ways rather than supporting the companies as they deal with the situation.

5. How does BII evaluate the impact of its investments?

·          This is a BII strength.  They are collaborative, they demonstrate thought leadership and rigour, combined with pragmatism.