Seven years ago Kenyan Heshan de Silva’s parents gave him KSh. 10,000 (US$116) which he used as capital to start his first business.
De Silva, who was 18 at the time, started a company which bundled insurance cover with long distance bus tickets. By the end of the year, the business had made KSh. 90m (US$1.05m).
He then embarked on his next venture, that of investing in innovative ideas. Today De Silva runs VenCap Kenya, a venture capital firm that is invested in 22,000 people and has created 17,000 businesses across the world. The fund is part of The De Silva Group.
VenCap Kenya invests an average of $10,000-$15,000 into innovative ideas and offers its investees support in executing the ideas. So far, the businesses created by VenCap and its investees employ about 70,000 people.
“When we started this we didn’t want to be the Abraajs of this continent that do five deals a year and they are happy. We wanted to impact people on a large scale. The mandate of our group is to reduce poverty from 60% to 40% in this country within five years. We can’t do that with five deals a year.”
According to the 25-year-old entrepreneur, VenCap has had a 70% success rate, with three of its companies crossing the $10m valuation mark. One of its businesses is an advertising company that offers GPS-enabled advertising on public transport vehicles for KSh. 150 ($1.74) and whose model has been patented in dozens of countries worldwide.
Another successful business is The Gourmet Nomads, which distributes more than 1,000 lunches to businesses in Nairobi every day for KSh. 150 ($1.74) per meal. Offering affordable services, be it in advertising or packed lunches, De Silva says, is important because it appeals to a wider range of customers.
“I never take a majority stake in a business… usually around 25%-35% and that’s it. Even if we are financing an idea completely, we will never cross 40% ownership,” he says, adding that “trust is everything in our line of work”.
VenCap has invested in various sectors including agribusiness, robotics, advertising, hospitality, fashion, rural road construction and hardware.
“The really nice thing about it is that we are not looking for the next big thing. We are not looking for huge businesses. We are targeting the poorest people in this country. These are people who make $2 or less a day. They are not having massive dreams of owning [a five star hotel]. So if it’s just a need in your street, or neighbourhood… and you create a business that can employ three or four people and make money at the end of the month, that is gold for us.”
A growing portfolio
De Silva enjoys being involved in a wide range of sectors. “Because of my ADD (attention deficit disorder), it is so handy that I am invested in so many things. I can be talking about the robotics we are invested in and switch to a green house then to a road that we are building. How can you ever get tired when you have got a clothing line in Miami and another in Kenya? It’s a lot of fun. I love what I do.”
However, he says managing the thousands of businesses is difficult, comparing the group’s portfolio to a zoo. Yet more entrepreneurs are keen on joining.
“The number of requests that we get every day is phenomenal. Our company email is shredded. Managing all that and sticking to our principles is important,” says De Silva, adding that he relies on his team of 400 who listen to pitches and ensure that ideas presented to the company are executed.
De Silva says his group takes lesson from the success of Toyota which employs 1m people in Japan. VenCap has planned for 50,000 businesses a year and has access to up to $2bn over the next five years. The firm works in partnership with two New York-based funds.
“There are 11m people here unemployed who are sitting somewhere wondering what they are going to do. Imagine if you can impact a fraction of those people, how fast would this country grow across many sectors?”
The VenCap boss is motivated by the “drastic” change in the lives of his entrepreneurs who just a few months ago struggled to put food on their tables but today can afford to dine at high-end restaurants, educate their children and create jobs for other people.
However, this instant success can have negative effects.
“Some of the people went into drugs when they started making money. That was something I never wanted to create. I don’t want to make you rich so you can go and waste your life. I want to make sure that people are responsible,” says De Silva, adding that the fund works closely with its entrepreneurs to avoid such cases.
De Silva knows about spending money irresponsibility, having experienced the same at the age of 23.
“When I started making a decent amount of money… I bought a house in Lavington (upmarket suburb in Nairobi) for KSh. 170m ($1.9m). Then I bought a house in Palm Beach Florida, and then in South Africaand in Sri Lanka. Then it became planes. It was ridiculous. There was no limit to how much I just wanted to throw at stuff. It was very irresponsible. It went full circle and I decided to live a simple life. I don’t need anything fancy. I believe very much in stewardship.”
Before his spending spree, De Silva faced even bigger challenges. He dropped out of an American university after a short stint, started abusing drugs and attempted to kill himself. He eventually managed to turn his life around and stopped using substances.
De Silva enjoys encouraging other youth and motivating them to aim for the stars regardless of their past. He hopes to change the perception that one must have a university degree to succeed in life.
“If you don’t have a degree, if you don’t have even a high school diploma, you will succeed if you plug a need. You don’t require a piece of paper to be certified to do business,” he says.
“I think education enables you to open your mind to a lot of possibilities but at the end of the day you are very narrowed to what you have studied and you lock out everything that is going on around you. The counter to that is that people like me are not narrowed to anything; we see opportunity everywhere.”
He advises the youth not to wait “for a golden ticket” to venture into business.
“Don’t scratch your head saying there is no financing. With what you have, what can you do to achieve your goal? Investors like people who have taken that initiative.”
Passion, he adds, is a must have.
“You really have to love what you do. If I care more about your business than you do there is a problem.