Ghanaian-born Kris Senanu is the Managing Director of Access Kenya Group, one of Kenya’s largest Internet service providers. Senanu, 41, started off his career at Access Kenya 14 years ago as a sales executive, and rose through the ranks to his current position. Throughout his career life with the company, he has been a key resource person in the organization’s growth through listing on the Nairobi Stock Exchange as the first publicly listed ICT firm, its subsequent de-listing and a later compulsory buyout by Japanese IT group Dimension Data Holdings.
But Senanu is also a venture capitalist and is the founder of Blackrock Capital Investments- an investment company that invests primarily in entertainment clubs and African-themed restaurants in East Africa. Blackrock Capital's portfolio includes prominent nightclubs in Kenya such as Tribeka and Sky Lounge and Nairobi's most popular West African restaurant, Mama Ashanti Restaurant, amongst others. He is a member of the African Leadership Network and sits on the Growth Enterprise Market Segment (GEMS) board of the Nairobi Stock Exchange.
I recently caught up with him in Nairobi for a brief chat where he recounted his story and spoke a bit about tech entrepreneurship in Kenya. Excerpts below -
You’re a Ghanaian, but you’ve decided to stay in Kenya for the last two decades. What’s your story?
In the 90s, I came from Accra to visit my dad who was a lecturer in Nairobi. I was fresh out of High School in Accra, and I was on my way to North Carolina in the United States to study for my undergraduate degree. But when I came to Nairobi, I found that I couldn’t even deal with the cold weather here. North Carolina is a very cold place, so since I couldn’t deal with the cold here, my dad told me that I couldn’t possibly survive the cold weather in the states. He asked me to find another University here. So I applied to the United States International University and got admitted. So I had to stay here in Kenya. To be honest, I was never really interested in going out of the continent to pursue my studies. I liked the atmosphere of the University, there was a vibrant international community and the lecturers were good. Then I went into student politics and became Head of student affairs. After my graduation in 1995, I went back to Ghana to reunite with my friends, but most of them had still not completed their University education because of strikes in the public Universities. It was a bit of a challenge for me to get a job there was well, so after a short while I decided to return to Kenya. I started working for Swift Global – an Internet service provider. I worked there for 5 years. I left afterwards because Swift Global was offering only dial-up services, but I felt that the future was in non dial-up. I was right because within 3 years, dial-up was dead because obviously a lot of people prefer to have dedicated connections. So I joined the Somen brothers (founders) to set-up AccessKenya. I was their second employee. We were about focusing on the corporate market, giving the clients what they wanted which was non-dialup, better customer care and reliability of connectivity. This was 2001. I stayed on in the company and worked my way up to become Managing Director.
As one of AccessKenya’s earliest employees, I imagine you owned quite a bit of shares in the company?
Definitely. When AccessKenya went public in 2009, the management had a massive employee share ownership plan in place. So a lot of employees were shareholders. Also, since I was one of the earliest employees, I was allocated a good number of shares. I also bought quite a lot of shares over time. I strongly believed in the company as I do till this day, so I kept investing. You have to believe in what you’re doing. AccessKenya was acquired in 2013 by Dimension Data, so I cashed out.
So you have no shares in the company now?
No. I’m just an employee of the company.
You own a venture capital company in Kenya- Blackrock Capital. What inspired you to start investing in Kenyan entrepreneurs ,and what sort of businesses constitute a key part of your portfolio?
One of the things I noted for a long time was that 70% of Small Medium Scale Enterprises (SMEs) fail within the first 3 years, and the rest that survive, only survive after 5 years. And the key question that people ask is why. Instead of just looking at the statistics, we need to understand the root of this: a key reason is inadequate funding; secondly, entrepreneurs don’t usually have access to the right kind of support. When I talk about support, I’m talking about support for the entrepreneur- strategic support whereby the entrepreneur has the ability to bounce off ideas to someone who has either done it before or has sat on boards of companies that have done it before. So Blackrock Capital came up to fill this void. I used to mentor a good number of entrepreneurs, so at some point, some of my mentees would ask me: “Why don’t you invest in my business?” So, rather than investing as an individual, I set up Blackrock Capital to be the investing vehicle. But rather than just providing these entrepreneurs with capital, our real value-add is in mentoring these entrepreneurs and helping them find the right strategic support so they can grow because different types of industries need different value systems or business models in order for them to grow effectively. For now, we invest primarily in the entertainment industries in East Africa.
How do you select these entrepreneurs and SMES?
70% of my decisions would depend on the entrepreneurs themselves- whether they are very passionate about the business they are in. A lot of people go into business because they see there is an opportunity to make money, but that value system of making money wears off at some point because when more competition comes into market or when they hit major obstacles, they’ll pull off because their objective was merely financial. When someone is passionate about a particular industry, w they are ready, willing and able to surmount all obstacles because the passion is bigger than mere financial gain. Of course, we also look at the business model in terms of return on investment or return on capital and then analyze the industry specifics to see growth trends and prospects. For now, most of our investments are focused on the Kenyan entertainment and leisure industries - so we have quite a number of investments in some West African restaurants in Nairobi and Night clubs, but I'm not going to disclose their names now.
How are you funded, and considering you are a Managing Director of a leading Kenyan company, how do you find time to manage your portfolio companies?
Blackrock Capital is funded with my personal capital. As for time management, I pretty much leave it to the entrepreneur to run the business. At the end of the day, I am the investor, not the entrepreneur. So I let the entrepreneurs call the shots. A 15-minute conversation with an entrepreneur I invest in is usually all I require in a month.
How much stake do you take in any business you invest in?
Usually between 30% to 33%.
The informal Sector/Enterprise segment of the Kenyan market employs about 7.5 million people and contributes up to 20% of the country’s GDP .What do you feel are the key ingredients that would make it a key driver of the Kenyan economy on the backdrop of dwindling production capabilities and diminishing tourism revenues?
Access to capital is one; access to human resource development is another. Kenyans are very hungry for education, information and growth. I don’t think there is enough entrepreneurial education. I think it’s crucial that entrepreneurs who play in the informal sector of the economy get better access to more courses and trainings on entrepreneurship and business development. That’s key. We need more incubators, investors, and angel investors – more people who have run successful informal businesses going into the Growth Enterprise Segment market on the Nairobi Stock Exchange. There needs to be more leading lights in that industry so people can be encouraged to put more investment and spend more time on it.
As a leading executive in the Kenyan technology space, do you think Kenyan tech ventures are getting the attention they truly deserve and are investors pouring in the money?
There are a lot of angel and crowd-source funds that are happy to invest. Some of the challenges have been that people have ideas that haven’t been well-tested or well-introduced to the market, and so there’s a lot of capital chasing well-tested business models. And there are not a lot of transactions being done so the closure range from the private equity and venture funds into Kenyan tech ventures is very little. The money is hanging around. If you go to the iHub, you’ll find a few people sitting on $5 – 10 million in capital for venture funding. But then again, these funds are mainly foreign funds which means that the entrepreneur may not necessarily end up getting the right kind of investor, and the terms of which the cash comes may not be favorable to the entrepreneur. For example, the investor might want the entrepreneur to relinquish intellectual property rights. I saw an article the other day about Vodafone U.K trying out M-Pesa in South Africa. It didn’t work out, but the way the article was written, they talked about M-Pesa which was created by Vodafone through its subsidiary, Safaricom. And that is a lie. But that’s not the truth of the matter, and the Kenyans know this. It was created by Kenyans not Vodafone staff. And so, Kenyans are going to lose a lot of money because indigenous entrepreneurs are not necessarily willing to sign off their intellectual property rights in order to raise money.
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