Deal origination has stayed relatively constant in Africa over the past couple of decades, and private equity firms have reported completing roughly only 1% of the leads they explore. Recent improvements include firms opening offices in key cities, hiring local talent or even consuming and analysing the limited market studies available. Nevertheless, deal origination and business development is relationship-based and very high contact with a lot of travel, meeting too many people, ultimately attending a lot of events – and not enough women.
Business across the continent is often linked to events and industry gatherings, which rely heavily on network associations and social groups. This lends itself to customer acquisition limited by geography and ‘who you know’. Deeper and more intricate deal-making is sometimes cemented on the golf course or dimly lit bars – places often bereft of female employees.
A lack of women in investment roles
Female representation at the leadership level is, at least in part, a reflection of the social and cultural nuances in the regions that these firms operate in. The private equity, private debt and trade finance industries have already been accused of not employing enough women. A recent report by Prequin shows that women only make up 9% of the senior roles in private equity funds, and a similar split can be expected across other asset classes.
“The nuances of the African investment ecosystem makes it more difficult for women to thrive as deal originators as it excludes people who are unable to travel often (and at short notice).”
Many efforts are currently underway to not only improve the lives of women across the African continent but also actively fund women-owned and women-led businesses. This requires innovation in business development and deal origination and further buttresses the need for teams – with women as a part of the origination team – who understand the climate and are able to better source opportunities. Many firms are signifying a willingness to adopt tools and practices to empower and equip high performing women in these job roles.
According to an Oliver Wyman report, global fund managers have reported 20% higher returns from funds managed by a gender-balanced senior team versus those that are male-dominated. As we all strive towards better performing deals across the continent, tools to move teams towards being gender-balanced should be taken seriously. Ana Costa, Partner at Oliver Wyman, underlines this with the view that “the first step is establishing the right tone from the top. Managers need to establish improving gender diverse outcomes as a priority. Set targets, track progress, and hold yourself accountable—comply or explain.”
The nuances of the African investment ecosystem makes it more difficult for women to thrive as deal originators as it excludes people who are unable to travel often (and at short notice). Deal origination and business development is usually the responsibility of the more senior members of the firm, and their positions are usually strengthened by how much new business they can bring to the firm. These roles are typically less occupied by women, and more so more difficult to fulfil by women – highlighting the further need for innovation.
Africa has been rightly named the final frontier market, attracting a lot of capital and efforts to grow its economy. This presents many opportunities for companies who are able to improve deal flow, provide insight and improve visibility on what deals are available on the continent. This can be evidenced by the increase in Africa-focused events and industry associations.
Status quo deal origination
One main takeaway from conversations at these business hubs is the fact that not all of these events and associations are relevant or fruitful in lead generation. A lot of this can be attributed to the fact that each attendee or participant has limited knowledge of the quality of leads available nor the relevance of these leads – so more often than not, you are left with a pile of business cards and a hefty expense form which can be discouraging.
More recently, event organisers have shared delegate lists ahead of events and associations have made more effort in collecting and updating information on its members. However, more often than not this is not enough and provides an opportunity for technology to play a big role.
Moving from the physical to the digital
Technology has the power to illuminate and ease the deal-making process in many ways. Many platforms have been developed to handle electronic messaging, develop business models, assist with tracking deal performance and more – but origination has always been done traditionally. There is clear merit in a deal origination platform that aggregates supply and company information with rich enough data points for investors and interested parties to source opportunities.
This could offer many advantages:
- Save time chasing obviously dead leads
- The ability to filter and be more direct with origination strategies
- Reduce cost and time spent on unfruitful travel or event attendance
- Increase success rate as you can be more specific and targeted about which opportunities you pursue
- Help level the playing field as opportunities can be assessed on merit and with little external influence
More importantly, tools and platforms make deals more accessible. They unlock opportunities that could be missed in crowded event rooms, or on the road with patchy network service – and could provide an edge for originators with their ability to bring in new business. Anyone with a laptop, the right credentials and a mandate will be able to source opportunities equally and fairly. For example, 23% of investors on the Orbitt platform are women, compared to an industry average of 9% as reported by Prequin.
Personal network and relationships will always play an important role across international business communities and more so in Africa, mainly because these social/business networks lend a certain level of credibility to business dealings. This physical touch adds an element of validity and trust to the business ecosystem, especially in a space where the data doesn’t provide the comfort or intuition you would expect from someone with years of experience. However, the additional capacity that technology provides can assist professionals in focusing on the more value-add aspects of deal origination.
“For example, 23% of investors on the Orbitt platform are women, compared to an industry average of 9% as reported by Prequin.”
Practically speaking, the ability to source potential business opportunities from the comfort of your office or home is especially powerful when you consider the factors at play. We can properly assess the opportunities beforehand, and be more prepared when approaching potential clients – boosting confidence and preparedness when seeking new customers. It also provides an avenue to do some research on the company and its operating market ahead of setting up any meetings.
The Digitisation of trust
Additionally, a platform provides a neutral and safe space for both parties to track conversations, securely share information and coordinate deal processing in a controlled manner. The ability to share details and book calls or meetings can assist in managing workflow, tracking deal efficiency and providing an accurate report on overall origination performance on an individual and team level.
Another helpful attribute of tools and tech include the ability to pinpoint the right person in the target organization for that specific discussion. Additional context and background on the individual and the company provide for a more informed approach when engaging the company for the first time – similar to networking platforms like LinkedIn.
Having good visibility of the deal ecosystem and the market insight around companies can bring about a more informed origination strategy through being able to map out the landscape and prioritising which leads are worth pursuing. This adds capacity to any origination team. Moreover, the majority of industry practitioners interviewed by Oliver Wyman believe they would benefit from gender diversity in their teams as it would provide a better position to access key female entrepreneurs in their regions of interest.
There is a huge multiplier effect when a woman is empowered, and this is true not only at the portfolio company level but also at senior management and origination levels too. Hiring and promoting women to senior levels is just as important as ensuring that they have the tools and products to maintain and excel at these roles. Digitising the deal origination process can do just that.
Ahanna Anaba is Transactions Executive at Orbitt. To date, Ahanna has overseen the screening process for over $1.3bn of transactions on the Orbitt platform. She has also managed the investor matching process, helping to generate term sheets for platform users totalling $390m.