As a former hedge fund investor, Eva Yazhari is comfortable making the contrarian bet.
While other VC investors are swinging for grand slams with AI startups, Yazhari’s Beyond Capital Ventures is knocking down singles and doubles around the west Indian Ocean, one of the world’s fastest-growing regions. The firm invests in East Africa and India from offices in Los Angeles, Nairobi and Delhi.
Yazhari sees the “gap” in financing available in those regions – say, for meeting the 2030 Sustainable Development Goals – as an opportunity for investors who are able to go “beyond capital.” Beyond Capital has raised two equity funds to invest in companies in healthtech, fintech, agtech and mobility, from seed rounds and Series A, along with a small private-credit fund (for background see, “Now is the time to be an emerging markets debt investor”).
“The gap is where the alpha lives,” Yazhari told ImpactAlpha on the latest Agents of Impact podcast. The demographic tailwinds for companies serving young and fast-growing populations are offset by underdeveloped capital markets and infrastructure in the countries where Beyond Capital operates, changing the shape of what Yazhari calls “the innovation curve.”
“It just takes a little bit longer for the portfolio companies that we invest in to hit their inflection points,” Yazhari says. “They already have product market fit. But because of some of the challenges, the tails are a little bit longer.”
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Instead of one or two companies with 10x returns that can subsidize losses on the rest of the portfolio – the classic profile of many VC funds – Yazhari is looking for 3x – 8x returns across the portfolio. She says that translates to top-tier returns, along with positive impact on tens or hundreds of millions of lives.
“We just think about the modeling very differently,” she says. “Rewriting the rules means you’re playing a different game, and that allows a lot more possibility of returns.”
Beyond Capital Ventures is among the fund managers and general partners who are beta-testing ImpactSpace, ImpactAlpha’s new real-time intelligence platform. In the coming months, we’ll be spotlighting other GPs, along with the limited partners, or LPs, that are investing with them, and exploring their strategies for unlocking the alpha in impact.
Embedded finance
Yazhari has family connections to East Africa – her father grew up in Tanzania and her husband in Kenya – which she says has increased her awareness of business realities in the region. For example, she said, she doubts that the thousands of small retail shops in every city will soon be replaced by big box stores. Or that technology solutions will be adopted without a human touch.
One portfolio company, the Nairobi-based fintech Zanifu, lends to such small shopkeepers to help stock their inventory. The company puts loan officers on the trucks distributing goods to the shops across Kenya – a literal interpretation of “embedded finance” (see our Q&A, “Why ’embedded finance’ is emerging as the future of global financial inclusion”).
“What it means is that the loan officer can explain to the borrower what it means to take on leverage and debt, ‘If you borrow X, you will sell more,’” Yazhari says. “We’re always thinking about replacement versus enhancement, and Zanifu is an enhancement strategy.”
Another portfolio company, Kasha Global, is trying to meet some of the demand for women’s health products that was left unmet when USAID effectively shut down its operations this year. Kigali-based Kasha operates in Rwanda, Kenya, South Africa, Uganda, Tanzania, Nigeria and Egypt with both a centralized digital platform and “last mile” agents to distribute health and personal care products.
The company is “building the enduring supply chains that will last into the future, where you can’t take the funding away,” Yazhari says.
Having raised two equity funds and the debt fund, Yazhari says she’s not fazed by the current tough fundraising environment. Nor is she deterred by the evident bias she faces as the rare solo female GP in the VC world. In her own small personal portfolio, she says, she’s committed to only investing in female fund managers.
“I believe that if allocators are not putting money in female fund managers in a dedicated way, they are contributing to the problem,” she says. “I am happy to be a fund manager investing in East Africa, investing in India, investing in the next wave of global consumers, in an inclusive way.”
