Why Our Investment Firm Decided to Launch a Mini-University
By Matthew Davis, CFA | Mon Aug 28 2017
When we set out to launch RENEW in Ethiopia, we aimed to build a company that would help shift the West’s focus from giving to investing in Africa (what nation can attribute its success to a history of giving?), and people thought we were crazy. When we chose to target companies that were stuck in a financing gap between micro-finance and larger private equity, our investment colleagues shook their heads and said “no way. It’s too much work.” But when we decided to launch a mini-university focused on building CFOs for our portfolio companies, and helping executives learn the fundamentals of planning and execution, everyone said “now, that might just work.” I am happy to say they were finally right.
In May of this year, after years of observing, watching and making a healthy amount of mistakes, we packaged up all of the things we had learned and designed and kicked-off the CFO 100 Program and The Executive’s Program. For three months, we took a dedicated set of Ethiopia’s finest and most determined executive teams through what is covered over several years at a university, including topics from the CFA Program, ACCA papers, multiple board meetings, and a lot of consulting secrets and tips often only privy to companies with large budgets.
During the Executive’s Program we focused mostly on the art of execution. Reflecting on my experience as a consultant, I was struck by the things I learned that were never taught in business school: How to run effective meetings; using my calendar to drive multiple projects forward each week; write a concise email that would get opened and elicit a response; plan and launch a project; evaluate and kill a bad project; design a meaningful performance metric; design an achievable but aggressive goal; communicate my plans to an executive team; etc. When I sat on my first board as an investor in a company in Ethiopia, I quickly realized that I was spending a large amount of my time explaining the why, what and how of these tools of execution. After multiple formal and sidebar discussions with executive teams and boards of the companies we invested in, the request was clear: This training is more valuable to us than the money, so do more of it. And thus the Executive’s Program was born.
One floor down, in the finance department, the same thing was happening but with the finance manager and his or her team. These were sharp people with degrees and designations. But they didn’t understand why or how to close their books each month, build and use a budget, constantly update their 13-week cash flow, decide whether to raise prices, or master the art of collections. After years of back-and-forth sessions cleaning up excel files and asking “why, why, why, why…” we decided to co-launch the CFO 100.
Time will tell whether the Executive’s Program and the CFO 100 will truly impact the bottom line and drive returns to shareholders, though I am happy to report that the board meetings I attended, and the monthly financial reports we have received from our portfolio companies, just weeks after these programs finished have been a night-and-day difference.
What have I taken away from this experience? When you set out to do something that has never been done and the world is telling you you’re crazy, you must always innovate and try something new. The business and operating models that work in California may not work in Ethiopia. We love this challenge at RENEW, and hope the CFO 100 and Executive’s Program will be something we look back on 20 years from now and say “now that worked!”
Renew Capital is an Africa-focused impact investment firm that backs innovative companies with high-growth potential. Renew Capital manages investments made on behalf of the Renew Capital Angels, a global network of angel investors, foundations and family offices who seek financial returns and sustainable social impact. For the latest on investing in Africa, subscribe and follow us at our social links below.