Last Friday, Nairobi Garage hosted an “After Office Hours ” chat session with Kris Senanu, the Managing Director- Enterprise at Telkom Kenya. He is also a successful venture capitalist with diverse investments and is also a judge on KCB Lion’s Den, a televised local version of the Shark Tank show, in which entrepreneurs pitch for investors to fund their companies.

Excerpts from the Q&A  

Balancing Work and Investments: He has a fun day job at Telkom, but he’s an insomniac and is able to do investing work from 6 PM to midnight. He started investing as a “terrible hobby “when he was 21 and he has a high appetite for risk.

He’s Not Just Invested in Tech: “Investments depends on what is the value to me, the community, country and profitability.” He started his first business Yaka Yeke which was about bringing West African fashion, which he liked, to East Africa. Later he got a partner and started Mama Ashanti restaurant because he wanted to eat West African food and saw there was a demand for that.

He doesn’t own any company. He created Blackrock, with his partners, which he doesn’t manage, to consolidate and oversee his investments. They take a maximum of 33% of equity and let the other shareholders deal with the heavy tasks of managing companies while they provide guidance.  He puts in money based on plans, and milestones and has people who check on those. While he may go serve drinks at one of their bars, he does not dwell on the daily numbers but will read reports late at night.

Funding Decisions: He said a key thing for any entrepreneurs seeking funds from investors was to know what type of money to seek. It was not about “do I need equity or debt?” and what amount to ask for, but also about what you need at any particular time – one is for operational expense, the other is for long-term expenses. If you go for equity, there is some money that is good for you, and others to avoid – and some companies get money and right from month one of the new funding, the business or environment changes.

He invests $10,000 to $500,000, and takes on riskier investments – and if it is an area he can add value and scale, it will get investment. He also looks at how passionate an investor is  “are they willing to do this for 10 years or is it just a side-hustle?”Spreadsheets are powerful tools that guide, but also confuse with numbers that can obscure real basic business. Investment decisions take up to six months as they evaluate, build relationships with, and get to understand the entrepreneurs.

Scaling Companies:  His main challenge in the last few years has been scalability – as he says there are good businesses around, but they don’t have the ability to scale. While many do okay in a single market or single country, when numbers are good, investors want to see the businesses go multi-market or multi-country.

He said Nairobi has a lot of venture capital, angel funders, and private equity investors – all with money and who are willing to invest in businesses, but that the lot of money is chasing the few businesses that show scalability, and the ability to be sustainable and profitable in the long-term.

Foreigners Getting Start-Up Funding in Nairobi: On this, he said capital will flow to places and spaces where the capital feels comfortable, and entrepreneurs in Nairobi are going to have to make people more comfortable investing big money with us – and to change that narrative about “capital flowing to foreign faces in local spaces.” He said that it could be a case that some local businesses seeking investors were not fully baked and were perhaps at a stage where they were better off going of debt (convertibles/loans) rather than equity funding. He mentioned an episode of the Lion’s Den where someone mentioned Cellulant in a way that offended him. He said that many managers at Cellulant were former colleagues of his and he had watched the company grow for many years, overcoming many tough times as it ventured across Africa. He said entrepreneurs have to, know when to raise capital, know what to ask for, and that Cellulant was now attracting big funding rounds because of their strategic funding decisions and people have to get better at that in Nairobi.

His Work Philosophy: “if you work your whole life for money that is sad; you have to find purpose.” His is to invest in someone else’s visions and help them grow their companies – At Swift, he was employee number 7 and the company grew to 150 staff, while at Access Kenya, he was employee number three, after the founders. He endeavours to grow businesses, create employment, make profits, then exit and move on to the next one.

Night Club IPO? “I have a philosophy is to create one million jobs” but he Knows that is not going to happen through companies, but if he can enable, through his cash, other entrepreneurs to create 10 or 20 or 50 jobs, he will do it. From 2009 he was saving $200 per month, along with some friends who planned to attend the World Cup in South Africa. But he really had no interest in watching soccer and after his wife persuaded him to meet with a young entrepreneur, he ended up giving him the money he had set aside for the World Cup. “I liked the guy, his swag and ideas.” That young man was Amor Thige and the idea was to put money into a nightclub called Skylux Lounge. It later became the top club in Nairobi for several years and changed the nightlife scene.

The Skylux experience led him to invest in another group Tribeka which went on to open five nightclubs – Tribeka, Rafikiz,  Zodiak, Fahrenheit and Natives, and they later added Ebony and Marina Bay at English Point, Mombasa. At its height the group had a turnover of Kshs 87 million a month, rounding out to a billion shillings a year – but what mattered to him more was that the chain was employing 472 people, which was more than the 380 jobs at Access Kenya, a listed company. They also considered doing an IPO for the group, seeing as Kenyans who liked drinking would also like to own a piece of the company, and some of their clubs cost as much as Kshs  60 million to build out.

Where to Find Investment Information and Data? He said there’s so much diversity in Nairobi and cited a few conversations in sports bars about agribusiness that are leading him into investing in macadamia nuts. He is now doing research, scouting for companies and the best places to grow macadamia over the next few years –“it all depends on who you hang with and the conversations you are having”. He said you can get data on private companies from the right people who have no reason to embellish data, and added that even public companies in Kenya and South Africa audited by top firms are later found to have cooked their books.

Why Telkom Kenya?: He said he entered the telecommunications business while there was a giant monopoly, the Kenya Posts & Telecommunications Corporation (KPTC) – that had low-quality, high prices and poor service – and which constricted the growth of communications at the time. So when Access Kenya was sold to Dimension Data he saw working to revamp Telkom Kenya as his next challenge – to grow a viable challenger that disrupts, gives choice and opportunity in the era of another dominant company (). He sees this as his national service to give back to the people of Kenya, through the government, and the ecosystem, and that while people in the room may not appreciate it now, they will in five years.

Decision-Making: 

• Most difficult decision; firing the smartest person at the company, but who had the worst attitude. it was tough but it was for the greater good of the business.
• Best decision; sticking to technology. Tech brings change and motion process every day, He’s never bored, he wakes up to have fun. It started while he was selling clothes and Wangari Mathai’s niece asked him to join her at Swift Global and use his sales skills to also sell devices and he’s never looked back.
• Kris Senanu on his worst decision/regret; not having children earlier.