Investing in Medtech and Healthtech in Africa | LSI USA '24

Kwame Ulmer  0:05  
say, well, it was yes,

Sewu-Steve Tawia  0:07  
we made it.

Kwame Ulmer  0:09  
We made it. You made it all the way from Accra

Sewu-Steve Tawia  0:12  
to the 20 hours in total,

Kwame Ulmer  0:15  
I think you get the award for distance. longest travel. I think Scott, maybe? Oh, really?

Sewu-Steve Tawia  0:22  
Wow, wow.

Kwame Ulmer  0:24  
But this conferences quickly has gone from national in scope to international. And that's a testament to Scott and Kelly and the entire team at LSI. So thank you for having us this morning. Indeed.

Sewu-Steve Tawia  0:37  
Thank you very much.

Kwame Ulmer  0:39  
And we're going to just have three parts to this conversation. The first is I invite Sayward to give us an overview of the market in Africa, and any particular insights he wants to share, then I'll have a few questions to dig a little bit deeper. Are there particular markets you like South Africa versus Ghana, for example, we'll go through a few of those questions. And then if this sparks any thoughts, reactions, questions from the audience, we'll open it up to the audience for questions. And I have the fancy timer so I know when we'll get a little. Everyone will be ready to convene this show. But for for now, say we please help us understand the market.

Sewu-Steve Tawia  1:22  
So maybe I can introduce myself very shortly. So my name is Sewu-Steve    Tawia. I'm originally from Ghana, I've got more than 20 years experience across, I would say three main career changes I studied in sales and trading equity fixed and exotic derivatives, went to six years in consulting in strategy operations in Europe mostly, and then decided in 2009. To switch to private equity venture capital work for one of the biggest managers in Europe Europe investment fund 30 billion on the management investing funds. I thought that my life Luxembourg was bit too quiet and move to Ghana, where I'm originally from in December 2014. And since then, I've managed different asset classes in agriculture, renewable energy, and decided to tackle one of the biggest challenges on the continent, which is healthcare. And today, I'm the managing partner with just very ventures which is a 50 million target fund, target in digital health, med tech and biotech on the continent, really focusing on early stage investment, so PCT to reside, ticket sizes 202 million, and really looking forward to build an ecosystem do local and national partnership. So to come back to your question, when I told friends that I was going to healthcare, so look, why health care. And the key determinant of that was to realize that my mother has been a nurse, mph plus Master's in palliative care, as in working in health care, mostly in Europe, but I also started to do things on the continent, and realize that you didn't have the tools to do so. Right? That was number one. And number two, except for me, pretty much a lot of my family members are gynecologist, doctors, and is still theologies. And I thought that there was also an alignment of interest with an organization called V grafica. That has been an incubator accelerator in this space for the last eight years. So we partnered to set up January ventures for medtech healthcare generally in Africa. And these are very striking numbers. Africa's population is 1.4 billion today, poised to be about 2.5 billion by 2050. There is a national healthcare financing gap of 66 billion. Mostly infrastructure, yes, but technology devices, biotech, you name it, is there. And so when realized that look, this is a monster we can solve on our own our own was to to build the rails and the technologies using both locally developed low resource energy efficient ones and use international solutions to do so. And that's how basically the fund was set up. So the market for healthcare and on the continent, in terms of fundraising, and investment by venture capital organizations or investors in general, I will say it's about 100 80 million per year, for the last five years, compared to funds that have been raised by across the continent. All sectors, including in venture capital, about I would say this year is tracking in February at 217 million. But annually, you went from one point 4,000,000,007 years ago, to a big P COVID. 4.5 billion, and then last year was about 2.4 billion. So what I'm going He says that it's really an emerging market. Right. And the opportunity set is driven by four mega trends. I don't want to lecture people. But essentially I want to talk about these important mega trends on the continent. One is population growth, I mentioned that. The other one is urbanization. So out of those 1.4 billion people today on the continent 50% are urban or Peri urban. Okay, I'm gonna ask question, do you know the average or the median age on the continent? In the US is about 45. Were old

Kwame Ulmer  5:38  
in the US? I think that's a leading question. I have a sense, but yeah. Is it 2025?

Sewu-Steve Tawia  5:46  
No. 18? Wow, median age on the continents? 18. Boys for doubling. So there's a long term magnitude of growth that is there that it seems to be not many people are seeing right. And so essentially, when you look at it, I thought to myself, look, let me be one of the early actors in the space on the continent to start driving, better, affordable health care. And I'll give you a bit more about the thesis so that I understand where we're going. We realize that today, with the technologies that are available digital, medical and biotech, massive legs accelerated by AI and machine learning, there's a huge opportunity for Africa and emerging markets in general to leapfrog. Right? And so that means that we those four mega trends, I mentioned, urbanization, growing population, digitization, mostly, we majority go on the internet, not on a laptop, but on the phone. Yes. Right. And the last one, I'll mention the mega trend to fight a fire to complete on that is against all the doom and gloom during COVID times, right? We demonstrated our resilience, we actually grow even some of the company countries grew during COVID, which is a bit crazy to understand. And so with these four mega trends, realize with those technologies, if you're at home, in the office, or in transit, urban, Peri urban, or in remote areas, and some of the solutions actually can apply even here in remote areas, when you look at the US the middle belt, population density is very low, it can be applied, there's a huge opportunity to essentially this is our thesis to bring health care to people and people to healthcare when it's needed. So that means that home office or in transit, if anything happens to you, we can bring a device, right? That conduct knows you. And essentially, maybe buy digital medicine prescriptions, give you a prescription so they can go to the pharmacy. And if you cannot move, we send somebody to get it for you and bring it to your home, or wherever you are in the office. So that's in summary, the thesis, and I've been going a bit ahead of talk about other things. And I just got the materials.

Kwame Ulmer  8:19  
Yeah, boy, you're doing great for 715 in the morning, man

Sewu-Steve Tawia  8:23  
with jet lag.

Kwame Ulmer  8:26  
So you sent me in a really intriguing article about how two different countries two different markets in Africa respond to the COVID-19 with access to ventilators. Correct? And when I read it, it seemed to me that South Africa was a success, and they had figured it out. Yeah. And the other country, not so much. What are your findings or insights from what makes one country be able to figure out med tech and another not?

Sewu-Steve Tawia  8:59  
It's, I think that there's several elements. One is the general private sector and public sector interest and drive to find a common solution. Right? That's number one. Number two is usually the depth or the regulatory environment that enables that to happen, right. And the case of South Africa is pretty clear. South Africa has been developing metric solution for a longest time ever. They have actually a major cluster of biotech and may take between Cape Town and Stellenbosch for med biotech, and to some extent by Medtronic, and also around Johannesburg for med tech. And then other countries also have different clusters. But the key determinant is a public private partnership to make it happen. That's what really was the driver. I can give you the case of Ghana We also managed to really have a coordinated public private partnership between the ministry of health, public facilities, public and private healthcare facilities to really drive those solutions much faster. So it really depends on each country. And I have to remind people, it's 54 countries. It's not just Africa, right?

Kwame Ulmer  10:21  
Yeah, I I love this. I love the topic, the headline investing in Africa, but South Africa is much different than Zimbabwe, which is much different than in Nigeria. And my sense, and you don't notice you're given me a lot of free education. My sense is gone is a fairly mature Life Science hub. South Africa is probably one of the most mature hubs, but then there are many countries that need to catch up. Is that kind of

Sewu-Steve Tawia  10:54  
fair? Correct about again. So we tend to break it down in our verticals. So digital health, med, tech, and biotech. And then we also have what we call enabling themes that enable those three verticals to thrive or not. Okay. So what I would say is that the, depending on what you're looking at some countries may be either marginally or substantially better than others. So I'll give you a very striking example. Tunisia, came out of nowhere, and became the biggest exit with biotech buying instant deep on the continent last year. Right, so buying it, I bought a biotech company biontech. So he bought a biotech company called Insta deep, for $750 million. That was the biggest exit on the continent. But hardly any newspapers talked about it, because they already understand healthcare, they'll always talk about fintech. So Tunisia now is has become a hotbed of biotech innovations. Because of that major exit, it attracted a lot of people. Garner has imagi biotech has revved up Biosciences and a few other key hospitals that are really driving biotech innovation, and then are therefore attracting entrepreneurs and investors there. Yeah, so really depends on the country that clusters, what I would say South Africa has been ahead of the game for a long time for different reasons. But I think a number of countries are catching up. And there's a clear national interest in doing so. A clear example is Rwanda. Rwanda. Absolutely. Yeah.

Kwame Ulmer  12:45  
You know, in the States, there's a general formula for innovation ecosystems and include universities, strategics startups. And my general sense is there are some large strategics that have had a presence in Africa. Do you see a role for them in this emerging medtech ecosystem? I know, I'm thinking about a few Japanese pharmaceutical companies that will do jayvees With digital health companies, just to kind of get a sense of what's going on in the US market. Do you see any parallels?

Sewu-Steve Tawia  13:20  
I totally agree with that. So what we've noticed been happening for the last five years is that you have a large number of Japanese entities come in to invest in Africa through mostly funds. Okay. All right. Find the phones. Yeah. So they come. So I mentioned specifically JETRO, jQa. And there's another one of them. So what I do is essentially a lot of those Japanese conglomerate try and partner with tech startup but because usually do not have the foothold on the ground. They go through investment companies or other power partners, they run innovation program with Vigouroux, for instance, etc. So they they get the pipeline, and they start looking into the market. What I would say is that, it's it was not coordinated before, but now it's getting more and more coordinated. But what I would say is that, funnily enough, the Japanese are kind of late to the game. Oh, yeah. Stanford by design has been on the continent for five, six years now. Yes, right. And then so many other organization, American one, John Hopkins, etc, etc, or being on the continent doing work on the ground, but most of the time looking at the donor lens, accelerators, incubator donor programs. Now that more and more looking at the commercial investment opportunity, and that is what is of interest to me because Because basically, I could be raising funds with these corporates and strategic partners to develop the ecosystem, obviously do tech transfer and other things. Yeah.

Kwame Ulmer  15:00  
And when we were talking yesterday, you had a point of view about NGOs or an AI as funding sources for innovation ecosystems, uh, you they weren't high on your list. Is that right?

Sewu-Steve Tawia  15:16  
Let me put it this way. Unfortunately, donor programs have been massively developed on the continent. They've done a lot of good. But I think now the market on the contrary, isn't mature ring enough for them to start thinking more public private partnership. And I even coined a business model that I'm not sure it's very much used here. So obviously, you have a b2b, b2c, or b2b b2c, or B to G in business to government, right. But what is actually happening a lot of times on the continent is that we have b to d business to donors, where a donor program or who UNICEF etc, would run a certain number of programs. And startups would leverage on that to develop a solution for business to donors mode, while actually converting that to a b2b or b2c played down the road. So it's a it's a easier access to free capital donors and commercial capital through donors and then start developing a more commercially viable business.

Kwame Ulmer  16:32  
So that's one pathway. But I think what I'm also hearing is the classic jayvees With strategics can work in Africa. innovation hubs like Stanford's Biodesign program can work in Africa. That's encouraging. I have to throw in a regulatory question, because I'm a regulatory guy. Even this early in the morning, maybe it'll wake people up, hopefully, it won't put people which countries in Europe because you've been in 34 countries in the continent,

Sewu-Steve Tawia  17:03  
personally and business wise. Yeah.

Kwame Ulmer  17:07  
So much fun. You've been 34 continents, so he's on your your grading sheet, which countries have the best regulatory frameworks, Ministries of Health to really accelerate growth?

Sewu-Steve Tawia  17:21  
That's a tough one. Again, depends on what you're looking at. So biotech, I would say South Africa, Egypt. Yeah. South Africa, Egypt, med tech. Again, South Africa, number one or two. But Nigeria is not bad. Tunisia is not bad. And then on the digital health side, Ghana, Kenya, South Africa, maybe number three. But the key thing I have to say about regulatory approvals is that hardly any country on the continent actually has a metric track. So it's either depending on the pharmacy boards, or the Food and Drug, okay, right. But there's no specific, even within the Food and Drug, they would usually attach it to the either pharmacy is very limited to biotech. So there's no dedicated metric devices. And so the shortcut a lot of the entrepreneurs take, not shotgun really, but they get local regulatory approval, but they actually have to work it out and educate the regulators on their own product so that they get approval. So I always say, on the continent, we fly the plane while we're building it, because this is literally the case. Now a lot of companies want they get local rental approval, what we advise them and we walk them through the process, get a CE mark, or USFDA. And usually, what happens is that when you have a CE mark, or USFDA, you can actually scale much faster, let's say from Kenya, you got the local approval. And then once you have a CE mark, or USSD, or both, then when you present that to any or most of the continent, countries on the continent, it's okay. It's much faster.

Kwame Ulmer  19:23  
You mentioned Tunisia and I'm reminded of a startup that got the equivalent of NIH funding. It was Tunisian government funding to start a company and they were I'm almost certain that LSI about three years ago. Let me get to my question. My question is, do you see the US is the most logical second market for these med tech companies that are grown in African countries or is the EU the most logical next market for them to go into

Sewu-Steve Tawia  19:54  
so a must admit to you? We've had inbound It's actually from both sides, even Japan actually. Hi, hi. And look the size of the market. And the risk appetite seems to be much bigger here than Europe, because you have to remember, Europe is not one country is several countries with their own regulatory approval. There's no easy passport thing between the countries, when you have an approval or the EU level, it's easier, but the process maybe the CE mark, may be a bit more cumbersome. So I think the natural and more direct market is the US. I know we've had opportunities to see that. For instance, we have, you know, a new Panda, which is one of our portfolio companies. Neo panda. Yeah. Aha. So you know, sooner? Yes. So it's one particular company. And she has a US FDA approved device. And she's actually actively marketing it here. Because she has low production costs, she designed it mostly here produced, and then scaled on the continent more and more, but then the interest is here also, right? For low resource environments, etc, right?

Kwame Ulmer  21:16  
And I'm going to scan a row is it filled up a bit? I'm going to scan the room here. And if you have a question, please feel free to raise your hand. We just want to pause a minute. Good. But then I'm gonna get back to my free education. All right, free education. So for Nia Panda, they produced a product for the African market with a lot of African park partners, I believe they follow the double design approach. Yeah. Are they planning to sell that same product than the US? Or they're going to sell a more for lack of a better word, fully featured version for the US market? And do you have an opinion about? Do you just use that same product that you're selling in Ghana and export it to the US? Or do you put more bells and whistles on a US version?

Sewu-Steve Tawia  22:10  
So I honestly cannot answer that question, because there is their product design. But what I've noticed is we were approached for with these kinds of requirements, do you have any interesting metric product that we can take transfer to the US that does the same thing with the same health outcomes at the fraction of the cost? Now, what I was hearing is, oh, maybe you have a $1 production cost, but we're going to sell it to people in the US $100. Right. Not $10 in Kenya or Ghana or Nigeria, so the margins, right? So for me, that tells me that actually, they wouldn't change the design, or increase any features unless customers or patients need it. But as it is, it's a US FDA approved device that can be sold here. As is, right. So I think it's more the commercial interest rather than really the different health outcomes they're looking at. So

Kwame Ulmer  23:13  
when we were having coffee yesterday, we're sitting there and you said, you know, what these entrepreneurs need is power. And I say power, you mean like political power? He said, Don't quote me like electricity. Can you talk about the role of infrastructure in med tech and Africa knows, look.

Sewu-Steve Tawia  23:38  
So when we start going to low resource environments, rural areas, etc, what we quickly realize is that, for us to really have long term sustainable, scalable health outcomes, we need to make sure that all the solutions that are mentioned are as close as possible to the patients wherever they are. What happens is that and I'll take my previous hat as a fund manager or in climate and renewable energy. I was running the program to support renewable energy companies in the agricultural value chain across seven countries in East Africa. Okay. We'll go to a refugee camp in Kakuma north of Kenya, where the company was supposed to be using solar panels in veter. And Haleakala Frieza to conserve food, vegetables, whatever, right. So that was part of the what I was supposed to do. Guess what we go to the refugee camp, we'll go to our site cities. And what we realize is that notably in the verge, Fuji camp, it was food but breast milk that was conserved, or in the pharmacies, vaccines, alright, to keep the potency for that. So I was saying Actually, there is a nexus of climate and health that we need to look into. So that when we go to the remote areas where they don't have the grid there, we can put solar panel inverters batteries, that one can conserve the medicine but also since you have power, now you can bring data and therefore digital devices might a device that can connect to data and then upload and then you can have related telemedicine, etc. And I want to make a point on telemedicine. When I see an entrepreneur or startup telling me about telemedicine on the continent. What do you mean, literally be telemedicine of having Oh, somebody talked to you, you see a video call because of power, data cost and accessibility, it is not feasible. Apart from Peri urban or urban areas, obviously. So when people tell me about telemedicine, really what I'm seeing in rural areas is USSD codes, short codes, or a phone call, or a text message that is telemedicine at that level, right. And so what I see entrepreneurs telling me that, that means that they really haven't understood the access the energy need, in road remote areas to just deliver health care. So one of the models we're looking at with different organization is what we call community health community health workers as self entrepreneurs. And so that probably is a model where we can essentially equip those community health workers, as entrepreneurs in climate and health, where they can be selling panels, inverters and Batteries Plus data, to make sure that they can deliver health care, collect the data, etc, with pads and things and there's a whole project around it. So. So

Kwame Ulmer  26:55  
how do we put some of this in action? Let me let me tell you why I'm why I'm asking this question. So thena capital is a VC firm based in the UK, one of our partners is British, we were I was on a panel with fina capital, they invest in med tech in the UK, but we WaveMaker 360 health the fund and I work with as a venture partner, we don't understand that market. So we would co invest in a deal where they let it because they know the local market, and oh, by the way, they're going to their go to market involves the US in the next six to nine months, is that how a US fund would partner with you? Absolutely,

Sewu-Steve Tawia  27:32  
you find one of the so I didn't mention how we are structured as a fund. So we're target 50 million. So we're raising by the way, fund, the second unit we have internally is transactional advisory, which means basically, we would help hospitals, clinics, specialty care, to raise $5 million or more. And then the third leg is does RF Labs, which is basically an internal innovation lab where we want running venture studio programs. And the most interesting part is the launch pad. So that means that within the lab, what we do is the venture studio, but also the launchpad where we say look, if you're an international company or a fund, you want to have exposure to the continent, we can give you access to our deal flow. And so basically, we actually call it D flow as a service, right? Simple or corporate Vc as a service that will depend on how you want to do so get get access to all the flow co investment REITs. And it's helpful for us because one we diversify in our risks, investing with other people we do do like work, obviously. And then it's also more capital coming to the companies, right? And then I'll finish on that on the launch pad. The Launch Pad is also the opportunity for international entrepreneurs who want to launch on the continent to partner with us and it will help them do proof of concept and access to market as well make an entry you remind

Kwame Ulmer  29:09  
me of in Estates is a well known innovation ecosystem called the Fogarty Institute. And they have many of the same elements she described and investors over the years come to know it as a home in Northern California. So this is exciting. So there's a home in Kenya for absolutely tech investors. And Lamia ain't gonna ain't gonna Oh, we can't leave out gonna. Last question, then we'll open it up for anyone who's been intrigued by this, like I have my question, say who was around? Oh, your conference? There's a conference coming up in Africa. In August. It doesn't conflict with Scott's programs. Scott has come in yes to talk a little bit about the conference

Sewu-Steve Tawia  29:58  
very, very much so so With the abundance, we grow Africa, we realize that there's a huge opportunity for my take on the continent driven by one boy, who is a metric person. She's actually trained here. Stanford has three patents here in the US. And she went came back home. And we're brainstorming excetera, one day, 18 month ago, so actually, why don't we organize the conference, because all the other ones were seen on the continent, I read just sales pitches where you know, big, I will, I will not name any names, but the big guys come and sell devices, etc. So look, actually, why not we do one that is homegrown, and is trying to build the local ecosystem with international startups, not the big guys. And so that's how we started. So we started transforming Africa metric conference. The next edition is 28th to 30th of August in Nairobi, Kenya. And I always say it's the opportunity to, you know, understand the ecosystem, get to know people, but also come for Safari.

Kwame Ulmer  31:06  
We're still working on my wife, Safari coming up. Okay. Questions. Yes.

Audience Question  31:12  
Thank you so much for being here. We talk with investors in the US ecosystem, often prioritization on focus of everything at once. One thing. expectation is that there are other ecosystem players who can support the rest of that. You mentioned electricity, contract manufacturing is a similar situation, there are a number of different pieces. And a lot of what's been successful innovation has been low resource environments, if required, integrating all of these things at once. How does that change the way you think, as an investor and the types of things you invest in when the prioritization for US investor might look quite different? Because

Sewu-Steve Tawia  31:53  
that's always my challenge. Thank you for the question. So a lot of people always said, why don't you just do digital health? You know, that's more money. It's scalable, blah, blah. Okay, fine. I said I actually just solving one part of the leg problem, right? And so the other part is, okay, you have digital fine, but what does the digital build on any devices and things right, so you need to have both, I always talk about digital, physical and digital, because you cannot have just digital on the continent in need to have the physical. So more specifically on that. What we believe today is that the market is not nascent. So if I project myself in the next 1015 years, ultimately, you move, we may actually have three different funds, right. But for now, we believe that we need to cover the whole spectrum internally. Because there's a kind of continuum of care and synergies between those three, that is evident. And I'll give you a striking example. One of my massive and I'm going to call on anybody who can help you on that is breast cancer on the continent is a massively on the serve, challenge. Okay? Today, here in the US, or Europe, you can go online, Amazon, wherever, buy a bracket test, or go on 23andme Do the swab, they tell you if you have the gene or not, and they can start monitoring on a yearly basis to figure out whether or not you need to have a procedure. It is not readily available on the continent, you have very few labs and are able to do it, okay. And so a key thing for me is to be able to combine data, digital, the device, and then actually help do research. So all three are very key for me to make sure that it's a cycle, right? It's what we call a conveyor belt in various ways, between us and vagaro, the way we work and but also between the three verticals. And it

Kwame Ulmer  34:07  
sounds like Caitlin, part of the answer may be to target countries with the most robust infrastructure. So power is maybe a little bit less of a problem, but I don't want to speak for you, but that there's that

Sewu-Steve Tawia  34:19  
element, but also where is the government and the private sector leading to make it an enabling environment to do so. And so Kenya, last year, they published a new digital health bill that was critical for us to have so that all the companies that are in this space in our portfolio, really use that to scale. Alright, and so two of our companies were actually part and parcel of that conversation, building the plane while you're flying it. Yeah.

Kwame Ulmer  34:51  
Let's try. Well, one more, one more. And then we'll go Yeah,

Audience Question  35:00  
Have you mentioned a facial expression? Or you add big donor, like distorts the market doesn't actually forces entrepreneurs. What actual market prices positions provide the business model?

Sewu-Steve Tawia  35:19  
Yeah, no. So I have a love and hate relationship with donors, right. And so in some instances, they are very critical in starting the race, right, of new innovations, etc, because the have the risk appetite and the font introducer. But sometimes when I see grant printers, right, it makes me wonder why they cannot wait yourself of these series of donor programs and really look at a commercially viable solution, right. That's the reason why I was doing it. So I think there's value to it, but I think he needs to outgrow it and really focus on rescaling. And then you know, getting somewhere where it's more commercially viable.

Kwame Ulmer  36:05  
So, unfortunately, we're out of time for all of you who woke up early for this meeting. I hope you're as blessed as I am. You got your free education. I want to thank say, whoo. And do you want to leave us with any parting thoughts before we close?

Sewu-Steve Tawia  36:22  
Come visit Kenya.

Kwame Ulmer  36:25  
I love it. Thank you.