In the 42 days of lockdown, Robert Kabushenga (RK) is taking off time to run a daily mentorship program called #40DayMentor hosted on his Twitter spaces. In this episode he hosts Daudi Nanambi (DN) to talk on How to Raise Capital.
RK: Let me ask you a straight question, who is Daudi Nanambi and why should we trust him on money?
DN: Thank you for leveraging your brand and experience to set up a platform to inspire many people. The issue is not you trusting me with your money. The issue is going through the big matter of raising capital but through my life’s journey what that means, is building business and supporting others.
A bit of perspective of who I am and how I have come be is very important. I am a trained electrical engineer. I also lectured engineering mathematics and electoral magnetism for about one and a half years and then part of my passion was around finances. It turned out that the mathematics I had specialised in was applicable in the world of finances especially complex derivatives. The mathematical side of finances in the western world. So when I left to go for further studies in Cape Town, it was in the area of mathematical finance on full scholarship and from there I went to the university of Cambridge where I did financial mathematics. I started working in investment banking in London.
RK: Wait a minute, Daudi, first slow down, I want you to help me understand this mathematical finance that you are taking about.
DN: Mathematical finance starts at a point of trying to find the value of products whose delivery is in the future. For example; if you are selling your coffee and you have an option to sell it or not sell it in eight months from now, someone would ask, how do we finance that? So Mathematical finance comes in to provide these models; a bit of predictions of how these prices are going to move in the future. It is a very simple exercise but it has been invaded by astrophysics and all these big areas for a reason. If you have ever watched CNN or Bloomberg and looked at the stock ticker symbol, it’s a very ragged symbol, it looks like a particle of smoke in air… so they use all these heavy particles which have been used in the modelling of the universe and apply it in the stock market. That is why that area is invaded by people from a background of engineering, physics and the like. For me, it was a natural step to move from electrical engineering into the world of finance through this heavy mathematical stuff.
RK: Let’s get back to the human stuff, why didn’t you just do finance from the beginning when you left high school. What delayed you?
DN: That calls to knowing who the human being is. I was raised by my grandmother at Zana along Entebbe road. I was handed down two cards in my early days at school. I was very small and I had a very unusual last name. This hardened me. I was a smart pupil. I managed to make it to Budo. But then I was hit by another card; I realised the power of money and wealth. There were all these very rich students. It was also my first time to learn about things like basketball, Nike, Jordan and such stuff. I had your traditional mabarenge and gnuts made by lovely caretakers. At that point I had to make a decision of who I wanted to be.
I realised that life can deal with you. You either fly over it or you stand up and work with what you have. By the time I got done with A level I had really excelled at Mathematics. I had broken quite a number of records. I used to score 100% in Mathematics. By the time I was leaving A level, it was clear to me that working in mathematics and its applications was going to be extremely important to me. I did not know what but I trusted it was going to be good.
RK: So for you, by excelling at that level was your way of responding back to the bullies that you were not what the bullies and the people making fun of you thought you were.
DN: Exactly. By A level, I had become a celebrity. I was shining in this thing. But I took it to a bit of extreme. When I was in my O level holidays, I was teaching myself A level mathematics. But I had also changed my perspective to life. I had decided to work with what I had. That marked the journey of persevering through all the headwinds that came my way. That became my escape
By the time I joined university, had a very strong independent mind of what I wanted to do. It was not so clear because of the limited opportunities but I trusted that I could connect the dots backwards. When I was going to university, I wanted to do actuarial science but I was talked out of it. Electrical engineering is one of the very important course in the sense that you deal with the statistics and the programming and the crazy mathematics I talked about. Actuarial science couldn’t have exposed me to all this.
I also had a passion for economics. I had done it at A level. I loved the financial markets. The big economics and the big picture thinking. In my 4th year, I started a business. I was already sure I was going to get a first class degree. So I put my time in developing websites. I would raise UGX 3 million but soon I realised my talent was with numbers.
Around 2008, there was this talk about these complex things to do with investment banking. And I realised I could apply my talents there. They wanted raw smarts and I knew here was one place I could fully apply myself.
There is an interesting story I would like to share with you. The investment banking that you see in the movies, there is what they call the sales side where you find most of the traders on the mathematical side, there you have so many PhDs. I asked how do I work here? I did not have the opportunity to be recruited directly. I had to teach myself a lot of stuff. I knew one day an opportunity would come, and I wanted it to find me ready. I realised that to get into those spaces, they hired either from Oxford or Cambridge or LSE. I applied to Oxford but the examiners did not know the weight of a first class degree from Makerere. I applied again but was turned down.
I then found out that these professors from Cambridge and Oxford used to go to Cape Town University for their summer programmes to lecture. I went to Cape Town. There, I met a professor whose speciality was the stuff I had taught myself. We ended up writing a paper together. When he went back to Cambridge, he sent me a letter to go and attend Cambridge. There I did one of the oldest program in the world called Part three of the mathematical tripolis.
I went for a job interview in London with people who had PhDs and I had a masters. I remember in the last interviews; guys were asking me but David what makes you so different. I told them I was born in Uganda and I had done my best to be there. I gave the scenario of someone being in a forest surrounded by lions but only with a knife as a weapon. I had fought my way to reach a point in time for you to think I am worth it. They gave me the job.
RK: Wow! You sound so unbelievable yet you are.
DN: I am an introvert. But I thought to myself the world is devoid of inspiration, guidance and mentorship. Sharing this story is to help someone on a similar journey to carry on.
I got another scholarship to study at London School of Economics. The things I had done at university and along the way were coming full circle. I realised soon enough that doing a PhD was not going to work for me. I decided to start the hedge fund and work.
At the hedge fund, I learnt a fundamental lesson of my life. A lot that has to do with success and where we end up in life has to do with opportunities that come our way. I wasn’t being given the opportunity to do the real work. They thought just being there with them, they thought was enough, but I was hungry, I wanted more. I looked for the way home.
The money was good but I knew I would make this kind of money back home. I was dissatisfied. In London, I was feeling like a spoke in the wheel. London was not working. I packed my bags and came back home.
RK: Was that the point when you came back home?
DN: Yes. A number of my friends told me I could do more. That is where friendship comes in, when I was at Budo, I met two friends James Orima and Brian Kavuya. James came up with the idea of establishing a firm. Out of that past trust built over 6 years together, we began something new. In December 2015, we began the journey of Asigma Capital with the intention to get Ugandans to come together to invest in businesses. The sole focus was raising money from high networth business people in the country.
From January to May 2016, we reached out to anyone who had money but they were hard to convince. We didn’t raise the money.
In mid-2016, we added other services to the frim and my friends tasked me to run it since I had experience in this work of word. That started a journey of two years of pain.
RK: So where are you now?
DN: Before I respond to that. I would like it say, it was a trying walk. I had to use up my savings from London for the sustenance of the business.
RK: Let me interrupt you, were you married?
DN: No. If I had a family, it would have been reckless of me. I would have been forced to take a job from job hunters from abroad. I had to go back to mother’s house. On my 32 years, I asked God to give me the opportunities to show that the things I had learnt would be for the benefit of others.
Our breakthrough came through foreign firms. Around 2017, all development partners started thinking about private sector investment. The model changed from dealing with NGOs to sustainability. Donald Trump, Johnson Boris and right wing governments were only interested in private sector investment.
That opened the doors. One brought another and our tam grew. I used to tell myself, I didn’t come back here to do small business. I kept on looking for more opportunities for the frim.
If you look at brokerage firms in the country, most of them are loss making because there is no opportunity on the market. If you are the best surfer in the world, and they bring you to L. Victoria you cannot excel because there are no waves at Victoria. That became the adaptation of our firm. We were looking for a space no was playing in.
Comrade Otoa: There is one interesting thing you mentioned, you talked about being an introvert but maximised on your friends/ networks. How were you able to identify the right people to work with? What gives you the impetus to have that second instinct that pushes you that far?
DN: Part of life is about building a culture. I always said this is now the right time to hire people. A lot of perspective is about connecting dots backward. I always trust things will work out.
The issue of timing is all about the grace of God. To carry us through and present us with these opportunities. And that is the prayer we should all have. To be directed to places at the right time.
RK: I am currently unemployed. Consider me for an opportunity.
Tio Kauma: Private equity is still very new in Uganda and what of private equity are you focusing on mostly? And how have you been able to pick the companies that you invest in?
DN: What we do as a firm, we do not have a raised fund. What we do at the development cycle phase is to be able to raise funds for projects and that could be like someone in manufacturing coming together with another group of entities. We help them understand the opportunity to raise funds. We also do project management oversight.
We give support and project management oversight. We are playing a critical role now of building business systems that will lead to better business and at the same time will produce better and scalable business. In the value chain, there is project preparation which is a lot of research and fund raising support because of our networks from DFI and partner banks. We are also building a platform where we shall be able to democratise financial access on digital platforms which means someone who has a business and wants to access investment trading will be put in touch with financiers.
Eve Zalwango: When it comes to local investment, from a personal experience, finding a local investor is hard. I am a carpenter most of the time as the business is growing, you need more capital. Local investors want short term returns, are there local investors available in Uganda?
DN: The space of linking local investors to local finance opportunities is still being developed. It is still very virgin. The people like the Kampala Angel Investors Network are trying to close this gap. Early stages is very hard. People are not just going to deploy their money to people they don’t trust but largely it’s an untapped opportunity.
RK: Brian Kavuya, tell us about Daudi.
Brian Kavuya: David and I have walked a journey for some time since the setting up of Asigma. We are where Europe was 200 years ago in terms of things hedge fund, capital raising and private equity.
RK: Our entrepreneurs cannot find capital, where can they find people like you?
DN: We have a contact number and email where we can get into contact with entrepreneurs who need this help. Reach out to us on: firstname.lastname@example.org
Brian: Even when you have not fine-tuned your idea, we can work with you.
Aineamani: What type of skills should someone of 20 years old focus on acquiring in regards to how the finance industry is going in the next 20 to 30 years?
DN: In the late 90s, Privatisation was in place and accounting was the main career because of restructuring during that time. Uganda is at a proper take off stage. The critical skill for any young person is to get into investment space. Every two months we are looking for investment analysts. Out of 100 applicants, we can only take two and we have to train them. When choosing a career, you have a lot of energy, you owe it to yourself to find the right place that will reward you to do that.
The world of investment is going to be dominated by computing. Today, the broker on the stock market has been substituted by Artificial Intelligence, Computational statistics and programming will be very competitive skills for the future. Computing and mathematics will help you to pivot.
Moses Kalema: How do you convince a Ugandan who has money, that the numbers make sense. In Uganda we don’t have much data collected for a long period of time, how do you build models without this data?
DN: Quantitative means nothing without context. Financial model is only a representation of a business current environment and where it is going to be in the future without the right context, you can do the right thing. There is the idea of a track record. There is a journey and it takes time.
Data is very hard in African countries, for investments to take off, there has to be money in people’s pockets. It takes time. We need more time in the investment spaces. We have capital here.
Joseph Owino: How can young entrepreneurs prepare for foreign capital?
DN: The entrepreneurship journey is very brutal. Build yourself first. What is your edge? What is your contact? Look for opportunities where you can build yourself. You should go on a journey which you should be able to pivot as a business.
Jonathan Baakwebwa: The future of online businesses, are you considering investing in them as well?
DN: The intersection between digital and finance is one the passionate things we do at the firm. On scalability: human beings have always wanted to be better financially, socially and spiritually. Digital has changed a lot of things, anyone who is good at something can deal with digital. Once you know you are good at something, you can leverage all the opportunities to scale yourself up.
Start-ups are very important but they cannot become viable by targeting only Uganda. They should look beyond. You need the numbers.