What Heshan De Silva Really Does :Part I

Blnaire080414Heshan de Silva needs no introduction. He has been in press for both good and not so good reasons but the devout christian says he is not stopping his good deeds to the businesses he has funded and the youth he mentors at church every week to ditch substance abuse and instead do business.

Heshan says he started out the de Silva Group with $200 and with careful planning and choice of where to invest his money, he grew the de Silva Group into one of the region’s most enterprising entities, with holdings in commodities, technology, renewable energy, insurance and agri-business. In 2008, Heshan says he was selected by the United States Congress as one of Kenya’s Brightest Young Leaders and now sits on boards of several firms. Today, Heshan says he lends his hand to the Boards of a number of well-respected companies in Kenya, as well as several youth and social enterprise funds.

The Questions

Our friends at Kachanywa.com saw it wierd whether his 1 billion KES worth is real or a fraud. Then still more questions from our friends at Hapakenya.com and a lot more questions on social media too. In the wake of hundreds of questions, another investor’s credibility was put on question by our friends at Techweez.com.

But just who is Heshan de Silva? In a series of interviews to have him answer this questions and see his firm’s bank statements, TechMoran reached out to him and this is what he says he really does. Leave a question in our comments section for our part of II of the interview with more tangible details.

 

Who is Heshan De Silva?

I am a very quiet, pretty shy person. I try to be the quietest person in the room, which probably comes from my upbringing – we were taught to always listen to others and learn as much as possible, rather than being loud and forward. I was born into a middle-income family in Nairobi that sacrificed almost everything so that my brother and I could have a solid education. It was hard going to those schools at times because we were always surrounded by children who had more. What we did not have in money, we made up for in caring for one and other – and in working hard to have a better life. I did not make the most of the opportunities given to me, dropping out of university after only 1 year, which was a real set-back for my family. Applying for jobs was a nightmare, with a transcript of F’s its almost impossible, and that’s when I learned my biggest lesson – no matter who you know, or who you are – this world owes you nothing. What you get out of it correlates directly to how much effort you put in. That’s it.

When was your first business? How much did you invest in it? What were the challenges then?

My first business was an insurance product called SafiriSure – which eventually changed to SafiriSalama, not an insurance company as is often misquoted. It took MONTHS to get an insurance company to even listen to us, spamming info email addresses of corporates constantly in the hope of a reply. Initially the business was supposed to be a mobile bus ticketing business which added an insurance component. We found that very hard to sell as the users needed to have a PC – and bus companies were notoriously against documenting all purchases. When an insurance company, Cannon Assurance, finally gave us a call to come pitch to them – we didn’t have the money to even register the business. Cannon loved the product, fine tuned it and ditched the online model, and gave us a run on 3 large bus companies in the region.

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I did not invest anything other than time – there was no money to invest! Cannon were very good to us, walking us through the Insurance Regulatory Authority process to make us a legal entity. Thereafter we made 20% commissions on all sales, the standard brokerage, which we then split among the 4 owners of the insurance business. That was my first foray into business, and I’m very lucky we dealt with upstanding and honorable people during our naïve beginnings.

How many ideas or business have you invested in? How many do you want to invest in before the end of this year?

There is a misconception about our work. We have 2 arms. VenCap is our PE fund that invests in no more than 10 high growth businesses per year much like any PE fund, usually averaging around 6 totally – we aim to take in 4 more by the end of the year and are currently in talks with record-label and video production company Motion Image Sound (MIS) to buy into them. SocEnt is our Social Investment arm. In that we partner with different social groups at the bottom of the pyramid. People who do not have access to capital to start a micro business such as kiosks, second hand clothes stalls and the such.

These businesses are not investments, they are seed capital into people’s lives. We take a minority equity position in each to keep the owners accountable while growing our portfolio in that space. We do not expect our money back. What we do want is to see these very poor families GROW and in turn be able to help others. SocEnt will always be the focus of our work and because the capital per micro business averages $300 or less we can create far more than the 50,000 we set out to do. Now we partner with disadvantaged social groups of more than 20 members. It increases our growth, while also fostering accountability among societies.

Are you investing in tech businesses/ ideas also? Are you facing competition from local seed funds?

Tech is a very small part of what we do. Currently we have 3 tech companies in our PE fund. They are SASACabs, a text based and competitor to EasyTaxi and Uber; UniQ Technologies that has a very neat advertising device for public radios that is GPRS/GPS enabled that has been adopted by Kilele Buses in Nairobi and will be expanding throughout the region; and Wallenje which is a mobile wallet solution. Competition is fun, but tech is not a focus for us, and as a result we do not involve ourselves too much in the local community.  Its great to see such a big scene that is constantly growing, and I’m sure we will be more involved as time progresses.

Are Kenyan business men investing in local ideas? What can be done to encourage them to do so?

I think there’s a lot of space for local involvement. We’ve seen a culture of local innovators trusting foreign funders with their innovations for fear of it either being stolen locally, or run to the ground. It would be great to see local investors picking up the baton and adding their wealth of knowledge and financial backing to projects. There’s plenty of money in Kenya, just a lack of innovative thinking in terms of investing – but that quickly is changing. Currently, I think we are herd-based. We need to see a few businesses that have received funding to really take-off. When local investors believe that there is scalability and money to be made, they will be encouraged. There are plenty of people who are trying to increase that visibility.

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Does your faith affect your business in any way, positively or negatively?

Very much so. I am very vocal about my faith, and that’s not going to change. We have a culture of either being gods of our ‘empires’ or gods of knowledge. That breeds arrogance, an ‘I am always right’ attitude. I humble myself by knowing that God has gone before me, and  I am simply a steward. I do not care what faith system or religious belief someone has. What I do look for is someone who honors something greater than themselves with their actions. Accountability and Values are so important and are often missing in our society. When you can bring those two beliefs strongly back into your workplace, only positive things can happen.

People doubt your investments. Do you have something tangible to show them world, like a list of firms of have invested in apart from the three tech startups?

We have never spent a shilling on advertising ourselves – this of course creates room for doubts, naysayers and the like as many people who have not spent time with us do not know what exactly we do. We do not collect the public’s money to fund our projects; everything is done in-house among our network of partners depending on which partner is interested in which specific start-up. Large scale farming and agri-related businesses remain the focus of our Private Equity investments, with a few other interesting businesses to build up our portfolio. A list of our most promising and interesting PE businesses are on our website. We’ve done this so that people can get an idea of what we do. But to be very clear, our PE businesses exist so that we can do our work on the Social side. Building the bottom-of-the-pyramid economy through micro-businesses is our focus and always will be.

What inspires you to wake up in the morning and continue doing this every day?

In another life, if it was intended, I would be going to sleep hungry – with no roof over my head, and no hope for tomorrow. We have 60,000 children in Nairobi alone who do not go to school. Who do not know where their next meal will come from. Either we can be a part of a solution, or we can ignore it and blame others for not stepping up and helping those people. I choose to do my part, and with advisors like Dr. Manu Chandaria and our many partners from around the world – we are finding that by scaling our micro business model, we can impact thousands of lives. Just recently the United Nations recognized our work and is working with us to see how this model can be replicated in countries with burgeoning youth populations. With their guidance the next 5 years of our growth look particularly exciting, and that truly is a blessing – because the more we grow, the more lives we have positively impacted.

You dropped out of college and seem to be doing so well, do you encourage others to do so?

I think the reason why we know so many wealthy dropouts is because there are that few. The vast majority of people who drop out of university struggle for a large part of their lives. If you have the opportunity of education, take it. I sponsor many people to high school and university. When you do not have money, knowledge becomes your value. Whether you are in university or have not been able to go, always look to expand your knowledge base. If ever you think you know it all, you’ve already started falling behind. Life is all about making the most of the situation you find yourself in, degree or not, you still have to work very hard.

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How do you make your returns from investing into businesses?

We take equity positions in our VenCap businesses, just like any investor. Farming and agri-related businesses have been our bread-and-butter. We currently manage over 32000 acres of farmed land in Kenya, from Taita Taveta, Malindi, Kinangop, Litein and soon Siaya and Kisumu. We’ve gone into greenhouses in many of those farms, and are in talks to buy a large farm in Nakuru as well. Timber trading from South Sudan/Mt Elgon region to Mombasa has also been a winner for us. It is these businesses that float our fund. On the tech side, SASACabs came to us when they had 5 taxis on their system. Today we have over 150 in Nairobi alone, and a business model that can be replicated in any city on the continent.

What are the challenges you face today as an investor?

Innovators often promise bricks of gold as returns, and often deliver much less. We have fine tuned our due-diligence process to avoid pitfalls. Another challenge we face is we simply cannot take every business that is pitched to us, as much as we would like to help people. Our VenCap arm is very selective as I mentioned, and our SocEnt businesses are far too small for most urban innovators. Also many people believe they are ready to take on an investor, when they really aren’t. If you have a good idea, do a proof of concept test within your capacity and bootstrap as much as possible. You’ll learn many things about yourself, and your business as well.

What is your view on Uwezo Fund?

I think it’s a great idea on paper. But like all funds, implementation is key. For implementation to be successful, the board needs to identify a clear need group, focus, and grow in that space. One fund for all is a vast model that will be hard to make into a success. Either it needs to be socially driven, or sector specific. When that can be identified and addressed, I’m sure many young people will get some much needed help.

Do you just give money or you help mentor the business founders?

It is a strong mix of both. That being said, in many of our PE businesses we are investing in teams that are very solid – who know where they want to go and how to get there, and need financing and some guidance. I think mentorship and guidance are crucial to growth – as crucial as money. We have a great team of advisors who guide us, and we in turn offer the same to our start-ups, farms and social businesses within our capacity.

Do you plan on launching an incubation hub or accelerator soon?

We have already started on this! We have partnered with the Global Peace Foundation to create business incubation hubs in highschools, polytechnics and universities. These are not solely tech focused, but photography, music, farming, and technology based. Giving people a space where they can visit for free to learn more and explore what they are passionate about. Right now we have 9 in Nairobi and Kiambu, with a further 2 in construction – and plans to open up 14 more by the end of the year. Backed by Dr. Manu Chandaria, it’s a very exciting project that will impact a lot of lives. As you can probably tell, net impact means a lot more to me than net worth.

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