Funding runway for African creators, with Chinedu Enekwe
“So eventually we raised capital, left our previous platforms, and built this place where the black community around the world could feel like they belong, where their dreams can be financed, from innovation to stories. If they create content, we'll help finance it, we’ll help them grow. And that's the platform that we built.”
Chinedu Enekwe was a fine example of the American Dream: the son of Nigerian immigrants who became a lawyer and then an investment banker.
But then he surprised his parents by following an opportunity that took him back to Lagos where the venture-building bug bit. Chinedu has been growing businesses in Africa and America ever since. In today’s episode, I speak to him about one of those, Nandi Labs, and about how and why he is helping Africa’s premier creators access fair and efficient financing.
Nandi Labs are at https://nandimarket.com/ and on LinkedIn at https://www.linkedin.com/company/nandilabs/
You can also find them on Twitter at https://twitter.com/nandimarket
Passbook Ventures is at https://withkoji.com/@Passbook and https://www.linkedin.com/company/passbookvc/
Or if you prefer your interactions more human in nature, reach out to Chinedu directly on LinkedIn (and tell him you found him here)
You can learn more about myself, Brendan le Grange, on my LinkedIn page (feel free to connect), my action-adventure novels are on Amazon, some versions even for free, and my work with ConfirmU and our gamified psychometric scores is at https://confirmu.com/ and on episode 24 of this very show https://www.howtolendmoneytostrangers.show/episodes/episode-24
If you have any feedback, questions, or if you would like to participate in the show, please feel free to reach out to me via the contact page on this site.
Regards,
Brendan
The full written transcript, with timestamps, is below:
Chinedu Enekwe 0:00
One thing that I would say about Nigeria - and Africa in general - is there's really no glass ceiling for people of colour there: you can rise to the very top, you can do just about anything you want... but there's also no floor, things can get really dicey, really quickly!
Brendan Le Grange 0:17
When I was at university, some friends and I played in a casual indoor football league, and since we were too lazy to get better as players, we concentrated our pre-season efforts on choosing nicknames.
But of course, choosing your own nickname is lame, so what we did was write down a few unconnected words and phrases, put them in a hat, draw them at random, and then have them printed on the backs of our shirts. The interesting thing though, is that as soon as we had done that, people started to create their own backstories: Brian "Suitcase" Sayer was taunted by the crowd for being 'excess baggage', Sean "Teapot" Olivier was assumed to have been named using the same reverse logic that might lead your seven foot tall mate to being called 'Tiny' or as a subtle dig to his older brother who was a bit more short and stout; and I was "Skills" because the only way I could bring any onto the field was on the back of my shirt.
Anyway, I bring this up because I forgot to ask Chinedu Enekwe, today's guest, about the inspiration behind the name Nandi Labs, and as soon as I realised this, I became one of those people retrospectively seeking meaning.
Nandi was the mother of Shaka, perhaps the defining King of the Zulus, but Chinedu's roots are in Nigeria, which is a long way from Zululand. So I kept looking. Nandi is also the bull vahana of the Hindu god Shiva and the guardian deity of Kailash, which also seems a long way from home. Still, the Sanskrit word Nandi has the meaning of 'happy', 'joy' and 'satisfaction' so I can't completely discount it.
But of them all. My favourite lead was the Nandi bear, a ferocious creature from East African oral tradition, sightings of which were reported in Kenya through the 19th and 20th Century, but it 'has never been caught or identified' - all that from Wikipedia, which also says that sightings are likely to be misidentifications of known species.
But the Wikipedia entry goes on to say that the American palaeontologist George Gaylord Simpson commented that the "Nandi bear turned out to be in most cases, if not all cases, a ratel or a honey badger" - which at least makes for a serendipitous link back to episodes 94 and 95 with Honey Badger and Honeycomb Credit respectively.
Welcome to How to Lend Money to Strangers with Brendan le Grange.
Chinedu Enekwe, partner at Passbook Ventures and co-founder of Nandi Labs, welcome to the show.
Chinedu Enekwe 3:10
Thank you.
Brendan Le Grange 3:11
Chinedu, your main story today, we're really going to be here talking about Nandi Labs and how you're financing black culture's leading creators, but before that, your roots are actually in big finance and traditional investment banking, I would say.
So let's start there. What did your early career look like?
Chinedu Enekwe 3:29
My early career started off working at a law firm doing private equity fund formation. And that gave me some up-close experience with high finance. So I cut my teeth very early on understanding finance at a large scale. And then I went into investment banking.
And investment banking in my early career at Merrill Lynch, then to Dinosaur Securities and I experienced how you have to show up, what's expected of you in these environments, you know, waking up early every day, people basically hazing you by fire, by force, and recognising that those are the traits that you have to navigate.
And so I was able to understand how to build a career to obtain the different things that I wanted to, by learning and getting introduced to a lot of personalities and I, at a very early stage, recognised that I wanted to put capital in people's hands that I felt was deserving.
And I needed to have relationships with capital to do that, right.
And the only way for me, a person that came from my background: my parents are pharmacists, you know, we're Nigerian immigrants and came to the States and I knew that my family didn't have access to the capital that I was seeing on these major stages, right, we're not the people that are channelling billions of dollars into billion dollar funds. Those are, that's not who we are.
I didn't have those relationships, so I said, I have to build them And investment banking, law and finance was a way to do it.
Brendan Le Grange 5:15
It would be interesting to hear what your parents think, having emigrated to the US to then see you looking at moving back again - talk to me about what the idea was behind that, and how that started to change your career from kind of traditional high finance to something a bit different.
Chinedu Enekwe 5:30
When talking about Nigeria, one of the things that people always mention is this tremendous energy, especially if you go to Lagos. And then you recognise, when you're in Nigeria, when I was visited, that the energy that you're seeing is actually desperation, a search for someone to invest in their dreams, to provide them the capital that allows them to make more capital... but it's sitting in the savings of all these other countries everywhere. And to access it in Nigeria, and other countries, it's all of these crazy interest rates.
So, you know, for me, it was just like this lopsided world that we live in - savings live in these spaces that want to get gains, but they're scared of the regions that would deliver those gains. And they, they misinterpret the opportunity in those spaces. And I just felt like this is just a friction that needs more of a conversation, it needs to put people who can speak the languages on both sides to introduce the opportunities.
I was working at a firm called Dinosaur securities. And it was funny, it was Nigeria's I guess, 50th anniversary or celebration of independence. And I happened to be in a room where there was, I guess, 3 dollar billionaires. And I said to myself, 'why am I a room full of Nigerian billionaires celebrating Nigeria, and the only thing I have to offer them is other people's businesses to invest in, right? Like, why don't I have a business for them to invest in? Why don't I have more equity in the things I'm doing?
I was very young. I was very hungry. So, knowing that, I wanted to have a deeper and richer relationship, I then presented an opportunity to the firm I was working with and to other investors, and I said, Hey, I want to do this thing. This is a business.
The team was so excited about the fact that I come together with this presentation and pitch deck. And they said, well, do you want to run our Nigerian subsidiary that we just launched, and you'll help us run Africa. And, you know, I was 26 and someone said that I'll be a managing director, and fly across to Africa, and I thought, well, maybe that's might be my best decision to make.
So I took that, and my parents were, they were surprised.
They were really worried at first, right? Like, honestly, they were very worried about it, because Nigerian business, you know, it's not for the faint of heart, and they didn't really raise me to be the type of person that can handle Nigerian business! That was not what they thought I would do. I mean, they thought that I'd just be a lawyer. So when I told them that, um, you know, I'm really sticking to this investment banking thing. And I'm going to move to Nigeria to do it, that really opened their eyes.
They saw this guy's really committed, you know, both the company I was working at, and my family really knew that that was, it was a sink or swim moment. And one thing that I would say about Nigeria and Africa in general, is, there's really no glass ceiling for people of colour there, you know, you can rise to the very top. And that's what is expected of you if you have an opportunity, you can do just about anything you want... but what they were worried about, is that there's no floor either. Things could get risky, could get really dicey really quickly.
But I was able to make that transition. And I was able to swim, build relationships at the top of the financial ecosystem in Nigeria and across Africa. And that helped me identify even more opportunities and more relationships that I could build upon around the innovation space. So I got enamoured by how there were so many young entrepreneurs that were leveraging and trying to leverage technology to solve problems within Africa. That was what my pitch was at the beginning, anyway.
Brendan Le Grange 9:09
It's interesting to hear that early on already, you were creating your own ventures, because as I said, that's become more and more of a theme. And, you know, looking at your LinkedIn profile, it seems you've always had many different things going on at once but if I use my sort of amateur sleuthing, it looks like it was about a decade ago with Tip Hub that you stepped more from the big project big investment side into smaller, more human scale innovation.
So one, I guess, is that the case? And two, what was that change that got you to move away from controlling huge capital funds into getting closer to building businesses on a scale that more of us are familiar with?
Chinedu Enekwe 9:52
The change was my own activities where I recognised that I liked it but in investment banking, especially in Africa, you're dealing with many principles - whereas investment banking in the States, you're not so often dealing with the founder of a company, you're dealing with, like a corporation that has some managers where that, you know, some caretaker - but in in Nigeria and Africa is that what I found is this was someone's someone's project, it was their company, it was their life force that they were bringing to market.
And I found that to be more engaging for me, because I found a mentor in that space where, when he was talking to me about his company, and I was trying to help him get financing, it was an intimate experience. And that direct relationship with the founder is such an enriching experience.
So I learned that from investment banking.
With Tip Hub, when I was doing that, it was leveraging my experience, building my own company. And then the experience investment banking and building personal relationships with people doing, you know, larger transactions, and trying to use that as a vehicle to build my track record with investing. My focus became venture building and venture became something that just took over my life, right?
You know, it's almost like crypto, you get into it a little bit, you get into it a lot.
So that's essentially what took me forward, where I recognise how much change you can make in individuals lives, I really believed that the larger projects that I was creating multiplier effects. But when you start doing large projects, you realise how many of them fail, how many of them get corrupted by corruption? And then how many of them actually succeed to be the multiplier effect that you desire? Right? Like, there's hundreds and hundreds of millions of dollars that go on to the wayside for projects and finance. And it's, it's, it's really terrible.
When I think of why hasn't that amount of capital gone into the dreams of people who are actually trying to make a dent in all the problems that we're living through. And it's, you know, you can only watch that for so long before you decide to take action. So that's, that's basically really the fracture that happened and why I wanted to go from major projects to smaller companies that I wanted the, even if they failed, I wanted it to be a lot more earnest in that and a lot less wasted because the experience will be used and carry forward into the next opportunity.
Brendan Le Grange 12:20
And generally - now I'm going to accelerate forward in time a bit - because for the purpose of today, you've got to two main roles. I'm just assuming you've probably got a number of other things on in the backburner as well. But two main roles.
Nandi Labs is where the lending happens, and where we'll spend most of the second half of the episode. So maybe if we start now with Passbook Ventures - talk to me about what that is and what sort of projects you're you're bringing to life.
Chinedu Enekwe 12:45
Passbook Ventures is both a company creation studio and a venture fund.
It kind of works together, we build companies that are creators centric, and then we invest in companies that are commerce-centric, so we try to look for opportunities that are synergistic, that are the financial technologies that we can incorporate in the creator tools. So we invest in those let people build those let that be scaled.
We build platforms that have creators that can be tapped into at scale by those financial technologies.
So the founding of Passbook came from when my partner, Mark, and I connected on the idea. He came from Alibaba, I was working at Exponential Creativity Ventures. And so I understood creator tools. He understood commerce, we said, how they work together, and how there's no borders with commerce or culture, and how that kind of connectivity around creators, commerce, and culture is the opportunity. That's where we decided that we wanted to build.
And we said, initially, we needed to have funding to invest in those companies, we needed to build those companies ourselves - so eventually we raised capital, left our previous platforms, and decided that we wanted to kind of build this place where the black community around the world could feel like they belong, where their dreams can be financed.
And they're from innovation to stories. If they create content, we'll have a platform for them, we'll help finance it will help them grow. And that's the platform that we build.
And the platforms we invest in, will bring them closer by you know, helping them reach their financial goals through commerce tech, allowing them to sell more, get financial services. That's the idea around Passbook. Passbook is a term that means, like an abacus almost, like a measure of what's happening. So the foundation of passbook is actually built on the data that the community creates around what it consumes, what it buys and leveraging that data to then build businesses quicker to to give people access to the audience in better and more targeted ways.
So it's a it's really kind of a data at the bottom at the top. It's what you experience and what culture feels like in the monetization of those things that happens, that layer of technology that that helps culture exists digitally, is what we're investing in and what we're building.
Brendan Le Grange 15:21
So if I'm thinking of a creator in Africa, what was Nandi created to solve in terms of their, their problems and their day to day businesses?
Chinedu Enekwe 15:31
And love the fact that you said this creators are businesses, right? And you know, their day to day business as a creator, whether they're online or not, their business is intellectual property, creating it, distributing it, and collecting the royalties that come from it.
The problems that arise are how do you protect your intellectual property, especially when digital media exists? Digital replication exists? How do you protect your digital property? It's not replicated without you receiving any earnings. And then when it is distributed on platforms that you are supposed to get payments from? How much are you getting paid? Right?
So the amount that they were getting paid from the places where they do distribute their content is a problem. And then the other problem is, when do you get paid by those people that are supposed to pay?
The financial industry hasn't taken a sharp look at the fact that culture, especially digital media, creators of digital media, it's all recorded online. The data around financing or providing financing to creators exist online through all of these digital sources, and it can be quantified? Because it's already digitised.
That's why Nandi was born out of the idea to build a commerce layer for creators, especially the creators that are frozen out of the financial markets in underserved communities and underserved markets like Africa, especially. It's the idea that most markets, you could finance if you're a creator, the time between when you were supposed to get the money, because it's digitally recorded, and when it's paid up, because they're not taking a risk. If Spotify say they're gonna pay you, if it's Amazon saying they're gonna pay you. And that's a very simple proposition that local financial institutions around the world haven't gotten comfortable with, right.
And then there's another layer to that, or what is your already, like, you're getting brand partnerships, and all of these payments are supposed to come to you from affiliate marketing, there's so many ways that you can finance people based on their existing digital fanbases digital distribution of content.
So if you get Nandi credit loan, what you're really getting is an advance on your own receivables.
So what we will do is take a look at what receivables you have. And anywhere from basically $2,000 to $2 million, we will provide you a loan or if those events receipts, and those events, receipts of your revenue will be stretched over a period of time. So you have your tenor that can be stretched over a period of time, that might be from a year to five years. And then you have the amount that you pay, because of the tenor will change of how much your monthly revenue would go towards paying off this event. It's not alone. So it's not derived from your credit. It's only derived from your receipts. So you don't have a credit check. You don't get penalties for missing a payment.
What we do is secure our revenue by recovering money from the intellectual property rights royalties. Now if there's no royalties, we don't get paid. So what we would have is a perpetual ownership of those rights. If we're not paid out at the end. That's the risk that we're taking. That's why we're in beta to make sure that we test out our model as many times as possible around the data sources that we have. So we have a lot more confidence in the long tail of five years from now that a creator is the type of creator that will consistently create content that will exist and persistently make money for that amount of time.
A lot of people are trying this. So what we saw is this opportunity around music and Afrobeat and Nollywood and the growth of the streaming platforms. Those genres themselves are very large opportunities in addition to digital art, because that's where this actually was born out of the idea that digital art can be distributed as an NFT. That is basically the same as an mp3 but it has more layers of protection, more layers of ownership, and then you can build in the transaction of how much someone gets paid, gets directly distributed.
It was born out of the idea that we can get creators closer to their fans. And what we actually realised is that creators Want to be close to their fans, but that's another job they already have distributing their content in places that they still have problems. So we started to address the bigger, more proximate problems for them in the immediate sense, which is getting paid sooner versus distributing content to their fans, but we still provide community management and platform that capability to distribute content directly to their fans, everything is digitised, right.
So we don't actually we have an algorithm that leverages directly integrations into streaming platforms, digital distributor, so for instance, someone has a Spotify, someone has a Youtube, we directly integrate into their wherever they distribute their content, we take that data that is already there, we then project use predictive analytics using our algorithm to say how much they will get paid over a certain amount of months.
And that's essentially our model.
It's kind of data driven, they come in and make an application, but we start with a waitlist, then from the from the waitlist, we are financing, the folks that we understand have the highest capability of repayment. But right now, that's because we haven't opened it up, we're still sort of beta testing, you know, making sure and refining our model. But it's kind of simple. It's the application, digitally plug into the records, where they already distributing their content, we project how much they qualify for, they select how often how long they want to pay for on a monthly basis. And that's how it happens.
On the back end, there's a lot more complication, but we simplify what is actually happening on the back end, the back end is not a secret sauce, we use data analytics around what a song is, its components, what the platform that that content is being distributed through, how do they pay out what's the frequency, how relevant is that piece of content, and then, you know, we've come up with a analysis of what they will likely make and how long that music or that catalogue will decay. So we do so that's that's the, that's the basic framework is kind of a simple framework. In that way,
Brendan Le Grange 22:02
I've got a little bit of revenue that comes in every month from Amazon, I get a separate payment from each Amazon country, I get a little bit of money coming from podcast advertising, comes in from different places, I look at that. And even I don't really know what to make of that. It's a complicated thing for someone who's trying to spend their time creating, there are businesses, but they're usually small businesses, one or two people involved and if you were going to go to a traditional bank, you would need massive scale and an accountant and all sorts of things pulled together before they would look at that revenue stream with any kind of intention. Whereas having somebody who understands the industry, I think is, is the key there that someone can understand what it actually means to make money from from YouTube or from Tik Tok, or, you know, somebody who understands the music industry.
I don't think there's many in the bank that that could fill that role.
Chinedu Enekwe 22:54
No, absolutely. I mean, I would say one of the best initiatives at any bank or any financial institution in emerging markets has ever done has been the Bank of Industry in Nigeria. And they tried to finance and they are financing films in the afro beat, and then Nollywood sector, but the way that they do it, the way that they actually do it, they have a board that reads the scripts, and then decides to finance the scripts based on the selection process, whereas ours is the alternative underwriting capability for the Creator industry.
Ultimately, I don't blame the banks, someone has to build it, right. So that's what we did, we had to build the pipeline to integrate into these portals. And it's only going to be a fourth time.
Platforms like ours are going to be purchased by banks, because they already have cheap deposits. It's just the evolution of when we prove out that this works, we start to take in lending capital to our platform, that margin that we have will just increase when a bank uses this deposit base. But they just need to see that as revenue generating that there's no default.
So it's like how many cohorts do we need before we get acquired by a financial institution that sees this market as highly attractive. So it's really just the builders getting into the space that are going to do this like what we're doing. But ultimately, the market is so large, when you think about connected TV and streaming, there's over $200 billion coming down that pipeline and the creators, the content creators in that space, not even including the social media creator funding that comes in that add another $50 billion to that, that number. All of that can be financed.
There's no institution like JP Morgan that's financing $200 billion - there is going to be a lot of competitors in this space, as AI keeps on making predictive analytics far easier to do. As the streaming platforms start to open up more access to their API's is just which builders are going to target this opportunity and opening it up for creators. So we're one of those people and we have a head start. And we're excited about what we see as the opportunity.
Brendan Le Grange 25:13
If you think about the sort of creators that you're empowering here, what is the life like in terms of access to finance and the ease of getting the payments earned from from these various platforms for these creators today, versus the world that you're creating for them?
How is Nandi Labs changing the lives of creators,
Chinedu Enekwe 25:35
What we're trying to create is a helpful way to transition to a better space for that creator where they can basically have subscriptions from their fans that enables them to have more money to invest in their projects, and not have to negotiate with their record label on an equal footing.
So that's like the world that we're trying to create versus the world that it is most creators are at the behest of their financial investors, which are record labels, movie studios, and the macro environment around those entities. So in markets like Africa, emerging markets, in general, there's not a lot of money that is going into the creative sector. So they are operating, you know, they're making $1 out of 15 cents, they're, you know, tremendously overachieving in the quality of content that they deliver with the resources that they're provided.
What we're trying to do is basically recreate the space for them.
Brendan Le Grange 26:32
You've said you're you're in the early stages, but I see on the website here a number of products and, and features coming soon. So you're keeping yourself very busy there. If you look at the next six months to a year, where are you investing your energies and what sort of things should we be looking out for coming out of well either possible and anti labs.
Chinedu Enekwe 26:54
So with Nandi what you should be looking for is we're doing a major fundraiser to provide capital to creators for the lending product. So what you should see is the fruit of that effort and the scale of that will be aligned with the scale of the opportunity. So we will see that for Nandi, we'll see an expansion and really a go to market for Nandi that I'm excited about because we've kept a lot of what we've been doing under wraps.
Then with Passbook, again, we kept a lot of things under wraps, because there's been there's going to be a really exciting announcement about a couple of the people that are joining the firm as partners.
And so I think you should watch out for what passbook announcements have been this is kind of like one of the first gramme actually discussing the studio model. So, you know, this is like breaking news, sort of and the announcement of who's joining as partners in the studio is going to be another breaking news that should come out very shortly - just know that we're going to be in the connected TV space.
I'm very excited about the team that we've built the funding that we're in the final stages of securing and really excited about the impact to the creators that we that we serve that we're building for will experience.
Brendan Le Grange 28:19
if anyone listening would like to watch that unfold would like to learn more about either business where can they go to follow the story,
Chinedu Enekwe 28:26
Follow us on Twitter at Passbook VC and then they can also follow Nandi and Nandi Labs on Twitter. That's where we're gonna be dropping the news. Most especially. But, you know, you probably see us on the LinkedIn streets. I'm kind of LinkedIn guy.
Brendan Le Grange 28:54
Perfect. I'll add those links as well. And any updates they may have happened between now and when we publish. Chinedu thank you so much for your time. It's great to hear that this has been treated as the big new industry that it is, you know, this is a full on established and legitimate way to make money these days. And it's great to hear that Fintech is catching up.
Chinedu Enekwe 29:14
We respect capital, we think capital has his rightful place. But it doesn't mean that it should shake the ownership of the content that is created and that's one of the fundamental, like undergirding principles like the cultural component of creators should imbue to the culture, the creator, and not just the financier, what are the nuts and bolts?
Brendan Le Grange 29:39
I think that's a very powerful way to finish.
And thank you all for listening.
Please do look for and follow the show on your favourite podcast platform and share the updates widely on LinkedIn where lending nerds are found in our largest concentration. Plus, send me a connection request while you're there.
This show is written and recorded by myself Brendan le Grange in Brighton, England and edited by Fina Charleson of FC Productions.
Show music is by Iam_wake, and you can find show notes and written transcripts at www.HowtoLendMoneytoStrangers.show and I'll see you again next Thursday.