The Republic of Rwanda’s economy grew 5.8% in 2006 keeping pace with the rest of the African continent, which grew about 6%. To some people this might be shocking growth number in a region that has been wracked by civil wars, disease, hunger, and poverty – with some notable exceptions such as South Africa.
In a recent interview with Rob Fogler, founder and managing director of Thousand Hills Venture Fund 
(THVF), he expressed much optimism for Rwanda. Mr. Fogler’s venture fund operates exclusively within Rwanda where it aims to close the financing gap with seed capital, ranging from $50,000 to $500,000, for promising Rwandan startups. “No one is serving that gap,” he said, adding that such venture capital funding is crucial for Rwandan entrepreneurial activity. “Everyone understands that the small to medium enterprises will be the engine for economic growth in these countries,” Mr. Fogler said.
The Thousand Hills Venture Fund has about 25 investors on board, all U.S. based, with the exception of one Canadian and one Rwandan. The only for-profit venture capital fund investing in small and medium-sized enterprises in Rwanda has been operating there for about three years and closed two investments thus far totaling $500,000. Mr. Fogler said some of the biggest opportunities in Rwanda laid with companies that can take advantage of the “exploding” growth and/or companies that can sell products to the growing economic base within the region. Some sectors he identified were tech, retail, and agricultural processing factories.
THVF’s success relies on its principals’ ability to cultivate relationships with local entrepreneurs, business people, and human resource professionals. “We spend a lot of time with them in the communities,” Mr. Fogler said. “We are constantly meeting with business people and entrepreneurs. We have been fortunate to meet a lot of great people over there and establish a strong reputation that gives us access to deal flow.” Mr. Fogler travels to Rwanda every two months and his partner spends a greater amount of time there deepening and broadening their relationship with the business community. The country has made large strides since its well known civil war in the 1990s.
Rwanda plunged into chaos in April 1994 when the Hutu – the ethnic majority – killed about 800,000 Tutsi – the ruling group of Rwanda for generations – sparking a civil war. After Tutsi rebels emerged victorious the genocide decimated Rwanda's fragile economic base, severely impoverished the population and eroded the country's ability to attract private and external investment. Since then the country has held successful elections and recently achieved stability.
In Mr. Fogler’s view conflict is no longer a risk to THVF investments. “Things are going very well there – it’s a very stable country,” he remarked. He credited the political leadership of President Paul Kagame, who took office in April 2000, as part of the reason why stability has come to Rwanda. Corruption, which runs rampant in Africa, has been minimized in Rwanda. From a business perspective, exit opportunities are not a problem for private equity in Rwanda. The single biggest risk, Mr. Fogler said, is similar to any startup operation – finding the right management team, piecing together a good board of directors, and plan execution. Another is the lack of access to financing that entrepreneurs need in the beginning stages of their business plan. “The [Rwandan] financial markets are not well developed at all,” he said.
Rwanda has also been successful at curbing excessive bureaucracy. Most entrepreneurial activity throughout Africa has been crushed by the weight of ridiculous regulation, taxes, and other barriers to entry. Reason why, aside from corruption, is that colonialism’s lasting legacy to the continent of Africa has been civil law, which begets excessive government bureaucracy, Mr. Fogler said.
Mr. Fogler is also a partner with Kamlet Shepherd & Reichert, LLP and is chair of the firm’s Private Equity & Venture Capital practice area. He has assisted private equity investors in evaluating, structuring, negotiating and completing a variety of transactions. He has counseled numerous investors, including angels, venture capital and other private equity funds and investment banks. “So being a private equity lawyer it was easy for me to form the fund,” he said. “I became interested in Rwanda three years ago because I see great opportunity for investment for investors in countries like Rwanda.”
For more information about THVF visit www.thvf.com
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