Since starting Kubik, I have sat with dozens of prospective investors. Their enthusiasm for what we are doing has been unparalleled, their feedback has made Kubik an exceptionally stronger business, and the networks they have placed us in has accelerated our growth.
In some of these meetings, some form of the following questions come up: isn’t Africa a risky place to do business? How would you deal with the corruption and political instability? Isn’t it possible to maybe do this in the USA first and then ship the technology to Africa?
While my responses to these questions typically took a variation of “We have great operational insights and experience on the continent” to “Well, our due diligence of markets takes operational and political risk into consideration”, I would always leave these meetings a bit bothered why “Africa” is scary for an early investor.
I raised this to a good friend of mine, who happens to be very familiar with the Africa investment scene; his response took me by surprise.
“Look, Kidus, you have confused them and they don’t know how to articulate their confusion to you. Don’t forget that as nice as an investor is with you, they are looking for great returns. Most just got used to fintech and payment apps as a lucrative business on the continent. Everything else to them is bucketed as philanthropy — impact investment at best. You need to demonstrate to them that great returns can be made in what you are doing, even if what you are ultimately doing is helping people.”
My friend had a point. Spending our days in Abidjan, Addis Ababa, Nairobi, and Dakar, Penda and I took for granted that people will understand the opportunity trash brings to the real estate market, and that we have a company to directly tap into it. We needed to put the opportunity in more numbers for our investors.
So, instead of an update to a pitch deck, we wanted to share with you the four reasons why Kubik is going to make “great returns for their investors” by doing good for others:
- 34,000 homes need to be built every day in Africa. The continent’s future is urban, with over 100 cities to exceed a population over 1m by 2030 — requiring 100 million new homes to be built by then.
- $247 of building materials is needed to make 1 square meter of housing. Taking the continent’s average GDP per capita of $1485.5 in 2020, this would mean the most average person in Africa would need to spend 5 years of their income to purchase building materials for a 30sqm (~300sqft) house. That’s very expensive.
- 2 tons of plastic waste is thrown away every second. With close to 70m tons of plastic waste either produced or imported into Africa every year, governments are starting to see the catastrophic magnitude waste is bringing to their people and economy.
- 2x more recycling companies exist now than just 10 years ago. While only 4% of waste is recycled in Africa, new recycling companies are building the market and logistics for waste to be reused easily. Over 50 recycling companies exist on the continent, providing everything from raw waste to processed plastic palettes.
What does all of this mean for Kubik and its backers?
- The market is there, and growing fast. Buildings can’t be made with building materials, to state the obvious. What the real estate market is looking for are products that don’t require specialized skills to use, and easy to build with. Kubik materials do just that.
- High quality, low cost building materials are in desperate need. An average Kubik product costs $145 per sqm — over 40% cheaper than regular building materials. At the same time, they are twice as strong and over 100 times more durable (plastic lasts 1000 years!).
- Our raw material is in abundance…unfortunately. We plan to upcycle 2.2m tons of plastic waste. That would be available within the time you have read this sentence.
- There is no need for Kubik to also become a recycling company. Recycling is hard and expensive because of the time and investment needed to set up proper logistics. Thankfully, there are companies we can partner with to take care of that.
Demand is there, we come in at an attractive price for the market, there is a lot of trash to clean up, and we can do it with great partners.
With all that said, we are in the business to build dignity for those who can’t afford it. There are over 500 million of them on the African continent alone. They are due to double in the next 30 years unless we do something about it.