Vuyo Mpako on Building Old Mutual's Venture Arm, Next176

Why Old Mutual set up a venture arm outside its core businesses

Next176 exists to find growth for Old Mutual beyond its existing businesses. Mpako explained that the unit launched roughly four years ago, when the group was 176 years old, hence the name, and then CEO Iain Williamson had challenged the board to look for "growth prospects outside of the core businesses of today." The mandate was to find what sits on the edge of the core, test whether there is optionality to build tomorrow's businesses, and if not, return capital to shareholders at a decent return.

The unit deliberately does not compete with the group's day-to-day innovation. Old Mutual runs "massive businesses, 30,000 people" across 12 markets, Mpako said, and most of their innovation is aimed at existing clients and operational efficiency. Next176 instead plays in ecosystems where distribution to new clients is the prize: education, health, and jobs, including the gig-worker space. Where the capital required is too heavy, as in telco infrastructure or retail, it partners to embed financial services rather than building itself.

How the portfolio is structured across build, invest and partner

Next176 splits its activity into building, investing and partnering, and the numbers reflect that spread. Over roughly three and a half years the unit has assembled a portfolio of around 18 businesses, Mpako said. Some were incubated in its venture studio and have since graduated with outside investors; three or four remain inside the studio; the rest are equity investments. At any given point the studio holds around five or six ventures that are still wholly owned, before external investors or founder equity pools come in.

The studio, Mpako argued, exists partly to solve loneliness. An entrepreneur trying to build alone inside a large corporate "is very, very lonely," with no one to talk to about structure or risk. By running ten such builds at once, Next176 lets founders share cross-learnings that a single in-house venture never gets. Governance and risk separation matter most here, because the unit owns these ventures 100 per cent on day zero. Mpako put it plainly: "You don't want to be taking kids that should be in kindergarten into the big building."

Why Next176 backs the jockey, not the horse

When founders come knocking, Mpako said the decisive factor is the person, not the idea. "It's more the jockey than it is the horse for us, and we've got data to prove that," he told the audience, noting that where the venture studio has backed the wrong founder it has not gone well, and where it backed the right one the returns have been "absolutely amazing."

His filter is uncomfortably practical. The fundamental question he puts to anyone claiming entrepreneurial credentials is whether they can go without a salary, "let alone the bonus," and whether they are willing to let go of the perks they hold today. If the answer falters, "there's no conversation afterwards." The strongest signal of commitment, he added, is a founder who worries at month-end about whether payroll will clear for themselves and their team.

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How the group was persuaded to accept failure as part of the model

Convincing an Old Mutual board to accept write-offs was, Mpako said, a matter of reframing the money as a fund investment rather than an annual budget line. Because the group had already invested in other VC funds as a shareholder, the first move was to have it treat Next176 the same way: committed capital that the team draws down over time, not a profit-and-loss conversation "six months down the line." The first five years, he noted, are still about deploying capital.

The second shift was portfolio thinking. "Out of the 5 or 10 there's going to be winners, and there's going to be losers," Mpako said, and any model that requires explaining every loser to the board "is going to fail dismally." Next176 constructed its portfolio with concentration and diversification in mind so no single failed bet brings the whole thing down. The payoff is concrete: the unit has had write-offs, but "I don't have to go and explain what the write-offs are, because the overall portfolio for the stage that we're at is still appropriate." He credited top-class board support as non-negotiable, warning that without it any such unit will fail eventually.

The strategic return is already visible. Within its first three years, Next176 spun one portfolio company back into Old Mutual, the group choosing to acquire it rather than see it exit externally. Mpako framed this as de-risking mergers and acquisitions, letting the group observe three or four ventures at arm's length before deciding which are worth acquiring, and pointed to McKinsey's work on "programmatic mergers and acquisitions" and the role Microsoft's M12 played early with OpenAI as the pattern he is copying.

Why African corporates need to fill the venture funding gap

Mpako's wider argument is that African corporates have a duty to plug a funding gap the market is not filling. Venture capital as an asset class on the continent sits below 1 per cent of GDP, he said, against roughly 0.35 per cent in India and 0.28 per cent in Europe. The sharpest problem is not seed money but the gap in the funnel before private equity, the scaling and growth stage where companies stall.

Corporates, he argued, are uniquely placed to fill it, and not only with capital. The unfair advantage Old Mutual brings is financial-services expertise: "If a startup is trying to find the best accountant, they must not come to me," Mpako said, but at the point a startup starts thinking about financial services, "that's our superpower." Just as important, corporates can create the exit routes the continent lacks, where IPOs are scarce and M&A is becoming the realistic path to returns. Iles noted that VC into Africa has been drying up from an already low base of under 3 billion dollars, a fraction of global flows, in part because international investors cannot see an exit route.

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What one question does Next176 ask every would-be founder?

Next176 asks whether a would-be founder can go without a salary, and for how long. Mpako said the question, extended to giving up bonuses and existing perks, is his fastest filter for genuine commitment. Candidates who talk up doing the till for their parents as children but cannot answer it end the conversation there. The founders who have delivered his best results, he said, are the ones anxious about making payroll at month-end, because that anxiety signals real skin in the game.

What should a founder ask a corporate before taking its money?

A founder should turn the due-diligence process around and interrogate the corporate as hard as it interrogates them. Mpako said he has seen "so many horror stories of startups being killed by corporates," lured by the promise of distribution into processes that "will kill you." Founders rarely ask him the questions that matter: the size of the fund and its capacity for follow-on cheques, the unit's autonomy, and whether his own incentives are linked to their success. All three, he said, they should ask. He also cautioned against making a corporate your first ever client, because if the relationship fails "your business is dead," and suggested cutting teeth on smaller clients first.

How does a corporate actually start a venture arm?

Mpako offered a five-part playbook, prefaced with the warning that you get it up and running "with great difficulty." First, be clear it is strategically important to the division or organisation and speaks to its core strategy; it need not sit at group level. Second, secure committed capital upfront for the whole journey, not just the first idea, or you create orphans. Third, make sure whoever provides the capital understands it as a portfolio of bets with winners and losers. Fourth, put appropriate governance in place that satisfies the corporate owner while respecting the rules of the ecosystem. Fifth, deliberately align the incentives of the unit, the founders and the parent corporate. Iles added a sixth: a personal appetite for risk, because novel ventures will draw pushback from the corporate's antibodies.