One of Nigeria’s high profile angel investors is launching a fund for African startups – TechCrunch

Olumide Soyombo is one of well-known angel investors active in Nigerian and African tech startups in general. Since it began investing in Angel in 2014, Soyombo has invested in 33 startups, including ownership of Stripe. Payment stack, PiggyVest and TeamApt.

Today, the investor announces the launch of Voltron Capital, a pan-African venture capital firm he co-founded with Abe Choi, entrepreneur and investor based in the United States.

Voltron will deploy capital in approximately 30 startups, mainly in the pre-seed stage and seed across Africa, in an attempt to “address the severe lack of access to early stage finance for African technology companies.” Ticket sizes will range from $ 20,000 to $ 100,000, focusing on startups in Nigeria, Kenya, South Africa and North Africa.

Soyombo He is one of the few founders and investors on the continent, despite the fact that his company is not the traditional venture capital-backed startup the world has grown accustomed to. In 2008, it began Bluechip Technologies with a friend, Kazeem Tewogbade as an enterprise company providing enterprise application and data storage solutions to banks, telcos and insurance companies. Some of its main customers include OEMs like Oracle.

Founder of a non-traditional startup to an angel investor

Six years later, the couple decided to venture into technology, a relatively nascent industry in Nigeria at that time and began investing in startups through LeadPath, an early stage company that they launched in Lagos, Nigeria. The idea was to invest $ 25,000 and take the startups over a three-month period. accelerator program culminating in a Demo Day. The plan was to run LeadPath as a Y Combinator, but it didn’t take off as planned.

“In 2014, three months later, we learned that there was no investor to put them in charge. So you would have to write another check yourself, ”Soyombo humorously said over the phone. “U.S quickly we saw that the throttle model was not working so we started reversing individually. It’s funny how things have changed since then. “

LeadPath became a special purpose vehicle (SPV) for the couple to carry out their angel investment deals.. And over the years, Soyombo has launched several SPVs for the same purpose. So why do things? differently now creating a background? Soyombo explains to me one of the processes he has used to fund deals over the years to answer this question.

As an influential figure in the Nigerian tech ecosystem, Soyombo has access to just about any major deal on the market.. “I am privileged to see many offers before most people see them. I have built that network within the startup ecosystem and a reputation for being an angel always ready to help.. Then obviously, that helped me see many offers very quickly,” he said. Often their deal flows are full of startups seeking six-figure pre-seed to seed investments. Say, for example, a founder is looking to raise $ 300,000, Soyombo can typically invest $ 50,000 of your own money. And based on your perception of the startup’s growth prospects, you can choose to bring your friends and acquaintances on board to complete the round.

This informal approach is what Soyombo wants to formalize through a structured format where each individual or organizational LP has access to its flow of deals simultaneously. The investor believes that companies will raise capital faster this way.. And what’s interesting is that his work in corporate Nigeria has allowed him access to non-traditional capital, which means that some of the investors using Soyombo’s deal streams are outside of the typical Nigerian technology investment landscape.

He views his job as someone who bridges the angel investment gap between his corporate friends and colleagues who haven’t. typically invested in tech and startups that need your money.

“Now there is a bit of FOMO,” he said. “People, including high net worth people, tell me to carry them whenever I’m investing, and then I have startups looking for capital as well. But then again, I’m not trying to get a full job managing a full fund, so we’ve structured it this way. “

Anyone familiar with the events of African technology in recent months knows the two events that have caused this FOMO: Paystack exit to Stripe Y Unicorn Status by Flutterwave. Soyombo was an early investor in the former, marking his lonely primary exit alongside two secondaries within a portfolio that racked up more than $ 70 million. Therefore, it is not difficult to see why Soyombo is not having a hard time convincing non-traditional investors, including HNI (which are notoriously risk averse when it comes to technology investments), to write checks at startups.

Everything all of a sudden it’s interesting in what is happening in space. HNIs who would have invested money in real estate are looking for new businesses. We even see Older HNIs tell their children to invest on their behalf, making it an easier conversation to have. Most of them want to diversify their portfolio by having a piece of that pie, ”he said, pointing to the successes of Paystack and Flutterwave..

Abe Choi (co-founder, Voltron)

Voltron Capital be managed in AngelList. Its investors traverse HNI and executives of banks, telecommunications companies, among other sectors, each investing a minimum of $ 10,000. Voltron is similar to a typical seven-figure fund targeting early-stage and pre-seed start-ups in Africa, but ‘It’s quite different in the way you choose to endorse the founders. The fund continues to be an embodiment of Soyombo’s investment stance, which is “founders first, regardless of the industry.”

“I will continue to support interesting entrepreneurs. If PiggyVest’s Odunayo was building a healthcare technology or education technology company, I will still support that company, ”he said, referring to the $ 1 million investment he made three years ago. in one of the most famous fintechs in Nigeria. “Then believe the investment capacity of the sectors, for me, is driven by quality entrepreneurs who are going to solve problems in that area. “

Investment in the early stage needs more work

In 2019, African tech startups raised a record $ 2 billion, according to Partech Africa. They have raised half of that number already this year, and some posts predict these startups will break the 2019 record.

Much of these investments enters into agreements at the last stage, which is typical of most technology ecosystems globally. But Africa stands out because early-stage startups find it more difficult to raise investment compared to other regions. For example, the IFC reported that 82% of African tech startups cite access to seed funding and a lack of angel investors as the main problems they face.. Without early stage funding, many of the startups poised to drive this growth are losing vital capital to support their startup operations and generate revenue, which is a key. requirement to secure subsequent rounds of funding and a larger scale.

Voltron, in his small capacity, wants to fill this void in the best possible way. In addition to listing local investors as LP, Soyombo says startups will also be able to access foreign capital. Choi is the key to making that happen. Personally, Choi has invested in 15 startups (out of two); therefore, your experience and network in the US will be crucial to raising foreign capital on the continent..

Soyombo believes that Stripe’s acquisition of Paystack has made foreign investors aware of African startups. He with humor references Paul Graham’s tweet after the acquisition as another reason why foreign investor interests have also been piqued. The Y Combinator co-founder’s tweet read: “Investors ignoring Nigeria now have to ask themselves: What do I know that Patrick Collision doesn’t know?”

That said, the investor maintains that the rate at which the African tech ecosystem is maturing should excite anyone.. The The quality of founders on the continent is improving and will continue to do so because there are more problems to be solved, he continued.

“Also, as our new businesses mature, we will see people leave to establish their own. We want the next wave of African tech success stories to not only impact the continent, but also Really global; Through Abe’s strategic connections to the US, we are confident that we can provide our portfolio with the best possible opportunities to achieve this through our US and global network. “

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