The Future Africa fund, which has just opened up to co-investors, adds an element of competition to the regular angel investor network model in use across Africa.
That is according to its co-founder Iyinoluwa Aboyeji, who was a guest of the first edition of the Disrupt Podcast, the new fortnightly podcast released by the team at Disrupt Africa.
Aboyeji, who in the form of Andela and Flutterwave helped to launch two of Africa’s best known and best funded startups, launched Future Africa alongside Olabinjo Adeniran and Adenike Sheriff back in January.
The fund last month opened to co-investors as it bids to back solutions tackling issues associated with the COVID-19 crisis and beyond. Though like angel investor networks it sources investments from various individual angels, Aboyeji said it was different to these networks in some key ways.
“The process that we follow makes it an easier decision to make, and introduces the right amount of competition into the process, which I think is something that is lacking in the existing angel investor networks. There’s too much collectivist thinking,” he said.
Future Africa’s platform is competitive, with investors needing to be quick to ensure they are able to invest in opportunities made available on its platform. Aboyeji said it would be offering selected investors some very exciting opportunities.
“You really want to work with us, quite frankly. Because it’s your best guarantee, so to speak, of results,” he said.
For startups, there are key benefits to working with the Future Africa fund.
“We are one of the only operator VCs in the market,” said Aboyeji. “We are one of those investors that are side by side with you in the trenches. The benefit of the collective is that we are pulling in some very experienced diaspora investors, many of whom are working with big tech in the US, and so really understand the issues and can really support your growth.”
More so than capital, African startups need the right talent and advice to help you grow, which Future Africa can provide.
“There’s something special we bring to the table from a building perspective that no other VC right now on the market can give you,” said Aboyeji.
He told Disrupt Podcast that Future Africa began life as a “futuristic” news outlet, but the founders soon realised its community needed more. Aboyeji merged his family office with Future Africa to create a platform for innovators to access capital and coaching.
“We don’t just want to talk about the future, we want to actively build it. We are identifying the talent that is passionate about solving some of Africa’s biggest problems and turning those problems into massive business opportunities that can scale globally,” he said.
“We identify those founders, we invest money into them, we get other people to invest in them, we provide them with coaching, and then, ultimately, they are part of our community that help us push forward this African future every day.”
So far it has 20 companies in its portfolio, with US$12.5 million in assets under management. This includes Andela and Flutterwave, as well as the likes of 54gene, Bamboo and Chaka. Aboyeji said Future Africa wants to fund 20 companies per year, investing up to US$50,000 per deal.
“The major goal for our fund is tdo fill those investor slots in record time, every time, and hopefully get to the point where we can deploy larger amounts of capital,” he said.
Apparently, it has always been planned that the fund would open up to co-investors, but much later in the day. Yet in the wake of COVID-19, Aboyeji and his co-founders witnessed a couple of funding rounds grind to a halt, which was putting a couple of its founders in trouble. They decided to proactively start to build a local investor base in order to fill the gap.
Short-term at least, this has proven successful.
“It’s been an amazing process so far. We’ve had over 400 investors apply. We’re accepting around 100 of them. We put a deal on the platform with a group of pre-selected co-investors, and that deal was delivered in 72 hours. So it is a very clear indicator that what we are putting out there is working, and there is definitely demand for it,” said Aboyeji.
The first episode of Disrupt Podcast is available now, featuring in-depth interviews with Aboyeji as well as Yoco CTO Lungisa Matshoba.