Early-stage venture capital firm Microtraction, which invests in African tech startups at the pre-seed stage, has announced a US$15 million first close of its second fund, counting a number of established African tech startup founders among its LPs.
Founded by Yele Bademosi and Kwamena Afful in 2017, with initial backing from PAVE Investments, Michael Seibel, Andy Volk, and Chris Shultz, Microtraction has invested in 36 companies comprising 83 founders in Nigeria, Ghana, Kenya, and Rwanda.
Portfolio companies include Accounteer, Riby, Thank U Cash, CowryWise, Wallet.ng, Schoolable, 54gene, Termii, Pivo, Bit Sika and Raise, with these companies between them having raised more than US$10 million in follow-on funding.
For its second fund, the Community Fund, Microtraction said it had “carefully and intentionally” sought out founders, GPs, and LPs that comprise its investor base. A first cloe of US$15 million has now been achieved, with LPs including The LPs in this community fund include more than 30 venture-backed founders of African companies, like Paystack’s Shola Akinlade, Cowrywise’s Razaq Ahmed, 54gene’s Francis Osifo, Piggyvest’s Odun Eweniyi, and Float’s Jesse Ghansah.
The fund will write first cheques of US$100,000 for seven per cent into early-stage African companies across different sectors and regions in Africa with an option for a quick top-up of up to US$350,000, as long as Microtraction does not account for more than 25 per cent of the company’s next official fundraising round. The firm intends to make a minimum of 60 investments via this vehicle, with around 20 getting the quick top-up in the next round. So far, 20 investments have been made through this community fund.
“This year marks the 5th anniversary of Microtraction and over the past few years, we’ve been fortunate enough to witness and contribute to the growth of the African tech ecosystem. We are grateful to have partnered with some of the most innovative, mission-driven founders solving some of the continent’s most pressing challenges,” said Kwamena Afful, founding partner at Microtraction.
“As a team, we constantly ask ourselves: ‘What do founders need right now? How do we improve our offering to founders? How do we differentiate ourselves from other investors?’. We realized, very quickly, that the difference between founders that are on the right track to building successful businesses and those that are not quite there yet, is access to a rich and valuable community that increases the odds of success,” said Dayo Koleowo, partner at Microtraction.
In order to create an engaging experience within the community, Microtraction is also venturing into the Web3 space by setting up a community vehicle as the first African fund with community tokens for its members, where social tokens will be used to incentivise and gamify the experience of members who will provide value-add and support to the fund and founders. For now, the DAO will operate on an invite-only basis and will be launching with various perks such as exclusive access to events, investment opportunities, industry deep dives, and more.
“As a group, we are never shy of experimenting and creating a blueprint others can build upon. We believe that the African startup ecosystem is still in its infancy and it’s going to take a community of connected, aligned, and incentivised members to contribute, grow and accelerate its development. As a fund and community, we look forward to continuing to innovate on Africa’s innovation infrastructure alongside our members,” said Yele Bademosi, founding partner at Microtraction.