In 2020, despite the gloominess of the pandemic, arguably the biggest story of the Nigerian tech ecosystem broke with the acquisition of technology company Paystack by American fintech giant, Stripe. The exit signaled a significant win for many angel investors who had ‘cut checks’ for the startup at its early stage. In fact, one of the early-stage investors in Paystack confirmed the “multiples of the return on investment are incredible.” In a similar vein, earlier this year, Flutterwave, another financial tech startup surpassed over $1B in valuation after raising $170m in series C funding.
Recent developments signal increased interest in African startups both from within and outside the continent. Africans who have the capital are now willing to cut checks for startups as an investment. However, for many of these people, there still exists the challenges of access and know-how as many of them do not understand the ecosystem. This is where people-powered investment syndicates like the Future Africa Collective come in.
Why Investment Syndicates?
Investment syndicates are special funds that pool capital from multiple investors to invest in a company. Think of it as a crowdfunding investment for a startup. However, the difference here is that for investment syndicates, the opportunity to co-invest is limited to few admitted individuals and most importantly the investment round is usually led by experienced investors who are sometimes ex-founders of successful companies. This ensures that proper due diligence is done and the risk of investment is mitigated. A perfect example of this is the Future Africa Collective, a community of angel investors from the Future Africa Fund led by Iyin Aboyeji founder of two of Africa’s most valuable startups: Andela and Flutterwave.
Providing access to high growth startups…
The Future Africa Collective gives selected qualified individuals to access to startups by the Future Africa Fund. Every year, the collective sends members up to 20 startups they can invest in with detailed information such as:
- A brief on the company and why it is a good investment.
- A detailed pitch deck co-created with the company.
- A live Q&A call with the founding team of the company.
- Data room access which includes an investment memo(detailing the industry the startup is operating in, why it is important and its product roadmap) and necessary due diligence corporate and financial data.
- Most importantly, a link to the company’s deal syndicate page where members can invest with a $2,500 minimum.
Mitigating Risks…
For every deal sent to members of the collective, Future Africa analyzes, vets the investments, and also invests in each deal. The collective also tries to reduce the risk of failure by leveraging its operating expertise and founders’ experience to provide active coaching and support for startup founders in its portfolio. The membership fee is dedicated to sourcing, analyzing, preparing, and conducting due diligence on startups to be presented to the collective
Startups in the collective’s portfolio go through a rigorous onboarding process where information on financial records, business model, talent (people), market gap, product design and distribution are scrutinized.
What kind of Startups does the Collective invest in?
According to correspondence from the founders, the collective is sector-agnostic. The collective invests in high-growth tech-driven startups across industries like Infrastructure, Payments, Healthcare, Agriculture, Logistics, Hospitality, Software As a Service (SaaS), Media, and Entertainment across Africa.
Since its inception in 2016, the Future Africa Fund has invested in innovative startups transforming African challenges into global solutions. It has backed startups like Flutterwave, Smile Identity, Kobo360, 54Gene, Bamboo, BuyCoins, Tambua Health, Bongalow, Sote, Termii amongst others.
As at January 2021 Future Africa has grown its portfolio 8x to $12m in assets under management, and its startups have created $1.2 billion of company value, raised $300 million in follow-on capital, made $120 million in annual revenues while creating 3,000 direct jobs and 12,000 indirect jobs.
Why and How to join the Collective?
It is no news that investing in startups is a very risky venture. Nonetheless, when done right, with the right access and expert information, it can be very rewarding. The Future Africa Collective gives investors an opportunity to invest in carefully selected African startups while providing investors with information that helps them make an investment decision.
To join the collective, interested members can now apply directly via the Future Africa website. The collective Selected members from this pool are required to pay a $1000 per annum or $300 per quarter membership fee before they can begin to access deals. The collective admits members all year round.
Disclaimer: Early-stage investing is very high risk. Past performances do not predict future returns. Although Future Africa thoroughly vets the startups and founders that it presents to the collective, venture capital – especially at the earliest stages where it invests is unpredictable. You could make multiples on your investment or lose all your money. However, Future Africa reduces the risk of failure by leveraging its operating expertise to provide management support and coaching for startups. Do note that you are investing at your own risk and Future Africa cannot be held liable for any losses you incur while investing.
