Future Africa, a platform that provides capital, coaching, and community for African innovators, just announced that it invested a total of $1 million in nine African startups in the third quarter of this year.
The firm was founded by Andela and Flutterwave co-founder, Iyinoluwa Aboyeji; Olabinjo Adeniran, Adenike Sheriff, and Chuba Ezekwesili in March 2019.
January 2020 saw the firm launch the Future Africa Fund dedicated to investing in African startups. The capital arm of the organisation, the Future Africa Fund, wanted to back 20 founders with up to $50,000 each year for less than 11% equity.
Aboyeji, who serves as Founding Limited Partner alongside co-Andela-founder Nadayar Enegesi, explains that while the Future Africa Fund had previously written checks to different startups years back, it was only just making the process official.
“We’ve been investing as angel investors before now and while some failed, we’ve exited quite a number of startups. A lot of those investments were made in the last year, what we just did was to formalise our angel investment process,” he told Techpoint Africa.
At the time, the company's site suggested that the fund had invested in 14 African startups like Andela, Kobo360, Flutterwave, and 54gene.
The Future Africa Collective and Rolling Fund
With a goal to invest $1 million in 2020, the firm was forced to restrategise, no thanks to the COVID-19 pandemic. And in the midst of the disruptions, the firm began exploring new investment models.
In April, Future Africa launched its syndicate fund for angel investors: Future Africa Collective. The strategy was to allow qualified investors to sign up with Future Africa and co-invest on a deal-by-deal basis via investment syndicates (usually institutional VC firms and angel investors).
According to Sheriff, Future Africa chief of staff, these investors get access to 20 startups annually as members of the syndicate. For individuals, this is in exchange for a subscription fee of $1,000 and for institutional investors, $10,000.
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Also, in each deal, the minimum ticket size for anyone partaking in a round is $5,000.
Subsequently, the syndicates pool capital from these investors into a special investment vehicle. After that, they invest the pooled funds in a company.
Future Africa, on the other hand, sources the deals, analyses and vets the investments. At the same time, the firm personally invests in every deal at no less than 20% of the total amount.
Since its launch, the Future Africa Collective has amassed 125 angel investors onto its platform. And while this number keeps increasing, Aboyeji points out that when there is an exit, the investors are required to pay Future Africa and its fund manager 20% of profits from their investment returns.
Then in July, the firm launched the Future Africa Rolling Fund, its investment subscription product. As the name suggests, this scheme allows investors to subscribe periodically throughout the year as opposed to a venture fund that raises capital every few years.
Investors here are encouraged to invest $10k per quarter to get access to all the deals in that quarter.
Additionally, instead of waiting for a traditional exit opportunity, the Rolling Fund will only sell stakes in portfolio companies after they hit a $100m valuation.
Q3 2020 investments
Having built these offerings and made significant progress since the second quarter of the year, Future Africa says its portfolio now has a total of 35 African startups.
With over $500k raised in the Rolling Venture Fund and more than $1m across the three funds, these startup investments include fresh and follow-up rounds.
Additionally, Sheriff tells us that Future Africa chose these startups because they are solving important problems across sectors in tech, media, infrastructure, and environment.
They will join names like Big Cabal Media, LORI Systems, Max.ng in the firm's portfolio.
Here are the startups Future Africa funded in Q3 2020 via its Fund, Collective, and Rolling Venture schemes.
Bamboo: Founded by Yanmo Omorogbe and Richmond Bassey, Bamboo is a wealthtech startup that gives Nigerians unrestricted access to over 3,000 stocks listed on the Nigerian Stock Exchange and US stock exchanges.
Eden: A tech-enabled concierge service for Nigerians to live better and simpler lives. Eden was founded by Nadayar Enegesi, Prosper Otemuyiwa, and Sim Momoh.
Releaf: The startup is improving the value-chain of agricultural products in Nigeria starting with the oil palm fruit. The three-year-old company was founded by Ikenna Nzewi, Uzoma Ayogu, and Isaiah Udotong.
Tambua Health: Founded in 2018 by Daniel Gathigai, the healthtech startup has invented precise, non-invasive, and radiation-free lung imaging devices for use by primary healthcare providers. It was the first deal closed by the Future Africa Collective.
Indicina: The fintech startup is building Africa’s credit infrastructure to digitise the credit value chain and improve decision making by creditors. Yvonne Johnson and Yemi Ajao founded the two-year-old startup.
Evolve Credit: Launched in May 2020, the fintech startup is a marketplace for financial services in Nigeria. Founded by Akan Nelson and Daniel Osineye, Evolve Credit helps Nigerians find, review, and apply for loans and financial products.
Shara: Founded by Grant Brooke (also co-founder of Twiga Foods) in 2017, Shara is building free route-to-market software for consumer goods companies in developing markets.
MyAwayHome: Founded by Kelechi Nwokocha, MyAwayHome is a platform for diasporans to own and manage property back home.
Stears: A Nigerian-based media startup, Stears is building a media and data network for Africa to help individuals, development organisations, investors, governments, and companies access data needed to make informed decisions. It was founded in 2017 by Preston Ideh, Abdul Abdulrahim, Foluso Ogunlana and Michael Famoroti.
The ticket size across these startups ranges from $25k to $250k. Commenting on why Future Africa backed these startups, here's what Aboyeji had to say.
"We believe there is a truly unique opportunity for innovators to turn our continent’s biggest challenges into massive business opportunities. We will continue to provide capital, coaching, and community to founders building the future in Africa.”
