MAGIC Fund’s $30m raise, VC funding in Africa

by | Jul 7, 2021

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Good day,

Today, I’m discussing:

  • MAGIC Fund’s $30m raise
  • Record numbers for African VC funding

MAGIC Fund’s $30m raise

Magic Fund Partners
MAGIC Fund partners. Source: TechCrunch

MAGIC Fund, a collective of founders across the world, has announced the raise of $30 million to support founders across Africa, Europe, Latin America, North America, and Southeast Asia. The fund has 12 founders who act as general partners.

Per TechCrunch, the firm’s first fund of $1.5 million yielded a 5x return over three years. With some of the companies that were backed exiting, their founders invested in MAGIC Fund, coming onboard as Fund II partners.

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Since launching, the firm has invested in 70 companies, including Mono, Retool, Bamboo, and Eden Life.

Read more: VC Firm, MAGIC Fund raises $30m to support early-stage startups globally

What does this mean? As founders build and successfully exit startups, they often want to invest in other founders. If they choose to go alone, they are limited either by their location or network. However, by providing a vehicle for founders to invest together, MAGIC Fund exposes these founders to opportunities they may have missed.

A school of thought believes that the best venture capitalists are founders turned investors. These investors have the unique position of having been in the founders’ shoes and are best placed to offer support. This has led to a rise in founders becoming investors.

What’s in it for the startups? First, it’s important to point out that MAGIC Fund is an early-stage investor. Consequently, they typically invest at the pre-seed or seed stages of a company’s funding round. Startups would gain a network of people who have gone through similar challenges as them. Think of it as an elder brother providing dating tips for his younger brother.

This is echoed in the words of Adegoke Olubusi, Managing Partner and Co-founder of Helium Health. “There is so much money in the market now and early-stage decision making should be left in the hands of founders. Because think about it really, it makes sense to have those who have spent years battling through it in the trenches make those decisions.” 

By the way, twice a month, we feature an angel investor or venture capital firm investing in African startups. Here’s a link to read the previous episodes.  

Startup funding for African startups exceed $1 billion in H1 2021

FUNDING 2

African startups have raised over $1.14 billion so far in 2021, more than double the amount raised at the same point in 2020. This is as reported by Maxime Bayen, company builder at GreenTec Capital. This figure only includes deals over $1m. 

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As usual, with 48%, fintech startups account for the majority of the funding while the ‘Big Four’ — Nigeria, South Africa, Kenya, and Egypt — took home 80%.

There’s some improvement on the gender-parity scene, with female-led companies receiving 14% of the funding, up from 2% in H1 2020.

Bayen’s report is in line with predictions for startup funding in Africa for 2021. In 2020, owing to the coronavirus pandemic, investments in African startups fell below the numbers from 2019 with African startups receiving an estimated $1.5 billion from investors. 

With the pandemic expected to ease up, AfricArena predicted that VC investments on the continent would range between $2.25 billion and $2.8 billion in 2021.

At this rate, African startups are on track to meet and possibly surpass these predictions. 

Interest in African startups and founders has been rising in recent years. However, these numbers are low when compared to startups in other regions. For example, Southeast Asian startups raised $6 billion in the first quarter of 2021, which is almost three times the projected investment in Africa for the entire year.

For more on startup funding in Africa, come back later in the day as I look at the numbers making up these investments. 

What I’m reading

  • The pandemic did not affect mental health the way you think. Read.
  • Why in-law relationships can be so challenging. Read.
  • From K-pop stan to keyboard warrior: Meet the activists battling Myanmar’s military junta. Read.

What do you think about these stories? Let us know in the comments section. 

Wishing you a productive day. 

Chimgozirim Nwokoma
Chimgozirim Nwokoma

Accidental writer, covering Africa’s startup landscape and its heroes.

On January 22, 2022, be part of the largest gathering of innovators, startup founders, thinkers, programmers, policymakers, and investors in West Africa. Register free.

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