Startup investing in Africa has come a long way, and this is partly due to the work that angel investors do in helping startups take off. As their name suggests, angel investors are individuals who provide early-stage financing for startups that helps them get their business off the ground and hopefully attract bigger investments.
Because they invest at the very early stages of a startup’s life, the chances of failure are really high, yet without the money they invest, many startups may never get started.
For today’s instalment in the Angels and VC series, Techpoint Africa spoke to Biola Alabi, an angel investor and the founder of Biola Alabi Media, a company that produces film and television content. If you’ve watched Nollywood movies such as Lara and the Beat, Banana Island Ghosts, and Bukas and Joints, then you have her company to thank for it.
Can you give us a brief history of your professional experience?
My career has seen me work in different industries. I started out working in the automotive sector before moving to startups and then media. Working in the media was actually what led to me returning to Africa.
When I started working in Africa, I became more obsessed with impact. So for me, if I was going to leave the US to return to Africa, anything I did had to be impactful.
There was no point in being here if I was not going to make an impact. Currently, I run a strategic and advisory company that also produces film and television content.
How did you get started with angel investing?
For me, it was really about investing in people. There were people with good ideas who often asked me to invest, but I always thought of formalising the process.
The founder of Big Cabal Media reached out to me on Twitter for a meeting, during which he told me about what they wanted to do and where they planned to go with the business.
At that time, I was a subscriber to TechCabal‘s newsletter. Having been a part of a tech ecosystem, I knew that reporting on ecosystems was important for building one.
I was really interested in what they were doing and the fact that they were going to be Pan-African, so I wrote a cheque for them. I believe I was one of the first people who did that, and that sort of started my journey.
Once again, it was always about what the company was doing, if they were solving a pain point or creating jobs for young people on the continent and Nigeria. These were all things that were important to me. After Big Cabal Media, I started looking at tech companies to learn more about the tech ecosystem here.
I visited CcHUB and got involved with Lagos Angel Network (LAN) because I also wanted to learn more about angel investing from an educational perspective, and LAN was a great place to do that. There’s so much around angel investing. It’s not just about writing a cheque; it’s also about rolling up your sleeves and helping the entrepreneurs.
There was a lot of learning to do, and I think I learnt a lot from my first investments.
You’ve mentioned impact, but what else motivates you?
Well, angel investing is literally about people; it’s about investing in people who have a good idea. So part of how I see my role as an angel investor is in terms of how I can help the company grow and the value I can bring to them.
Sometimes there are companies where you don’t have the opportunity to roll up your sleeves and get involved. I’ve made some of these investments and found that I don’t enjoy them as much as companies where I’m helping out.
At the end of the day, we’re angel investors and not executives, but if we can help the executives in the company strategise, think differently, and open our network to them, I believe that’s when we’re adding real value.
Throughout my career, I’ve worked in roles that have required me to add value to companies from a strategic perspective to grow portfolios within companies. These are things in my wheelhouse, so I’m very excited if I can bring them to a startup.
I’m also excited when we can build corporate governance into their systems. As early-stage startups, they need to start to think very early about how to ensure that the business is structured correctly. Hence, structuring businesses is something I enjoy doing too.
Angel investing is really about making a change. Of course, long term, hopefully, we make some profit, but that’s not what drives me. While angel investing is part of my investment portfolio, it is not a core part. I only invest money that I don’t mind losing, and we need more people to invest in early-stage startups on the continent.
Are there specific industries that you’re interested in, and why?
There are things that I’m interested in, but sometimes, that’s also not what drives my investments. For some, it could be that the market is not large enough or that I don’t think the solution is something that we need right now. I’m interested in the health sector, but sometimes I see businesses and don’t invest in them.
Sometimes it’s the leadership because I believe that you need a great team to grow and scale a company. They don’t necessarily need to have all the right answers, but I really have to believe in the team.
For some businesses, it’s just about how passionate I am about the solution. I might not necessarily know the big picture, and they might have to pivot a few times in their journey, but the fact that they were thinking about solving a very difficult problem can sometimes motivate me to write a cheque.
I am very decisive because I’ve learnt that the sooner you can decide as an investor, the better for you so that you don’t waste your time or the entrepreneur’s.
I’m very interested in health and education; in the past, I’ve worked with a company committed to using media to educate.
I’m currently working with an edutech company, and they’re building some really cool and exciting stuff. Anything that saves or preserves life, can move our health system forward, or eliminate a lot of the friction that exists in our financial system is interesting to me.
Are you like most angel investors who invest at the early stage?
Angel investing is really early stage. We come in very early so that you can go out and prove to bigger investors that you have a product people are willing to pay for. Sometimes we come in at the idea stage, especially if you’re a first-time founder, but that’s rare. Most, if not all, investments I’ve done have been in companies with at least a minimum viable product (MVP).
By your standards, what shouldn’t a startup be doing?
I think one of the things a startup should not be doing is hide its challenges from investors. So startups usually have challenges, and a lot of the time, they only give you the good news.
I try to advise startups to show the good, the bad, and the ugly sides of their business. They should be able to ask for help when they need it, so startups need to be as transparent as possible.
Even if things are going badly, you should not ghost your investors. Keep them informed because it’s a very small community and word travels very quickly.
If you’re a founder, you never know when an investor is capable of helping you. Also, when making demands from investors, be very clear. Angel investors are busy, but they want to help, so make it easier for them to do that by being specific.
What’s your average ticket size for a company?
The cheques vary in size depending on where the entrepreneur is in their journey and where I think the company is. I’ve written cheques for $5,000 all the way to $25,000. Currently, I’m going out of my comfort zone and writing larger cheques.
What companies do you have in your portfolio?
Chekkit, Big Cabal Media, Nature’s Bounty, Trove, and a few others, which I won’t disclose.
Have you had any bad investments so far?
I’m not sure I’d call them bad investments, but there’ve been a few that haven’t worked out. The company just wasn’t the right company at the right time, and with those companies, you take it on the chin and move on. For some of these companies, I’ve stayed in touch with the founders and have explored investing in new projects that they are working on.
What are some of your significant wins?
One of the most notable stories for us has been Big Cabal Media and the transition from the founder who was also the CEO to a new CEO. So the founders wanted to move on to something else and had to be replaced. I’m the chairwoman of the board, and that phase needed to be handled well.
Succession planning was not something we thought about before then, but it’s something I now encourage founders to consider. You never know if you want to move on to something else or if you are the right fit for the stage at which the company is. Being able to pull it off successfully is something that I’m incredibly proud of.
Are there opportunities that you regret passing on?
I’m not sure I regret the opportunities I’ve passed on because I try to learn from them. I’m an angel investor, and that means I invest my money. I have a budget that I work with, and sometimes I pass on some deals because my budget does not cover them. One of the things that you must have as an angel investor is discipline so that you don’t get burnt out.
Occasionally, I go over my budget, but I try not to overstretch myself. I enjoy what I do, and if I start to overstretch myself, I might not enjoy it as much. When I see some of these deals that I cannot invest in, I try to introduce them to other angel investors that I know.