Ventures Platform, based in Abuja and Lagos, has recently announced the first closing of its $40 million pan-African fund.
Kola Aina, one of Nigeria’s most prominent early-stage investors, established the fund, which has made 69 investments since 2016. Ventures Platform’s announcement comes just one day after 4DX Ventures, a pan-African VC company, announced the final close of its $60 million fund.
Aina, the firm’s founder, and general partner indicated that the initial batch of investments he made were made with his own money. Following that, Ventures Platform tried out an accelerator model, in which it paid out standardized $20,000 pre-seed checks to seed-stage firms in exchange for 10% equity.
For the first time in 2017, the firm formed syndicates and took outside financing. Piggyvest, Paystack, Kudi, and Thrive Agric were among the startups it invested in during this two-year period.
“We wanted to perfect our style of finding high-performing companies early on before they become obvious and backing them with everything we’ve learned as operators,” Aina said.
“We didn’t want to go out and try to raise money when we didn’t have any proof that we could make money.”
Ventures Platform was one of the local investors who profited from Paystack’s $200 million+ departure to Stripe last October. With a couple more secondary exits under its belt, Aina believes now is the right moment for the company to “go to the market and raise its first institutional fund.”
The value of the first closing of Ventures Platform’s first institutional fund isn’t disclosed, but Aina says “it’s a significant sum.” Surprisingly, the majority of the limited partners (LPs) involved are Nigerian and African-based, indicating that local investors’ capacity to fund the region’s most innovative enterprises is growing.
Shola Akinlade, the CEO of Paystack, is one of the firm’s individual LPs, along with Gbenga Oyebode. Organizations including the Nigeria Sovereign Investment Authority (NSIA), UAC Nigeria (for the first time allocated to a VC), and VFD Group are also interested, as are international investors like Y Combinator CEO Michael Seibel and Adam Draper.
“We’re proud that a big portion of our financing comes from local sources for our initial close.” I did a TED Talk titled “Who Would Own Our Future Unicorns,” and I’m really pleased with it because it appears like Africans are saying loud and clear that we would own our future unicorns.
According to Aina, Ventures Platform was intentional about wanting local capital in this fund. “Getting local money for our first close was strategic for us.” However, as you will see, the second close will come from the global fund and DFIs where we have commitments. Still, as important as foreign capital is, I believe it is in foreign capital’s best interests to be in bed with local capital in order to reduce risk.”
The Ventures Platform considers itself to be a thesis-driven fund. According to Aina, the fund’s premise is to support market-creating innovations that address non-consumption and develop inventive new ways to offer goods and services to low-income markets. Fintech, edtech, agritech and food science, healthtech and bioscience, enterprise SaaS, and digital infrastructure are the firm’s six core verticals.
The pan-African firm couldn’t take on follow-on rounds in its portfolio companies, which include Tiger-backed Mono, SeamlessHR, PayHippo, and Migo, because it relied on the syndicate and proprietary capital funds in the early phases of its lifecycle.
These companies have raised more than $500 million in follow-on rounds, and Aina says his business is eager to participate now that it has achieved the fund’s first closure.
“As well as our portfolio firms who have secured new rounds of financing, we have a really solid pipeline of startups that we’ll be looking at across the continent.” We’re searching for innovative firms that meet our premise, and the fact that we have follow-on cash to support them makes it even more appealing,” he said.
With an average check size of $50,000, Ventures Platform largely focused on pre-seed and seed funding. However, Ventures Platform will be able to engage in Series A deals, where it will be able to invest more than $1 million in a single firm, thanks to this new fund (including follow-on rounds).
Outside of Nigeria, the Abuja-based venture capital business is expanding its operations, with investments in Kenya’s MarketForce and Tambua Health, Zambia’s Union54, and Egypt’s MoneyHash, to name a few. The company intends to spend further in these areas, as well as Francophone Africa.
Thirty percent of the firm’s 69 startups have gone through Y Combinator.
While having YC as a partner contributed to the company’s development, Aina believes his firm has a flair for identifying outstanding firms.
Only a few venture capital firms in Nigeria’s and Africa’s IT ecosystems can match Ventures Platform’s YC metrics. For startups, being part of these firms’ portfolios signifies a signal of success, but some VC critics say these sorts of numbers are assured for firms that adopt “spray and pray” strategies.
According to Aina, Ventures Platform’s function as an “early-stage discovery fund” entails discovering many startups to back early and investing in future stages of a handful.
“Finally, because of the stage at which we invest, a big element of our approach is to support a huge batch of firms at the pre-seed stage, and as time goes on, you can see how the funnel narrows”.
“We can now double down on our wins thanks to this new fund, which is fantastic for both the companies and the investors”.
As part of a move to broaden its expertise, Ventures Platform announced that it would bring on board well-known figures in African innovation as venture partners. Seni Sulyman, the former vice president of global operations at Andela and the CEO of BlackOps, a talent marketplace for African enterprise builders and operators, is the first and only announced partner for the time being.