Olumide Soyombo is one of the well-known energetic angel traders in Nigeria tech startups and Africa at massive. Since he started angel investing in 2014, Soyombo has invested in 33 startups, together with Stripe-owned Paystack, PiggyVest, and TeamApt.
Voltron might be deploying capital to roughly 30 startups, principally in pre-seed and seed-stage throughout Africa, in a bid to “deal with the extreme lack of entry to early-stage funding for African tech firms.” The ticket sizes will vary from $20,000 to $100,000, specializing in startups in Nigeria, Kenya, South Africa, and North Africa.
Soyombo is among the few founder-cum-investors on the continent, regardless of his firm not being the standard VC-backed startup the world has grow to be accustomed to. In 2008, he began Bluechip Applied sciences with a pal, Kazeem Tewogbade as an enterprise firm that gives knowledge warehousing options and enterprise functions to banks, telcos, insurance coverage corporations. A few of its largest shoppers embrace OEMs like Oracle.
Non-traditional startup founder to an angel investor
Six years later, the pair determined to enterprise into tech, a comparatively nascent trade in Nigeria on the time and commenced investing in startups by way of LeadPath, an early-stage agency they launched in Lagos, Nigeria. The concept was to take a position $25,000 and take the startups by way of a three-month accelerator program culminating in a Demo Day. The plan was to run LeadPath like Y Combinator however it didn’t take off as deliberate.
“In 2014, three months after we came upon that there was no investor to place them in entrance of. So that you’d have to jot down one other test your self,” Soyombo mentioned humorously over the cellphone. “We rapidly noticed that the accelerator mannequin didn’t work, so we began investing individually. It’s humorous how issues have modified since then.”
LeadPath turned a particular objective automobile (SPV) for the pair to hold out their angel investing offers. And through the years, Soyombo has launched a number of SPVs for a similar objective. So, why do issues otherwise now by making a fund? Soyombo walks me by way of one of many processes he has used to fund offers through the years to reply this query.
As an influential determine in Nigeria’s tech ecosystem, Soyombo has entry to nearly any necessary deal out there. “I get the privilege of seeing many offers earlier than most individuals see them. I’ve constructed that community throughout the startup ecosystem and repute as an angel at all times prepared to assist. So clearly, that helped me see many offers very rapidly,” he mentioned. Usually, his deal flows are crammed with startups looking for six-figure pre-seed to seed investments. Say, for example, a founder is trying to increase $300,000, Soyombo can usually make investments $50,000 of his personal cash. And primarily based on his notion of the startup’s progress prospects, he can select to convey his associates and acquaintances on board to fill the spherical.
This casual strategy is what Soyombo needs to make formal by way of a structured format the place every particular person or organisational LPs will get entry to his deal circulation concurrently. The investor believes firms will get capital faster this fashion. And the attention-grabbing bit is that his work in company Nigeria has allowed him to entry non-traditional capital which implies a number of the traders that use Soyombo’s deal flows are outdoors the everyday Nigerian tech investing panorama.
He sees his job as somebody bridging the hole of angel investing between his company associates and colleagues who haven’t usually invested in tech and startups that want their cash.
“There’s a little bit of FOMO now,” he mentioned. “Folks, together with excessive internet price people, inform me to hold them alongside anytime I’m investing, after which I’ve startups searching for capital as nicely. However then once more, I’m not making an attempt to get a full job by managing a full fund which is why we’ve structured it this fashion.”
Anybody conversant in the happenings in African tech these previous few months is aware of the 2 occasions which have brought about this FOMO: Paystack’s exit to Stripe and Flutterwave’s unicorn standing. Soyombo was an early investor within the former, marking his solitary main exit alongside two secondaries inside a portfolio which have cumulatively raised over $70 million. Thus, it’s not laborious to see why Soyombo isn’t having a tough time convincing non-traditional traders, together with HNIs (who’re notoriously risk-averse with regards to tech investing), to jot down checks in startups.
“All of a sudden, everybody is in what’s taking place within the area. The HNIs that will’ve thrown cash into actual property are searching for startups. We even see older HNIs telling their kids to take a position on their behalf, so it’s a better dialog to have. Most of them need to diversify their portfolio by having a bit of that pie,” he mentioned, pointing to Paystack and Flutterwave successes.
Voltron Capital will be managed on AngelList. Its traders lower throughout HNIs and executives from banks, telcos, amongst different sectors, every investing a minimal of $10,000. Voltron is just like a typical seven-figure fund concentrating on pre-seed and seed-stage startups in Africa, but it’s fairly completely different in the way in which it chooses to again founders. The fund stays an embodiment of Soyombo’s funding stance, which is “founders-first whatever the trade.”
“I’m going to proceed backing attention-grabbing entrepreneurs. If Odunayo of PiggyVest was constructing a healthtech or edtech firm, I’ll nonetheless again that firm,” he mentioned, referring to the $1 million funding he made three years in the past in one in all Nigeria’s broadly celebrated fintechs. “So I believe the investability of sectors, for me, is pushed by high quality entrepreneurs which can be going to resolve issues in that space.”
Early-stage investing wants extra work
In 2019, African tech startups raised a file $2 billion, in accordance with Partech Africa. They’ve raised half that quantity already this 12 months, and a few publications predict these startups will break 2019’s file.
A big chunk of those investments goes into late-stage offers, which is typical of most tech ecosystems globally. However Africa stands out as a result of early-stage startups discover it tougher to lift investments in comparison with different areas. As an example, IFC reported that 82% of African tech startups cite entry to seed funding and a scarcity of angel traders as main issues they face. With out early-stage funding, most of the startups primed to drive this progress are lacking out on important capital to help their early operations and generate income, which is a key requirement for securing later rounds of funding and a bigger scale.
Voltron, in its little capability, needs to fill this hole in one of the best ways it might probably. Apart from itemizing native traders as LPs, Soyombo says startups will have the ability to entry overseas capital too. Choi is the important thing to creating that occur. Personally, Choi has invested in 15 startups (exiting two); subsequently, his expertise and community within the U.S. might be essential in sourcing overseas capital into the continent.
Soyombo believes Stripe acquisition of Paystack has made overseas traders take discover of African startups. He humorously references Paul Graham’s tweet after the acquisition as another excuse why overseas traders’ pursuits have additionally piqued. The tweet from the Y Combinator co-founder learn: “Buyers who ignore Nigeria now should ask themselves: What do I do know that Patrick Collision doesn’t?”
That mentioned, the investor holds that the tempo at which the African tech ecosystem is maturing ought to excite anybody. The high quality of founders on the continent is bettering and can proceed in that method as a result of there are extra issues to resolve, he continued.
“Additionally, as our startups mature, we’ll see individuals leaving to arrange theirs. We would like the subsequent wave of African tech success tales to not solely make an impression on the continent however to be actually world; by way of Abe’s strategic connections to the USA, we’re assured we will present our portfolio with the very best alternatives to realize this by way of our US and world community.”