Happy New Year. I trust you are well and staying safe.
2020 was an extraordinary year for us at Future Africa.
We began the year in confusion and shock as the Coronavirus pandemic tore through our lives. As lives were lost, businesses shut down, and tempers flared over glaring injustices we could no longer overlook, it seemed like the wrong time to be building the future. Our efforts to raise institutional funding failed because I was stuck in Nigeria and unable to visit London, New York and DC where the institutional and development finance capital sits. In fact, to be quite honest, if someone had offered me a decent job and a safe landing for my team, I probably wouldn’t be writing this email to you today. Thankfully, as we demand of our innovators, we somehow found the courage to turn the big challenge of a failed fundraise into an opportunity to change the face of venture capital in Africa forever.
In April 2020, we put out a call asking you to Fund the Future and over 400 people applied. This incredible response led us on this amazing journey to invest in innovators building a future where prosperity and purpose is within everyone’s reach by turning our biggest challenges into global opportunities.
In less than 6 months of operationally launching the Future Africa Collective, we have grown our co-investment community to over 160 members and together deployed over $1m to 14 innovators across Africa. Without you, we could never have accomplished this and for this, we are eternally grateful.
There is no question that despite the pandemic, 2020 was a watershed year for Venture Capital in Africa. The great exits of technology companies Paystack, DPO and Sendwave and the rain of new funding rounds injected new energy into Venture Capital and put Africa on the global innovation map. Globally, the general atmosphere of cheap liquidity seeking returns (real or imagined) has fuelled an incredible bull run which we are cautiously taking advantage of by remaining disciplined in our assessment of opportunities, strategic in our allocation of capital and focused on our mission of serving innovators building the future.
Last year we also made a decision to profitably exit some of our legacy positions through secondaries so we could return capital to our earliest limited partners in our first fund and build a war chest that will enable us to invest more deeply in the Future Africa experience. We raised $1.2m in capital in 2018 and returned $3.7 million in 2020.
Our portfolio companies also raised a total of $63.6 million in follow on funding in 2020.
Here are the current aggregate statistics on the performance of all the funds we advice and/or manage as of December 2020 :
During our 2020 virtual retreat, we took the time to review the year and we identified five major areas of focus for us in 2021. Given I consider you all extended members of our team, I would love to share these areas of focus with you as we build together in 2021.
#1: Grow our co-investor collective
According to Paul Graham, founder of Y Combinator, the defining characteristic of a startup is growth. Unlike most other Venture Capital firms, we consider ourselves first and foremost a startup. As such our primary objective is growth. This year we are choosing to grow our Future Africa Collective members and co-investors. Now we know being a great co-investor goes beyond simply having money to invest in startups. In fact last year we turned down the vast majority of applicants, accepting only 37% of those who applied. This year we expect that percentage to be lower. Future Africa Collective co-investors have to bring more than money to the table. Some of them are experts in emerging technologies like biotech and DNA, while others are founders, investors, product managers and business leaders. All of us united in our mission to build the future by turning our biggest challenges into global business opportunities. Our primary objective this year will be to grow. So please if you know people who should be members of the collective and aren’t yet, please send them here.
#2 : Find and fund amazing innovators, earlier
I happen to believe in a slightly milder variant of Thiel’s law: a startup messed up at its foundation is extremely difficult to fix. The analogy I love to use for this is a rocketship. A few metres of incline in the wrong direction on launch could be the difference between landing in Baghdad or Beirut. Now, I understand early-stage investment is risky and has a high rate of failure. Yet, our years of experience in founding, building and investing in startups like Flutterwave, Andela, 54Gene, and Kobo360 amongst others, have proven to us that this is the best time to provide early guidance and active support to innovators. This year we are committing to not just finding and funding great innovators much earlier but helping them build the foundations of a great business so they can grow from zero to a hundred million dollar valuation in less than 30 months. If you’re an innovator just getting started on your journey to building the future, please apply to the fund.
#3: Bring more than capital to the table
Although investing in innovators is a huge focus for us in recent times, Future Africa has never really been just about writing checks to founders. In fact, given how small our check sizes are ($25k-250K), I am always amazed that founders bother with us at all. In the end founders and investors come to us because of our track record in coaching founders and building communities to support their work. We have supported founders on foundational decisions like co-founder searches, product design, market sizing, biz-ops & biz-dev, financial modelling & pricing, regulatory compliance and fundraising amongst other functions. This work is what earns us our spot on the cap table and the gratitude of founders. In the past, I and our core Future Africa team have primarily been responsible for filling out this function. This year, I am really excited to scale this function by working with you. We want to recruit from amongst our community, Venture Partners, coaches, advisors and board members for our companies. The dream is to enable founders to get best in class advice on-demand from experts in whatever company building challenge they face. If you have a passion for advising and supporting early-stage companies, please reach out to us.
#4: Fund more innovators, faster
Last year, we reviewed decks from over 600 innovators and funded 16 of them in total, bringing our all-time total of investments made to 33 companies. While this was a great result, we would love to take it to the next level by funding more diverse innovators, in more diverse industries, with much larger checks and faster. In particular, this year we are making a commitment to ensure at least $1m of our capital goes to female innovators. We are also looking to fund innovators working outside Nigeria as well as innovators solving difficult problems that may not be as popular with investors but are just impactful. In particular, we are looking to fund creative innovations in education technology, digital and physical infrastructure and agriculture amongst others. Doing this will require us to build a more open funnel for deal flow as well as invest deeply in talent, tools, and research data. Long term, we really do see Future Africa as a modern-day JP Morgan or Goldman Sachs managing and advising families of innovation funds spread out across geographies, asset classes, time horizons and industries with the singular goal of investing in innovators building an African future by turning our challenges into opportunities.
#5: Build purposeful and prosperous communities
Unfortunately, the global pandemic meant we couldn’t gather in-person to host our very popular FAVE Hangouts around the world. However, thanks to technology we connected virtually, to learn how to build wealth in turbulent times and discuss an African Rennaisance. We also launched our podcast series, Invest In The Future. This year, despite the pandemic, we hope to double down on bringing our community together at least once a quarter. We’ve already kicked off the year with our 10-year View of Entrepreneurship in Africa conference which we hosted with Local Globe. Whether we are bringing Africans together to discuss our continent’s challenges or organizing to turn these challenges into opportunities to deliver growth and impact, every event we host hopes to inspire people to build purposeful and prosperous communities. If you have event ideas or collaborations you want to share with us please share them with us at firstname.lastname@example.org.
The beauty of our five goals is that they build on each other. Growing our investor collective will empower us to build a capital stack that will enable us to find innovators earlier and fund more of them faster. When we bring more than capital to the table, we can deliver the high returns and high impact that will enable us to build purposeful and prosperous communities.
2020 was a year that seemingly exposed the fault lines in our overly optimistic narratives about building Africa’s future. Many times as we asked ourselves, how exactly do we hope to build the future in Africa when we face so many wicked problems that seem to only grow with complexity as time passes. The answer to this question is our thesis; we can only build the future by empowering mission-driven innovators who desire to take our biggest challenges and turn them into global business opportunities. Indeed, the obstacle is the way.
See you on the other side. Stronger.