In April 2020, we started the Future Africa Collective in the middle of the COVID pandemic. At this time, global capital was pulling back from Africa, believing that we would be the worst hit by the virus. In this moment of doubt, our community stepped up with the Future Africa Collective.
As we mentioned in our launch announcement, It is time to Fund the Future;
“There is no reason why limited partners and investor committees of investment bankers and aid workers who don’t live here, don’t understand our context, don’t believe in our entrepreneurial talent and don’t understand our challenges can determine which innovators help us make it through this crisis but you can’t. You too can fund an African future.”
Thanks to our amazing members, we did it!
When we started, we never imagined we would inspire a new way to fund African startups and ultimately democratize venture capital. We simply believed that Africans must be at the forefront of funding an African future, and the Future Africa Collective could be a way for them to do so. Two years later, not only have we demystified startup investing for hundreds of new African angel investors, but we also helped sow the seeds of a record year in African Venture Capital. In 2021, African startups raised a sum of $4.65 Billion in funding. In 2022, despite the downturn, that number is projected to almost double.
Over the last 2 years since we began, as a collective, we have invested $5,000,000 into 26 companies. The average investment per company is $220,000. Our companies do important work across industries – from Agriculture to Retail and E-commerce. Members of our Collective represent more than 20 countries worldwide. Yet, as was clearly indicated in our original founding manifesto, we remain by Africans, for Africans. 60% of Collective members are African, and forty percent live on the continent. Our co-investors, who have boldly walked this path with us from inception, deserve all the credit for these incredible achievements.
However, as we must all acknowledge, so much has changed about the market environment for startup investing over the last few months. The slowdown in public securities has had a chilling effect on private market valuations, forcing all participants back to earth. In our article: What does the market downturn mean for the Future of Africa?, we covered the downturn and how it would affect the future of African venture capital. Please take some time to read it.
In the end, change is the only constant. While the current slowdown is unfortunate, it presents an opportunity for the Collective to consider some important changes to how it invests. As investment managers, prudence demands that we explore whether investing via special purpose vehicles in club deals where we don’t have enough ownership to determine price is responsible stewardship of investors’ capital. We are not convinced this is the Future Africa way. We believe that especially now, we must get into investments much earlier so our investors can benefit from value multiples that typically accrue to early investors with sizable ownership. Most importantly, we believe that the Collective must support the aspirations of our members, who wish to be more embedded in the African startup ecosystem building an African future in various capacities (as founders, investors or employees).
A few weeks ago, we hosted a town hall with our community of co-investors to discuss the Future of the collective. At that meeting, we made a decision to evolve the collective from being a deal-driven investment platform to becoming a community-driven investment platform. Since then, we have worked hard to shut down our syndicate deal machinery. Today, over 50% of collective members have transitioned into the fund model and are aligned much better with the community’s ambitions to invest and work with early-stage founders.
Our goal is to:
- Provide a springboard for the next generation of emerging investment managers through the Collective
- Help co-investors build a track record of supporting and investing in founders very early
- Connect founders with our community so that together they can achieve incredible outcomes.
- Help diversify risk and risk-adjusted returns.
In summary, here’re some key differences between the old and the new collective.
Watch our Founding Partner, Iyinoluwa Aboyeji, present and discuss this transition (along with the QnA) here.
What we’re delivering
- An apprenticeship in early-stage investing.
- Insights and research will help people hone in on or solve specific problems.
- Community: Events, investor community, education, platform, conferences.
- An investment vehicle that gives Africans access to venture as an asset class.
Our community can expect quality research insights, deeper networks with other LPs (and founders) and more profound deals as we dig even deeper to uncover and develop valuable opportunities in the African market. So far, we have received overwhelming support from our investors worldwide and look forward to meeting the new challenges and opportunities of investing in Africa.