How Future Africa Invests – Our Investment Process Explained

How Future Africa Invests – Our Investment Process Explained
May 31, 2021 Oreoluwa Aremo
how-ww-invest-future-africa

Future Africa provides capital, coaching, and community to empower founders to build a future where purpose and prosperity are within everyone’s reach. Capital is one of our primary vehicles of support. We show our commitment to building Africa’s future by first investing capital into startups and then layering coaching and community support. 

We’ve invested about $4 million of capital into 45 startups across several countries in  Africa operating in different industries. These companies have raised over $350 million in follow-on funding, are worth over $1.5 Billion and provide over 5000 jobs.

We understand that the process of raising funds can be tough and our goal is to make it as transparent and simple as possible for founders.

If you find us worthy enough to back you, this article outlines what our investment process looks like.

To start, here are some important things to keep in mind when you pitch Future Africa.

First, we invest in people. Investing in founders solving Africa’s biggest challenges is the core of what we do. 

Second, we are sector-agnostic. We invest in high growth technology-driven companies across industries like Healthcare, Agriculture, Logistics, Hospitality, Software As A Service, Finance, Communications, Media & Entertainment, Retail, and Commerce. 

Third, we invest using a framework for the industries we consider – TIME. Here’s what TIME means:

Technology  –  We invest in technology or technology-enabled businesses which solve different problems in different industries. This could range from hardware companies like Tambua Health which is building diagnostic healthcare devices to Eden Life which automates home services.

Infrastructure – Startups building the physical or digital infrastructure that will enable the future we want to be built in Africa. We’ve invested in Charter City projects, hyper scale data centres like Kasi Data Centres, fibre cable landing stations and agro-processing factories. We’ve also invested in banking as a service infrastructure and payments infrastructure amongst others.

Media – Startups shaping new narratives by telling new stories and exploring new revenue models that include a mass reach and consumer platforms like Big Cabal Media, the publishers of Zikoko & Techcabal and Stears, the publishers of Stears Business. 

Environment – Startups in the agriculture space that enables more environmentally friendly smallholder farming and are building for the circular economy (e.g recycling or upcycling startups).

 

Now that you understand the themes we invest in, here’s a step-by-step walkthrough of our vetting process for startups who apply for funding. 

Step One: Apply to join our portfolio of founders. 

The first step is to apply to the Future Africa Fund by filling this form. We ask important questions about you and your startup to learn more about what you’re building. You can also email anyone at the fund or be introduced to us by a mutual contact. These are the three simple ways to get our attention.

Step Two: Preliminary review

Once we receive your application to the fund, you will receive an email confirming our receipt of your application. If we’re interested in talking further, a member of our investment team will send an email requesting your pitch deck. Our team will run through this deck and evaluate the industry and your team. This process takes an average of 6 weeks due to the large number of pitch decks and applications we get. After this assessment, we will send an email if we would like to proceed with the conversation and schedule a call with the founding team. 

Step Three:  Meeting

On Wednesdays, we have meetings with founders. During this conversation, you will have to tell us about the problem that you’re solving and why it is important. We’ll ask in-depth questions based on what you have shared and the research that we have carried out. 

Step Four: Evaluation of TD3 (Talent, Design, Data, Distribution)

We evaluate pitches using an internal framework we call TD3:

Talent: We invest pretty early and this means that at the point we invest, we’re actually investing in the founder(s). Founders need to demonstrate excellent knowledge and expertise in the industry that they are building for. They must also be mission-driven and passionate about the problem that they’re solving. Beyond the hustle, we must see the desire to make a true impact shine through.

Design: To us, the design includes how your product looks and feels as well as how it works and how users interact with it. We consider how well-thought-out the product’s design is and if it has been adapted to the target market.

Data: One of our portfolio companies- Stears, uses a quote that captures this perfectly: “In God we trust, everyone else must provide data”. 

We sift through publicly and privately available data about the industry, the market, the problems the product is solving, and existing solutions in the market.

Distribution: Is there a market for this product? If yes, what are your plans to get this product in the hands of customers or clients?

After we have asked these questions and assessed the company, two things can happen: we will send you any further questions we have or let you know that we are no longer able to proceed. 

Step Five: Due Diligence

When all questions have been satisfactorily answered, we will request for your investment deal room containing your deck, financial records/model, metrics,  business strategy, team information, legal documents and other essential information. Our investment team will review your deal room data and conduct background checks, and within 2 – 3 weeks, we will let you know what our investment decision is.

Step Six: Closing/Funding

Once the due diligence is complete, closing documents are signed (investment documents, side letter) and funds are wired.  We officially welcome you into the Future Africa community!

 

Here are some other things to note:

1. We invest in companies at the earliest stages i.e pre-seed and seed stages.
2.We don’t invest in just ideas. We want to see that you’ve built a Minimum Viable Product(MVP) of your proposed solution if you’re fundraising. To us, this means you’ve taken the steps to develop what you intend to build. This MVP can be a website, landing page, a demo or your product prototype.
3.For founders who want to build technology(software or hardware) products, we encourage you to have a technical co-founder.
4.Traction is important at the pre-seed and seed stage. While we do not expect you to have a lot of revenue, people using your product and/or paying for it is a great signal that people want what you’re building.
5.We write cheques from $25,000 – $500,000.
6.After funding companies with capital, we work closely with founders to support them as they build products and scale companies. We’re operators ourselves and have decades of experience building technology companies in Africa.
7.We receive hundreds of pitches and we like to take our time to carefully review each one, please be patient with us as you go through this process.

We look forward to your application and decks and to support you as we build the future of Africa. Please apply to the fund with the button below.

 

Apply For Funding

1 Comment

  1. Clement Egwurube 1 week ago

    Thanks for the opportunity to apply to your fund, I have actually done an online application 3 weeks back with the startup company Adpay Communications Ltd. Do I need to reapply?
    Thanks for your time

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