Frequently Asked Questions (FAQs)
What are the risks involved?
Early-stage investing is very high risk. Although we thoroughly vet the startups and founders that we present to the collective, venture capital – especially at the earliest stages where we invest is unpredictable. You could make multiples on your investment or lose all your money. However, we reduce the risk of failure by leveraging our operating expertise to provide active management and coaching for innovators. Do note that you are investing at your own risk and we cannot be held liable for any losses you incur while investing.
How are returns calculated?
The Future Africa Collective works with an institutional funding partner to automatically calculate investors’ returns. Returns are proportional to amounts invested in a syndicate less our carry. Here is a small calculator we built to help you navigate calculating your return on investment from a hypothetical company depending on the amount invested and exit multiple.
When do I get returns on investment?
Although your investments will typically increase in value with every new round of investment you will only get returns on your investment when startups exit. This typically happens in 7-14 years via acquisition, merger or IPO. From time to time, it is also possible to exit the investment via secondary sale to new investors. Future Africa has sole discretion over when an investment via the syndicate deal exits. At this point, returns are split commensurate to amounts members invested in the deal.
Can I exit my investment and get my money back?
Eventually yes. However, it is important you understand you have no control over when you can exit the investment. Typically investors exit their investments in 7-14 years via a liquidation event (merger, acquisition or IPO) or via secondary sale (selling your stock to larger investors). Future Africa has sole discretion over the timing of exit for the entire syndicate. We will notify co-investors when an exit is possible.
How much can I invest?
You must invest at least $2,500 should you choose to participate in a deal.
Must I invest in the companies that are sent to me?
No, you must not. Choosing the companies to invest in is entirely your prerogative. We simply present you with full information about companies we are investing on a deal by deal basis and then you can decide to co- invest with us or not. If you do choose to invest in a company, it is important that you commit to the deal on our funding platform and wire your funds as soon as you can! Our deals are so good they have a history of getting closed out really fast. It can sometimes feel like a game of fastest fingers. Our rule is first come, first serve.
What does membership of The Future Africa Collective offer me?
Membership of the collective gives you access to our deal flow. Every quarter, we will send you at least 5 startups that you can invest in. Each deal comes in an email from us with :
- A detailed investment brief on each company and why we believe it’s important to invest.
- Data room access, which includes necessary due diligence data.
- Most importantly, a link to the company’s deal page where you can invest.
What is carry?
Is membership to the Future Africa Collective free?
No, it’s not. The Future Africa Collective charges a quarterly membership fee of $300 or an annual fee of $1000. This money goes to pay financial and investment analysts who prepare companies to be presented to the collective. Should you choose to invest, each deal commands a fee pro-rated by the amount invested (for example a $10,000 investment in a $100,000 deal will command an $800 fee). This fee covers legal and company formation costs associated with each syndicate deal. Finally, every investment done via our platform requires you to commit to paying us and our fund advisor a 20% carry on your investment returns whenever you exit.
What is an investment syndicate?
A syndicate is a special fund created to invest in a startup. Syndicates pool capital from multiple investors into the special fund created, and then invest the pooled funds in a company. Future Africa sources the deals, analyzes and vets the investments and also personally invests in each deal we present to the collective. We will only present innovators and businesses we believe meet our high standards for a good and ethical investment.