The Nigerian tech space is becoming a house of investment for individual start-up owners who have been in the tech industry. As these start-up founders are gaining experience in the tech space, they are beginning to put their mouth where their money is.
In April 2020, one of Africa’s venture capital, Future Africa, founded by Iyin Aboyeji, put out a call to build a future where prosperity and purpose are within everyone’s reach. Prior to founding Future Africa, Aboyeji co-founded tech start-ups such a Andela and Flutterwave, which have now become unicorns.
Since the call, Future Africa’s co-investment community has grown to over 160 members and deployed over $1 million to 14 innovators across Africa.
Likewise, tech start-ups founders including Olugbenga Agboola (Flutterwave), Abdul Hassan (Mono), Victor Asemota (Africa & Diaspora Mentorship, Investment Network), Babs Ogundeyi (Kuda), Shola Akinlade (Paystack), among others who have received funding from both international and local investors are seen investing into start-ups across the Nigerian tech space.
As investment from these local tech founders grow in the ecosystem, experts say it is significant for the ecosystem’s future. By investing early in mission-driven founders solving hard problems across large markets, there will be control of these markets at the later stages.
One of the ways these founders are funding other emerging tech start-ups is by raising syndicate funds. A syndicate fund is an investment vehicle that allows investors, otherwise known as backers, to co-invest with relevant and reputable investors who are leaders in the best start-ups in the market.
Often times, these syndicate leaders are business angels with vast experience in selecting investment opportunities and investing in them, in various technology sectors and with deal-flow that most investors do not have access to. They are successful start-up founders who have been part of the industry for many years and know it is ins and outs.
They have a wealth of knowledge from playing different roles in the building of a start-up ecosystem. On the other hand, backers do not have much experience investing in start-ups most times, and for some that do, they will rather allow syndicate leads to choose start-ups to invest in and manage their investments.
According to Aboyeji, there is a massive early-stage funding gap for African start-ups. All the data the company looked at pointed to the fact that work needed to be done to bridge that gap. While Aboyeji thought of building Future Africa Collective to democratise access to African start-ups, two other Nigerian tech start-up founders, Bosun Tijani and Jason Njoku, have also launched syndicate funds within the past year.
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Tijani is the co-founder/CEO of Co-Creation Hub (CcHub), a pan-African innovation hub with offices in Kigali, Lagos and Nairobi. He is also an angel investor, which through its accelerator programme and a partner fund called Growth Capital Fund, has invested in more than 40 start-ups.
Through its syndicate funding, it is championing the growth of start-up communities whose savvy models are in turn motivating partners globally to embrace the technology revolution sweeping across Africa.
Another reason for syndicate funding is to help solve the challenges that exist with traditionally structured investment vehicles. This means that a syndicate should be an avenue where a percentage of remittances from diaspora can come in to deepen the quality of capital available to local entrepreneurs.
According to experts, the syndicate will help Africans in the diaspora who are passionate about nation-building but do not have the capacity to be limited partners in a typical fund structure, to co-invest.
Other individual start-up founders who are seen investing in emerging start-ups include Oluwaseun Oyinsan of Oui Capital – Duplol; Iyin Aboyeji of Future Africa – Frain; Dayo Koleowo of Microtraction – Sendbox; Olugbenga Agboola of Cre Venture Capital – Duplo; Yele Bademosi of Nestcoin- AltSchool, and Kola Aina of Ventures platform – MoneyHash, among others.
