Olumide Soyombo is a well-known active angel investors in Nigerian tech startups and Africa in general. Since starting angel investing in 2014, Soyombo has invested in 33 startups, including Paystack, PiggyVest and TeamApt, owned by Stripe.
Today, the investor announces the launch of Voltron Capital, a pan-African venture capital firm that he co-founded with Abe Choi, an American entrepreneur and investor.
Voltron will deploy capital in around 30 startups, mostly in the pre-seed and seed stage across Africa, with the aim of “addressing the severe lack of access to seed finance for African tech companies.” Ticket sizes will range from $ 20,000 to $ 100,000, focusing on startups in Nigeria, Kenya, South Africa and North Africa.
Soyombo is one of the few founders-investors on the continent, although his company isn’t the traditional venture-backed startup the world has become accustomed to. In 2008, he started Bluechip Technologies with a friend, Kazeem Tewogbade, as a company that provides data warehousing solutions and business applications to banks, telecom operators and insurance companies. Some of its larger customers include OEMs like Oracle.
Non-traditional startup founder to an angel investor
Six years later, the couple decided to venture into tech, a relatively nascent industry in Nigeria at the time, and began investing in startups through LeadPath, a start-up company they started in Lagos, in Nigeria. The idea was to invest $ 25,000 and have startups follow a three-month acceleration program culminating in a demonstration day. The plan was to run LeadPath like Y Combinator, but it didn’t take off as expected.
“In 2014, three months after we found out there was no investor to put them in front of. So you’ll have to write another check yourself, ”Soyombo said humorously over the phone. “We quickly found that the accelerator model was not working, so we started to invest individually. Funny how things have changed since then.
LeadPath has become a special purpose vehicle (SPV) for the pair to complete their angel investing transactions. Over the years, Soyombo has launched several SPVs for the same purpose. So why do things differently now by setting up a fund? Soyombo walks me through one of the processes he has used to fund deals over the years to answer this question.
As an influential figure in the Nigerian tech ecosystem, Soyombo has access to almost every major transaction in the market. “I have the privilege of seeing many offers before most people see them. I have built this network within the startup ecosystem and have a reputation for being an angel who is always ready to help. So obviously that helped me see a lot of offers very quickly, ”he said. Often times, its deal streams are filled with startups looking for six-figure pre-seed investments. Suppose, for example, that a founder is looking to raise $ 300,000, Soyombo can usually invest $ 50,000 of his own money. And depending on his perception of the startup’s growth prospects, he may choose to bring his friends and acquaintances on board to complete the round.
This informal approach is what Soyombo wants to formalize via a structured format where each individual or organizational LP has access to their transaction flow simultaneously. The investor believes that the companies will get capital faster in this way. And what is interesting is that his work in Nigerian companies has given him access to non-traditional capital, which means that some of the investors who use Soyombo’s transaction flows are outside the typical Nigerian landscape. technological investments.
He sees his job as someone who bridges the angel investing gap between his corporate friends and colleagues who typically haven’t invested in tech and startups that need their money.
“There is a bit of FOMO now,” he said. “People, including wealthy people, tell me to support them every time I invest, then I also have startups looking for capital. But again, I’m not trying to get a full-fledged job managing a full fund, which is why we structured it this way.
Anyone familiar with the events of African tech in recent months knows the two events that caused this FOMO: the release of Paystack to Stripe and the unicorn status of Flutterwave. Soyombo was an early investor in the former, scoring his lone primary outing alongside two secondaries in a portfolio that totaled over $ 70 million. So, it’s not hard to see why Soyombo doesn’t have a hard time convincing non-traditional investors, including HNIs (who are notoriously risk averse when it comes to technology investing), to issue checks in startups.
“All of a sudden everyone is interested in what’s going on in space. HNIs who have allegedly invested money in real estate are looking for startups. We’re even seeing older HNIs telling their kids to invest on their behalf, so it’s an easier conversation to have. Most of them want to diversify their portfolios by having a piece of this pie, ”he said, noting the successes of Paystack and Flutterwave.
Voltron Capital will be managed on AngelList. Its investors are drawn from HNIs and executives from banks, telecommunications companies, among other sectors, each investing a minimum of $ 10,000. Voltron is similar to a typical seven-figure fund targeting pre-seed and early-stage startups in Africa, but it’s quite different in the way it chooses to support founders. The fund remains an embodiment of Soyombo’s investment position, which is “founders first regardless of industry”.
“I will continue to support interesting entrepreneurs. If PiggyVest’s Odunayo were to build a health tech or edtech business, I will always support that business, ”he said, referring to the million dollar investment he made there. is three years in one of Nigeria’s most famous fintechs. “So I think that the investability of sectors, for me, is driven by quality entrepreneurs who will solve the problems in this area.”
Investing at an early stage takes more work
In 2019, African tech startups raised a record $ 2 billion, according to Partech Africa. They’ve already raised half that number this year, and some publications predict these startups will break the 2019 record.
Much of this investment is spent on late stage transactions, which is typical of most tech ecosystems around the world. But Africa stands out because start-ups have more difficulty raising investments compared to other regions. For example, IFC reported that 82% of African tech startups cite access to seed funding and the lack of angel investors as major issues they face. Without seed funding, many startups poised to drive this growth lack essential capital to support their early operations and generate revenue, which is a key requirement to secure subsequent, larger-scale funding cycles.
Voltron, in his small capacity, wants to fill this gap as best he can. In addition to listing local investors as LPs, Soyombo says startups will also be able to access foreign capital. Choi is the key to making it happen. Personally, Choi has invested in 15 startups (leaving two); therefore, its experience and network in the United States will be crucial in finding foreign capital on the continent.
Soyombo believes that Stripe’s acquisition of Paystack made foreign investors take notice of African startups. He humorously refers to Paul Graham’s post-acquisition tweet as another reason why foreign investor interests have also spiked. The tweet from the co-founder of Y Combinator read: “Investors who ignore Nigeria must now ask themselves: what do I know that Patrick Collision does not know?
That said, the investor believes the pace at which Africa’s tech ecosystem is maturing should excite everyone. The quality of founders on the continent is improving and will continue to do so as there are more issues to be addressed, he continued.
“Plus, as our startups mature, we’ll see people leaving to create theirs. We want the next wave of African technological successes to not only impact the continent, but to be truly global; Through Abe’s strategic connections to the United States, we are confident that we can provide our portfolio with the best possible opportunities to achieve this through our US and global network.