When Nigerian angel investor Tomi Davies backed his first firm — Strika Leisure in 2001 — he admits he wasn’t conscious of his future position.
“I used to be simply serving to out mates. I didn’t comprehend it was angel investing. I didn’t know there was a construction to it,” he mentioned.
Seven years later, Davies obtained a 20x return on his first exit and a decade after that he’s acknowledged as an architect of early-stage investing throughout Africa.
Davies is President of The African Business Angel Network and continues to fund and mentor younger tech entrepreneurs in a number of international locations.
On a name with TechCrunch, he shared recommendation for startups on fundraising, surviving COVID-19 and options for world buyers on coming into Africa.
VC in Africa
Davies’ ascendance in fundraising runs parallel to the growth in startup formation and VC on the continent over the past decade.
When he started In 2001, there wasn’t a lot measurable enterprise or digital entrepreneurial exercise in Sub-Saharan Africa, exterior South Africa. In truth, there was restricted information on VC investing on the continent till round 5 years in the past.
An early Crunchbase assisted examine estimated VC to African startups yearly grew from $40 million in 2012 to $500 million by 2015. A latest evaluation by funding agency Partech tallied $2 billion going to the continent’s digital entrepreneurs in 2019, throughout prime markets Nigeria, South Africa and Kenya.
There are actually hundreds of VC backed startup entrepreneurs throughout the continent descending on each conceivable use-case — from fintech to on demand electrical bike mobility.
More and more, Davies’ house nation of Nigeria has turn into the continent’s unofficial capital for enterprise funding and startup formation, given its market thesis of getting Africa’s largest economic system and inhabitants of 200 million individuals.
Even with the growth in VC to the continent’s startups — which has drawn buyers akin to Goldman Sachs and Steve Case — for years panels at African tech conferences have echoed the necessity for extra early-stage funding choices.
Davies has labored to fulfill that. He got here to investing on the family and friends stage after receiving an MBA on the College of Miami and an earlier profession that spanned roles in administration consulting, telecoms and IT.
After rising as one of many early angels to Africa’s startups, supporting the continent’s innovation ecosystem grew to become a mission for the Nigerian investor.
“My raison d’etre grew to become, and can stay till the day I die, tech in African,” Davies mentioned on a name from Lagos.
How one can pitch
In his position as President of The African Angel Enterprise Community, or ABAN, Davies has labored with a staff to construct out a neighborhood investor net throughout the continent.
“ABAN could be very merely a community of networks…we’ve 49 networks in 33 African international locations,” he defined.
These embody Lagos Angel Community, which Davies co-founded, Cairo Angels and Angel Investor Ethiopia, introduced in Addis Ababa in 2019.
ABAN establishes sure pointers and standards for a way member networks function, however every chapter units its personal funding phrases, in accordance with Davies.
For instance, ABAN affiliated Dakar Angel Community — based in 2018 to assist startups in French talking Africa — affords seed investments of between $25,000 to $100,000 to early-stage ventures.
The place and the way startups search funds from ABAN’s household of networks relies on the place they function. “One factor I say to everyone, from presidents to enterprise individuals to buyers, is Africa is about cities,” Davies mentioned.
“When you already know which metropolis your trying to spend money on or search funding in, routinely we’ll be ready to say, ‘right here’s your community.’”
For the Lagos Angel Community in Nigeria, the staff has a pitch evening the third Thursday of every month with a 30 day rule. “Earlier than you allow, you’ll hear if we’re or not. If we’re , we’ve obtained 30 days to make you a proposal,” defined Davies.
Recommendation to startups
Along with his work with ABAN, Davies continues to spend money on his personal portfolio of startups — now at 32 ventures — and is an everyday decide on Africa’s tech competitors circuit.
He’s developed a framework to evaluate firms and shared elements of it with TechCrunch.
“What I say to any startup elevating is the very first thing any investor is listening to is how do I get my a refund. That’s query primary, ‘How do I get my exit?,’” he mentioned.
Davies careworn three issues to fulfill that query: “The product service providing that you’ve got, the shoppers who see worth in that product service providing and the character of the connection when it comes to channel and value providing,” he mentioned.
“That’s what you’re all the time tinkering with after you begin with some type of worth proposition.”
Davies referenced the elevated significance of referrals, given the coronavirus has cancelled numerous occasions and restricted mobility to pitch in particular person in Africa’s prime VC markets.
“Due to COVID-19, networks have turn into critically essential. As a result of buyers can’t contact, can’t really feel, can’t see [founders] individuals are wanting now for referential integrity, ‘Who despatched me this deck?,’” Davies mentioned.
On how a coronavirus induced Nigerian recession might affect startups, Davies flagged the nation’s continuous casual business exercise — and the adaptability of Nigerian entrepreneurs — as elements that would carry ventures via.
“There’s a major chunk of the economic system that’s within the casual market. So even in the event you look again on the recessions we’ve had…it hasn’t been felt on the streets,” he mentioned.
Davies can also be collaborating with companions on creating working capital options for startups whose revenues have been impacted by slowdown.
Tomi Davies is direct about his want to attract new companions from tech facilities akin to Silicon Valley, into early-stage investing in Africa.
“We’re all the time on the lookout for co-investors and I converse on behalf of all 49 networks in ABAN,” he mentioned. Davies highlighted the native experience every community brings to their market as a profit to VCs trying to make investments on the continent via an African Enterprise Angel Community affiliate.