When Nigerian angel investor Tomi Davies backed his first firm — Strika Entertainment in 2001 — he admits he wasn’t conscious of his future function.
“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 acquired 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 solutions for world buyers on coming into Africa.
VC in Africa
Davies’ ascendance in fundraising runs parallel to the increase in startup formation and VC on the continent during the last 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 knowledge on VC investing on the continent till round 5 years in the past.
An early Crunchbase assisted research 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 high markets Nigeria, South Africa and Kenya.
There are actually 1000’s of VC backed startup entrepreneurs throughout the continent descending on each conceivable use-case — from fintech to on demand electrical bike mobility.
Increasingly, Davies’ dwelling nation of Nigeria has turn out to be the continent’s unofficial capital for enterprise funding and startup formation, given its market thesis of getting Africa’s largest financial system and inhabitants of 200 million individuals.
Even with the increase in VC to the continent’s startups — which has drawn buyers similar 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 University 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 to pitch
In his function as President of The African Angel Business Network, or ABAN, Davies has labored with a group to construct out a neighborhood investor internet throughout the continent.
“ABAN could be very merely a community of networks…we’ve got 49 networks in 33 African international locations,” he defined.
Those embody Lagos Angel Network, 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, based on Davies.
For instance, ABAN affiliated Dakar Angel Network — based in 2018 to assist startups in French talking Africa — gives seed investments of between $25,000 to $100,000 to early-stage ventures.
Dakar Network Angels begins startup investments in francophone Africa
Where and the way startups search funds from ABAN’s household of networks is dependent upon the place they function. “One factor I say to all people, from presidents to enterprise individuals to buyers, is Africa is about cities,” Davies mentioned.
“When you recognize which metropolis your trying to spend money on or search funding in, robotically we’ll be able to say, ‘right here’s your community.’”
For the Lagos Angel Network in Nigeria, the group has a pitch night time the third Thursday of every month with a 30 day rule. “Before you permit, you’ll hear if we’re or not. If we’re , we’ve bought 30 days to make you a proposal,” defined Davies.
Advice to startups
In addition to his work with ABAN, Davies continues to spend money on his personal portfolio of startups — now at 32 ventures — and is an everyday choose on Africa’s tech competitors circuit.
He’s developed a framework to evaluate firms and shared components 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 pressured three issues to fulfill that query: “The product service providing that you’ve, the shoppers who see worth in that product service providing and the character of the connection by way of channel and worth providing,” he mentioned.
“That’s what you’re all the time tinkering with after you begin with some form of worth proposition.”
Davies referenced the elevated significance of referrals, given the coronavirus has cancelled numerous occasions and restricted mobility to pitch in individual in Africa’s high VC markets.
“Because of COVID-19, networks have turn out to be critically vital. Because buyers can’t contact, can’t really feel, can’t see [founders] persons are wanting now for referential integrity, ‘Who despatched me this deck?,’” Davies mentioned.
On how a coronavirus induced Nigerian recession might impression startups, Davies flagged the nation’s continuous casual business exercise — and the adaptability of Nigerian entrepreneurs — as elements that would carry ventures by means of.
“There’s a major chunk of the financial system that’s within the casual market. So even when 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 need to attract new companions from tech facilities similar to Silicon Valley, into early-stage investing in Africa.
“We are all the time searching for co-investors and I communicate 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 by means of an African Business Angel Network affiliate.
Nigeria is changing into Africa’s unofficial tech capital