Oui Capital, an Africa-focused VC firm based in Lagos and Massachusetts, today announced that it has completed the first close of its second $30 million fund, Oui Capital Mentors Fund II, as it seeks to expand its presence in the continent. strengthen.
The company, founded in 2019 by Olu Oyinsan and Francesco Andreoli, launched its debut fund at $5 million. Since then, Oui Capital has made 18 investments in technology sectors across a variety of industries such as fintech, logistics and mobility, e-commerce, healthcare and enterprise software. Some names include TeamApt, MVX, Akiba Digital, Duplo, Ndovu, Maad, Intelligra, Aifluence, and Pharmacy Marts.
Oui Capital made eight investments last year and this second fund signals the VC’s intent to keep up with that pace. The $30 million fund, like the first, will support sub-Saharan startups in the pre-seed and seed phases. So far, the company has reached its first close at just over $11 million and expects to complete its final close in the fourth quarter of 2022.
Managing partner Oyinsan said in an interview with TechCrunch that Oui Capital’s first fund delivered early solid returns, with a multiple on investment capital (MOIC) of more than 7x. He said one of the reasons the company managed to achieve this lies in the “sparks” that determine in which startup you should or should not invest: team, market, knowledge of the customer and tech, and customer enthusiasm.
But while companies follow a guideline (like Oui Capital and the aforementioned investment strategies), not all deals turn out great. Oui Capital provides more comprehensive support for some of these startups by fostering partnerships and sales, facilitating hiring, and providing bridging investments. With regard to follow-on capital, the managing partner said Oui Capital is proactively making such investments as part of the firm’s ongoing portfolio monitoring. In its current form, Oui Capital has made follow-up investments in approximately 20% of its portfolio companies.
“We go one step further with founders we work with and so we have a relatively smaller portfolio compared to many start-up funds. However, there is a crucial distinction between a VC’s responsibilities as an investor and as a fund manager,” said the managing partner.
“As an investor, you get the kind of die-hard optimism and support described earlier. Being an effective fund manager also puts the fiduciary responsibility on you to know when to stop spending scarce resources on problems that may prove too difficult to solve and allocate those resources to better-performing companies in the world. your portfolio to minimize losses and maximize investor value.”
While economic cycles such as those experienced by the startup world are usually short- to medium-term, Oyinsan reiterates what local investors have been communicating in recent months: the return of sticking to first principles and backing companies with strong fundamentals, unity economies and valuation discipline . This event has given investors, including Oui Capital, the opportunity to invest higher up the chain, especially now that it has injected new capital.
According to Oyinsan, the company will aim to cover the full spectrum of pre-Series A investments, including bridging rounds, an activity it will strengthen, especially during this current venture capital crisis. In related news, Zedcrest Capital, another VC firm, last week launched a $10 million “emergency fund” to bail out startups in pre-Series A phases.
From this new fund, Oui Capital plans to issue initial checks of up to $750,000 (a 10x increase over the ticket size of the first fund) with reserves for such follow-up investments. “Expect many more deals across the ecosystem and voice business initiatives – all things that we’ve been quietly doing for the past four years but are now looking to double it with the new fund,” added Oyinsan .
Oui Capital’s second fund welcomed a mix of individual and VC investors as limited partners. Individual investors such as Brad Feld, Seth Levine and Ryan McIntyre (Foundry Group’s partners), Gbenga Oyebode, Alitheia Capital’s Tokunboh Ishmael, Idris Alubankudi and TeamApt CEO Tosin Eniolorunda participated.
As one of the largest fintechs in Africa (by revenue and market capitalization), TeamApt is the breakthrough success of Oui Capital’s portfolio so far. The fintech, which sources say is in the market to host a Series C round next year, stands as one of the continent’s lauded early horns. So it’s worthy of admiration for Eniolorunda to become a limited partner of the company because in these parts it’s such a rare feat for founders to become LPs in the funds that supported their startups. Another example is Paystack CEO Shola Akinlade and the pan-African early-stage fund, Ventures Platform.
“It’s a great feedback loop for us as a VC company and speaks to the strength of our working relationship with TeamApt in the years even before our investment in the company,” Peter Oriaifo, director at Oui Capital, told TechCrunch about the LP participation from Eniolorunda. “The founder-investor relationship is a testament to our work supporting a founder in the early stages and seeing the business succeed to a point where they want to pay it forward.”
Oui Capital invested in TeamApt when the fintech company was under the radar and before it caught the attention of other investors. Its success is one of the inspirations behind Oui Capital’s pan-African approach. The company is eager to make new investments in startups that it believes can become winners in their respective countries and sectors, Oyinsan said. Oui Capital cites Maad (the first B2B marketplace for fast-moving consumer goods in Senegal) and Pharmacy Marts (a B2B marketplace for pharmacies in Egypt) as examples.
As a result, Nigeria, Kenya, Senegal, Egypt and South Africa are the African countries where Oui Capital has made at least one investment. The company plans to increase investment in North Africa and Francophone Africa, regions that witnessed a surge in startup and venture capital activity last year as African technology finance hit record highs in correlation with global numbers.
“Our pan-African strategy has made us a fund of choice for global LPs seeking exposure to the broader opportunities in Africa without having to understand the different regions individually,” said Oyinsan. The global VCs involved in this second fund include Angur Nagpal’s Vibe Capital, D Global ventures, Boston-based One Way Ventures and Ground Squirrel Ventures.