African VC company at an early stage, microtraction reports rash in portfolio despite weight of COVID-19 – TechCrunch

In the year hit by the coronary virus epidemic, early-stage start-ups in the African continent seem to continue to see noticeable growth, both in terms of business and from investors interested in supporting them.

MicrotractionAn early-stage venture capital firm based in Lagos, Nigeria, saw funding almost quadruple for its portfolio.

B Published year review Last week, the firm noted that 21 companies in its portfolio have raised more than $ 33 million in funding. This represents growth almost fourfold a year ago when its portfolio raised $ 6 million (and only $ 3 million in 2018). The companies’ combined valuation is $ 147 million.

Founded by Yell in Demosi In 2017, microtraction reached the continent’s early investment scene with the intention of being “the most accessible and preferred source of pre-seed funding for African technology entrepreneurs.”

Damusi, who returned to Nigeria from the UK in 2015, has worked as the general manager of Starta Africa, an online community of African technology entrepreneurs. After the period of his stay there, he saw the need to close the gap of funding early in Nigeria and the overall continent through Microtraction.

Microtraction does not specify the size of its fund, but what is clearer is that She attracted a lot of attention and built a strong network in part because of who backs her up.

Michael Sable, CEO of Y Combinator, is a global consultant and investor in the company and so is Andy Volk, The head of Google’s sub-Saharan Africa’s ecosystem. Other investors include Pave Investments and Angel Investor in the US, Chris Schultz.

Being entrepreneurs in the past, some of these investors know what it takes to build a startup in the US. But it is completely different in Africa. With no knowledge in the field which startups to fund but interest in doing so, portfolio diversification and other personal reasons, Microtraction and some early investors Others present the best bets for achieving this goal.

Initially, Microtraction’s standard deal was to offer start-ups in portfolios $ 15,000 in exchange for 7.5% equity. But as a sign of how the market is growing, that changed last year and now the company is investing $ 25,000 for 7% equity.

Microtraction has revealed that it has received over 500 applications from start-ups in Nigeria, Ghana, Zambia and Mauritius in its first full year of operation. However, only eight of these companies received investments.

The introductory set-up was entirely Nigerian. Four fintech start-ups – Nervously, Ribi, Wallets Africa, And Thanks; Activation of crypto exchanges, Buy coins; SaaS platform, Accounteer; Startup AdTech, You can study in school; And operation of healthtech, 54gene.

In 2019, the local VC company invested in six companies. This time there was a representative from outside Nigeria – startup Fintech Ghana, In the foundry. Nigerian start-ups included social trade start-ups, Sendbox; Run events, Festival coins; As a service communication platform, Thermal. The rest were not announced.

Half of its portfolio companies are backed by YC and other global accelerators

Last year (the one this review is about) Microtraction announced seven startups. The latest selection includes Nigerian fintech start-ups, Develop credit and Chaka; Edtech boot, gradually; Bus platform PlentyWaka; And Kenyan credit data market, CARMA.

Of the total investments raised in 2019 and 2020, 54gene contributed more than half of these numbers by raising $ 4.5 million in seed and Series A investment of $ 15 million. With an ingenious solution to solve the under-representation of African genomics data in global genomics research, 54gene was accepted for the winter batch in January 2019, the same month it was officially launched.

Excluding 54gene, were Six other start-ups focused on Africa In the YC W19 group. Two of the six, Schoolable and Wallets Africa, were micro-traction portfolio companies. Others accepted to YC before and after included BuyCoins, Cowrywise, Termii and two unannounced start-ups.

ThankUCash backed up by a microtraction and a second unannounced session also joined groups of 500 startups. On the other hand, festival coins are the only start-up chosen for Google for a start-up accelerator. With all accounts, 11 of the 21 startups are backed by Y Combinator, 500 startups or Google for Startups.

Microtraction team with co-founder, Yell Badmosi (far right)

Entering these global accelerators is a surefire way to get tracking investments, ranging from $ 125,000 to $ 150,000. From the outside, start-ups see micro-traction and other early VC companies as the Ventures Platform as a means to do so. There have also been arguments that these companies are building start-ups that will be “YC or any global accelerator ready.”

However, Dio Colovo, A partner in Microtraction alongside Chidinma Iwueke, mutters him by saying there is no formula behind the numbers we see. He believes that YC and other accelerators share the same foundations with Microtraction which revolves around team, market and traction.

“We love super-technical teams, understand the industry they are in and are likely to succeed without us. We are always looking for companies that solve huge problems that many people face,” he told TechCrunch. “Also, the world of technology and startups is moving fast, so we love teams that understand that and can show in real time that they can do it. I believe these global accelerators are looking for the same things.”

Typically, YC and other accelerators may conduct due diligence and extended risk tests before cutting back on testing for any African startup without a local supporter. Colovo points out that this may be why Microtraction portfolio companies are getting faster. “The icing on the cake is that there is a level of risk elimination done by Microtraction and other local investors in the field before these global accelerators enter,” he added.

However, there is no denying the significance of the Microtraction Advisory Board playing a role in why half of the firm’s portfolio is in global accelerators. In addition to the names mentioned earlier, there are Lexi Nowitzka, PIO at Singularity Investments and Dutton Oloboforoko, a managing partner in Starta who serve as regional consultants, and Monique Woodward, a partner in the venture in 500 startups which is a global consultant.

And with the growing trends of globalization, plus the adoption of a more decentralized approach to construction and activity in the technology industry because of COVID-19, this is a trend that may continue for some time.