our capitalAn Africa-focused venture capital firm based in Lagos and Massachusetts, announced today that it has completed the first closing of its second $30 million fund, Oui Capital Mentors Fund II, as it looks to strengthen its presence on the continent.
The firm, founded in 2019 by Olu Oyin-san Y Francesco Andreoli, launched his debut fund at $5 million. Since then, Oui Capital has made 18 investments in technology sectors spanning different industries, such as fintech, logistics and mobility, e-commerce, healthcare, and enterprise software. Some names include TeamApt, MVXAkibaDigital, DoubleNdovu, Maad, Intelligra, Influx and Pharmacy Marts.
Oui Capital made eight investments last year and this second fund signals the VC’s intention to keep up that pace. The $30 million fund, like the first, will support Sub-Saharan startups in the pre- and early-stages. So far, the company has reached its first closing with just over $11 million and expects to complete the final closing by the fourth quarter of 2022.
Managing partner Oyinsan, in an interview with TechCrunch, said that Oui Capital’s first fund generated strong early returns, with an MOIC (multiple of invested capital) in excess of 7x. He said that one of the reasons the firm managed to achieve this lies in the “sparks” that determine which startup to invest in or not: team, market, knowledge of the client and the technology, and client enthusiasm.
But even though companies follow a manual (such as Oui Capital and its aforementioned investment strategies), not all transactions turn out great. Oui Capital provides broader support for some of these startups by driving partnerships and sales, facilitating hiring, and providing bridging investments. Regarding follow-on capital, the managing partner said that Oui Capital proactively makes such investments as part of the ongoing monitoring of the firm’s portfolio. As it stands, Oui Capital has made follow-on investments in about 20% of its portfolio companies.
“We go the extra mile with the founders we partner with and that’s why we keep a relatively smaller portfolio compared to many seed funds. However, there is a critical distinction between a VC’s responsibilities as an investor and as a fund manager,” said the managing partner.
“Being an investor breeds the kind of staunch optimism and support as described above. Being an effective fund manager also gives you a fiduciary responsibility to know when to stop devoting scarce resources to problems that might be too difficult to solve and instead dedicate these resources to higher-performing companies in your portfolio to minimize losses and maximize asset value. investors”.
The Oui Capital team. Image credits: our capital
While economic cycles like the one the startup world is experiencing are typically short- to medium-term, Oyinsan echoes what local investors have communicated in recent months: a return to sticking to first principles and backing companies with solid fundamentals, economic unity and valuation discipline. . This event has created an opportunity for investors, including Oui Capital, to invest in the chain, especially now that it has newly injected capital.
According to Oyinsan, the firm will be looking to cover the full spectrum of investments ahead of Series A, including bridging rounds, an activity that it will expand, particularly during this current venture capital crisis. In related news, Zedcrest Capital, another venture capital firm, thrown out a $10 million “emergency fund” to bail out pre-Series A start-ups last week.
From this new fund, Oui Capital intends to write initial checks for up to $750,000 (an increase of 10 times the ticket size of its first fund) with reserves for such follow-on investments. “Hopefully we are leading many more deals across the ecosystem and promoting strong initiatives, all things we have been quietly doing for the last four years, but now looking to double down with the new fund,” Oyinsan added.
Oui Capital’s second fund welcomed a mix of individual and venture capital investors as limited partners. Individual investors such as Brad Feld, Seth Levine and Ryan McIntyre (Foundry Group partners), Gbenga Oyebode, Tokunboh Ishmael of Alitheia Capital, Idris Alubankudi and TeamApt CEO Tosin Eniolorunda participated.
As one of Africa’s largest fintechs (by revenue and market capitalization), TeamApt is, for now, the biggest hit in Oui Capital’s portfolio. The fintech, which sources say is in the market to raise a Series C round next year, stands as one of the continent’s early lauds. So for Eniolorunda to become a limited partner in the firm is commendable, as it is a very rare feat in these places for founders to become LPs in the funds that backed their startups. Another example is the CEO of Paystack, Shola Akinlade, and the early-stage pan-African fund, Ventures Platform.
“It’s a great feedback loop for us as a venture capital firm and speaks to the strength of our working relationship with TeamApt in the years before we even invested in the company,” Peter Oriaifo, director of Oui Capital, told TechCrunch. , regarding the participation of LP from Eniolorunda. “The founder-investor relationship is a testament to our work to support an early-stage founder and see the company succeed to the point where they want to return the favor.”
Oui Capital invested in TeamApt when the fintech company was under the radar and before it attracted the attention of other investors. Its success is one of the inspirations behind Oui Capital’s pan-African approach. The firm is interested in making novel investments in startups that it believes can become winners in their respective countries and sectors, Oyinsan said. Oui Capital highlights 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, African countries where Oui Capital has made at least one investment include Nigeria, Kenya, Senegal, Egypt, and South Africa. The firm plans to make further investments in North Africa and Francophone Africa, regions that saw increased venture capital and start-up activity last year when African tech funding hits all-time highs in correlation with the global numbers.
“Our pan-African strategy has made us a fund of choice for global LPs seeking exposure to the broader Africa opportunity without having to wade through the weeds of understanding different regions separately,” said Oyinsan. 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.