Ventures Platform, based in Nigeria, has established itself as a prolific supporter of African startups. Over the past eight years, it has made significant investments in 78 startups, including notable successes like Piggyvest, Moniepoint, and Paystack, the latter of which was acquired by Stripe in October 2020 for over $200 million.
Shifting Focus to Pan-African Investments
After its initial successes in Nigeria, Ventures Platform is now setting its sights on broader African markets. Founded in 2016 by Kola Aina, the firm has so far invested in 12 startups outside Nigeria. “Even though we started from Nigeria and most of our investments are based in Nigeria, we always set out to be a pan-African investor,” said Dotun Olowoporoku, the managing partner of Ventures Platform.
Launched in 2021, Ventures Platform’s $46 million fund typically invests between $250,000 and $1 million per startup. As it expands beyond Nigeria, the firm focuses on “key strategic markets” that offer political stability, homegrown tech talent, and active angel investors. Recent investments have been concentrated in Francophone West Africa, meeting these criteria.
Strategic Approach to Ecosystem Development
“Startups only breed where the ecosystem has been put together,” Olowoporoku noted. In 2023, Ventures Platform maintained its status as one of the continent’s most active investors, backing twelve startups despite a 36% year-on-year decline in funding.
Ventures Platform is known for its hands-on approach with portfolio companies. In November 2022, it appointed Damilola Teidi to lead a dedicated team focused on supporting its startups. This support has been crucial for many founders, including Njavwa Mutambo, CEO of Caantin, a non-Nigerian Ventures Platform portfolio startup. Mutambo praised the firm for its unwavering support during challenging times, highlighting their hands-on involvement in recruiting talent and strategic guidance.
Lake vs. Ocean Strategy
Ventures Platform employs a distinctive “lake versus ocean” strategy in its investments. The Big Four (Nigeria, Kenya, Egypt, and South Africa) are considered “oceans,” where multiple competitors can thrive. In contrast, smaller markets like Francophone West Africa are seen as “lakes,” where one dominant player can capture significant market share.
In these “lake” markets, Ventures Platform aims to invest in startups that can quickly dominate and secure up to 80% of the market share before expanding to neighboring countries. This approach allows startups to become major players without the need to enter larger markets like Nigeria immediately.
Investment Criteria and Market Potential
Despite the capital-intensive nature of acquiring significant market share, Ventures Platform remains committed to backing startups that can retain customers and demonstrate strong growth. Recently, the firm invested in Tanel, a health insurance company in Senegal, marking its fourth investment in the country.
Ventures Platform also sees potential for easier exits in Francophone Africa due to the interest of French companies in acquisitions. This strategic view allows Ventures Platform to identify and support companies that might be overlooked by others.
GRMTT Metrics: A Structured Investment Approach
Ventures Platform employs a rigorous framework, referred to as GRMTT metrics, for evaluating potential investments. This framework considers:
1. Growth Rate: The startup must demonstrate incredible growth before receiving investment.
2. Revenue: Ventures Platform only invests in startups that are already generating revenue, reflecting their ability to create and capture value.
3. Revenue Margin: This helps in determining the startup’s valuation and understanding the sustainability of its business model.
4. Market Reality: The current and potential future state of the market in which the startup operates.
5. Market Potential: Evaluating whether the startup operates in a capped or uncapped market, affecting its long-term value and growth prospects.
Conclusion
Ventures Platform’s commitment to nurturing African startups through strategic, hands-on investment is evident in its expanding portfolio and pan-African focus. By leveraging a structured investment approach and targeting strategic markets, Ventures Platform continues to play a pivotal role in the growth of the African tech ecosystem.