In an effort to increase its presence on the continent, Oui Capital– a VC firm with a focus on Africa, and with offices in Massachusetts and Lagos– said today that the first close of its $30 million second fund, Oui Capital Mentors Fund II, had been completed.
The company’s first fund was launched at $10 million when it was founded in 2019 by Olu Oyinsan and Francesco Andreoli. Since that time, Oui Capital has invested in 18 technology-related businesses across a variety of sectors, including fintech, logistics & mobility, e-commerce, healthcare, and enterprise software. TeamApt, MVX, Akiba Digital, Duplo, Ndovu, Maad, Intelligra, Aifluence, and Pharmacy Marts are a few examples.
With this second fund, Oui Capital indicates that it plans to continue making the eight investments it made in the previous year. Similar to the original fund, the $30 million fund will support sub-Saharan entrepreneurs in their pre-seed and seed stages. The company has already completed its first close, which was a little over $11 million, and anticipates finishing the last close by Q4 2022.
In a recent interview, managing partner Oyinsan stated that Oui Capital’s first fund produced early, strong returns with a MOIC (multiple on invested Capital) of over 7 times. He claimed that the “sparks” that determine which startup to invest in or not include team, market, an understanding of customer and tech, and customer enthusiasm.
“We go the extra mile with founders whom we partner with and this is why we maintain a relatively smaller portfolio compared to many seed funds. However, there is a critical distinction between the responsibilities of a VC as an investor and as a fund manager,” Oyinsan said.
“Being an investor begets the type of die-hard optimism and support as earlier described. Being an effective fund manager also puts the fiduciary responsibility on you to know when to stop devoting scarce resources to problems that might prove too difficult to fix and dedicate these resources to higher-performing companies in your portfolio to minimize losses and maximize investor value,” he added.
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Oyinsan supports what local investors have been saying over the past few months: the return to sticking to first principles and supporting businesses with strong fundamentals, unit economics, and valuation discipline. Economic cycles like the one the startup world is going through are typically short to medium-term. Given its recently infused cash, Oui Capital has the option to invest farther up the value chain as a result of this event.
Oyinsan claims that “the company will seek to cover the complete range of investments before Series A, including bridge rounds. This activity will be accelerated in particular, during the present venture capital constraint,” he claims. In related news, last year another venture capital firm, Zedcrest Capital established a $10 million “emergency fund” to support firms in the pre-Series A stage.
This new funding means Oui Capital can write initial checks of up to $750,000 with enough reserves for follow-on investments. “Expect us to be leading many more deals across the ecosystem and vocalizing firm initiatives — all things that we’ve been doing quietly in the past four years, but now looking to double down on these with the new fund,” Oyinsan explained.
A mixture of individual and venture capital investors joined Oui Capital’s second fund as limited partners. Individual investors included Brad Feld, Seth Levine, and Ryan McIntyre (partners of Foundry Group), Gbenga Oyebode, Tokunboh Ismael of Alitheia Capital, Idris Alubankudi, and Tosin Eniolorunda, CEO of TeamApt.
TeamApt, one of the top fintech companies in Africa (by sales and market cap), is now the portfolio standout for Oui Capital. The fintech company is one of the continent’s celebrated soonicorns and— according to reports— is looking to raise a Series C by 2023. Since it is such an uncommon feat in these regions for founders to become LPs in the funds that they founded, Eniolorunda becoming a limited partner in the business is deserving of praise.
Another example is Paystack CEO Shola Akinlade and Pan-African early-stage fund, Ventures Platform.
Speaking on Eniolorunda’s LP participation, Peter Oriaifo, principal at Oui Capital said, “It’s a great feedback loop for us as a VC firm and speaks to the strength of our working relationship with TeamApt in the years even before our investment in the company. The founder-investor relationship is a testament of our work to back a founder at the seed stage and to see the company succeed to a point where they want to pay it forward.”
According to Oyinsan, the company is eager to invest in businesses that it thinks have a chance of succeeding in their particular nations and industries; just as it invested in TeamApt when the Fintech company was under the radar.
Maad, the first B2B marketplace for fast-moving consumer goods in Senegal, and Pharmacy Marts oui, an Egyptian B2B marketplace for pharmacies, are two examples given by Oui Capital.
As a result, Oui Capital has made investments in at least the following African nations: Nigeria, Kenya, Senegal, Egypt, and South Africa. The company intends to increase its investments in North Africa and Francophone Africa— two regions that saw an increase in startup and venture capital activity last year as African technology funding reached record highs in line with worldwide data.
“Our pan-African strategy has made us a fund of choice for global LPs looking for exposure to the broader African opportunity without having to get into the weeds of understanding different regions separately,” stated 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.
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