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Tag: venture capital

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DRIVEME: Our 1st Investment in 2022

DriveMe Technologies is an EduTech startup out of Nigeria. Though they are formally classified as a EduTech company, they really are positioned to push the frontiers of the transportation and logistics sector in Nigeria, and Africa at large. Skilled drivers are a rare commodity within the transportation sector in Nigeria. Lack of driver’s education and skills is the number one reason for vehicle accidents in Nigeria. There has long been no requirement (or at the very least, little enforcement) of the requirements put in place for formal drivers’ education before obtaining a license. This has resulted in 35% of driving-related accidents in the world occurring in Africa. Drivers simply don’t know the traffic rules and they become a danger to themselves and other commuters.

Many firms in the logistics sector have to rely on under-educated drivers and when accidents happen these firms find themselves in positions where they have to cough up millions of Naira in damages and business losses. Not too mention the hit on their reputation. These organizations and business owners are in dire need of formally educated and skilled drivers but seeing that this is not their area of competency, they also find themselves struggling with what the right curriculum should be and keeping up with the driving laws. They are left with little or no choice but to hire and fire which inevitably leads to high turnover. High turnover is a huge cost to the business and it further squeezes already small profit margins. Therefore, there is a huge incentive for businesses who are reliant on drivers to find a solution to having high-quality drivers. This is where DriveMe comes in.

DriveMe uses technology to deliver high-quality, up-to-date drivers’ education in Nigeria. They are an accredited driving school educating drivers of all levels: from the novices to the veteran drivers, DriveMe covers all their drivers’ education needs. In recent months, driving laws have changed in Nigeria making drivers’ education mandatory. This is what really attracted us to DriveMe because it is not just supplying drivers’ education solutions. There is a ready demand.

Looking at the demand side, drivers are able to list their services on the DriveMe platform. They have the benefit of being educated on the platform while also having exposure to potential clients and employers who are in search of high-quality drivers. In that respect, DriveMe also acts as a matching platform that provides job opportunities for drivers.

Another perk of onsite due diligence is SWAG!!

DriveMe is one of the first investments that I was fortunate enough to visit onsite (physically) in Nigeria during our Due Diligence process. It is not uncommon for angel investors to deploy capital into startups/companies we have not “physically” met. In this age of teleconferencing, physical on-site meetings have become less of a requirement in order to make a good investment decision. However, nothing can replace a physical meeting and it was a pleasure to meet Dami and Charlotte Odunlade at the DriveMe offices in Lekki, Lagos. We got to meet some of their students and spend time with their staff. We spoke with Dami and Charlotte in their offices discussing their long-term vision and current operational successes and challenges. Dayo and I walked away from that meeting confident that investors should make the investment in DriveMe. Even as virtual conferencing explodes all over the world, there will always be a place for in-person onsite meetings during Due Diligence and even post-check. In person meetings remain invaluable.

We are glad to make the DriveMe investment. We trust the DriveMe team will continue to grow the business and exceed their near term milestones!

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OUR INVESTMENT IN HAIRTELLIGENCE

It was a busy year for us as at FM Capital Group in 2021. From an investment perspective, it was our busiest year to date for our small team of investors. We saw many more investment opportunities than we had in the past which let us put money to work at a faster clip than in 2020. Hairtelligence was one of those few that we selected for investment. You will soon understand why.

I met the women of Hairtelligence a bit skeptical of the business. They manufacture wigs using artificial intelligence (AI). Ok. But what I couldn’t appreciate from reading the deck initially is the economics involved when AI is introduced to the manufacturing value chain. The costs are reduced so dramatically in an industry that has seen very little price disruption in the supply chain. They can deliver high-end, custom wigs to anyone at mass retail prices. The use of AI to disrupt the market with custom wigs starts with the customer experience. Customers can get a custom fit using the Hairtelligence online application. Long term, using AI throughout the customer experience positions Hairtelligence as a serious player in datasets of diverse women.

Isoken Igbinedion, Ifueko Igbinedion, Marlyse Reeves, Simone Kendle

Led by the formidable Isoken Igbinedion, the founders are leading the way in disrupting an age-old business. The hair business has had human capital at the heart of its manufacture for centuries. From sourcing the hair to threading the wig to styling and installation, the hair business has human hands involved. By removing as many of those hands as possible, the cost to make the wig drops pretty dramatically. Now it becomes possible for more women to access high-quality hair options. And this is big business. Hair is a $100 billion business globally and Black women are the #1 consumer spending 9 times more on hair care than any other demographic. Who is better positioned to manufacture wigs than the very consumers of those wigs?

Our ability to see the innovation for what it is before it was built speaks to the quality of investors that we work with. We moved quickly once our discussions made the opportunity very clear for us. It took 3 discussions with the team and 2 discussions amongst ourselves to get us through due diligence. We closed in September and our first investor update informed us that Serena had followed us with a subsequent investor. To say that Serena Williams and I are co-investors is kind of dope. And when she wears that hair at Wimbledon, don’t be surprised if its one from Hairtelligence. The product launched in December and customers are raving about it. Follow @hairtelligence to see the products and hear testimonials from a growing cadre of satisfied customers. This investment was our last of 2021 but it has already given us the most upside appreciation in that short time. I look forward to the future, helping them break into more markets beyond the US.

Great work Hairtelligence Team!

Some of these ideas are in our clients’ portfolios. To understand if this one can work for you or for help to invest your own wealth, talk to our advisors at FM Capital Group. Would you like more information on how to get venture capital in your portfolio? Schedule a meeting with us here.

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Our Investment in Truesoil

It’s been a busy year for us as at FM Capital Group. From an investment perspective, it has been our busiest year to date for our small team of investors. For the remainder of the year, I will highlight each of our 2021 investments and talk up the wonderful, important, and impactful work each of these companies are doing in Africa.

In April of this year, I traveled to Uganda to finally visit my portfolio company, Raintree Farms. Raintree is my first angel investment on the continent and actually my first proper vc investment. While I had met founder TMS Ruge plenty of times before, it would be my first time seeing the Farm. They say great founders know other great founders. Teddy is no exception. He is THE most connected founder in Uganda. He knows all the players, particularly the younger founders with startups solving big challenges in Uganda that have the potential to scale out to wider Africa. So it was Teddy that introduced me to Zachary Mugabi Haavaldsen, co-founder of Truesoil.

The establishment and security of land rights is critically important to the growth of an economy and wealth of its citizens. 70% of the world’s population lacks proof of land rights. This places individuals and families at risk of losing their homes and land property. More importantly, this discourages people from acquiring land for agriculture, construction, or investment. In Africa, the lack of and false documentation is a major challenge. False documentation creates overlapping rights which leads to legal conflicts between neighbors, tenants, landowners, and government. A complete lack of documentation makes it very difficult for heirs to inherit property or landlords to collect their rental income. Governments need modern systems to not only better track property rights but to also collect their own tax revenue as well.

Enter Truesoil. Truesoil is a digital solution to help both tenants and property owners establish their land rights in African markets. The company is headquartered in Kampala, Uganda. We believe that Truesoil is well positioned to transform property management and real estate in Africa. And that’s why we invested in them. Gradually, Truesoil is changing the land ownership scene in Africa as it makes negotiations simple and personal, helps tenants and landowners reach balanced agreements by connecting them, and facilitates transactions in a transparent and traceable manner. Keep up the great work Truesoil team!

Follow Truesoil on Twitter, Facebook, and Instagram!

Some of these ideas are in our clients’ portfolios. To understand which ones can work for you or for help to invest for your own wealth, talk to our advisors at FM Capital Group. Would you like more information on Investment Advisory, Portfolio Services, and VC? Schedule a meeting with us here.

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Our Investment in Recoplast Congo

It’s been a busy year for us as at FM Capital Group. From an investment perspective, it has been our busiest year to date for our small team of investors. For the remainder of the year, I will highlight each of our 2021 investments and talk up the wonderful, important, and impactful work each of these companies are doing in Africa.

In December 2020, Eric Casinga, the founder of Recoplast Congo, reached out to me seeking investment. While it was still in the midst of the pandemic, we had just made our first covid investment so investors were thawing out and ready to make more. So I was keen to meet Eric and learn more about Recoplast. And when I did, the business resonated with me immediately. Because when my siblings and I met up and went to Nigeria together in 2016, the plastic waste there was an eye sore in which we actually saw opportunity. We wondered how to start and operate a recycling company to combat the plastic waste that littered the, otherwise, beautiful environment. To learn that Eric had done just that in the Democratic Republic of Congo with his own patented process, I was very impressed and eager to share this investment opportunity with investors.

This startup was born out of a passion to fight against plastic pollution and deforestation by presenting a “perfect alternative” to ordinary wood. This type of upcycling creates a material called “Ecowood” that can be used to make more durable and affordable chairs, tables, pallets, and really anything that ordinary wood can make. The upcycled material is also used to create plastic products too. By paying for the plastic waste that ordinary people collect themselves, Recoplast is also providing opportunity for Congolese citizens, many of whom are women, to have a means of earning an income and providing for themselves and their families. Our angel investors saw and agreed that this was an opportunity that must be seized. We invested in this startup, finally closing the investment in July 2021. We have been busy since supporting Recoplast’s growth plans and look to do more investments in the cleantech sector in the coming year 2022.

We celebrate the Recoplast team for their efforts, grit, and innovation. Check out the video below to witness the waste transformation process. Follow Recoplast on Facebook, Instagram, and Twitter. Please reach out to Eric if you are also interested in investing. Let him know we sent you!

This particular investment is in our clients’ portfolios. To understand how you can invest in venture capital opportunities with us for your own portfolio, talk to our advisors at FM Capital Group. Schedule a meeting with us here. It’s free to chat!

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CONFESSIONS OF A FUND MANAGER

Yes, it’s true. In the midst of a global pandemic and during shelters in place, I kicked off my efforts to raise a vc fund in May 2020. Because I know the road is long to eventually work with institutional investors, I decided that with folks much more willing to take a video call, the pandemic was a good time, ironically, to forge those relationships. I kept having conversations and those conversations led to multiple meetings. I can no longer say that I hate networking. The pandemic made me love it. I joined Lunchclub, Clubhouse, and 100 Women in Finance. I learned a ton. Now 15 months later, I am doing my first first close! As I reflect on the process to prepare for the second close, I am basking in this milestone. It’s a huge moment in my career but it is an even bigger win for Africa.

Now by 2021, I had been in a lot of meetings by global pandemic standards. One of those meetings was with The Afropreneur himself, Idris Bello. I’ve followed Idris for a long time on Twitter. I knew his work. But I knew his partners, Marsha Wulff and Michael Oluwagbemi, a little bit better. I wanted to make an introduction to LoftyInc and they told me that I needed to speak with Idris. So I did. A couple months later, I find myself in Abuja to meet Michael at the LoftyInc office discussing an opportunity to join them with their new Fund.

Abuja, 2021.

Even though I was born in California, Nigeria was always called home. I always knew that I would invest there. That call has become more possible with FM Capital Group and the small checks we are able to deploy. But LoftyInc is one of the most prolific investors on the continent. They’ve been investing in Africa since 2009. They started one of the first tech hubs in Nigeria, Wennovation Hub in 2011. I did my first investment in Uganda in 2012. The Partners have been together for over 11 years. I’ve been a solopreneur for 6 years now. So when they gave me the opportunity to join a TEAM, and THIS is the team I get to join?!? I literally get to learn from the trailblazers. It was a no-brainer. In fact, it is an honor and a privilege.

I’ve been working with LoftyInc for 4 months now on the LoftyInc Afropreneurs Fund 3. I can’t wait to talk more about it, especially from an operations perspective. What a journey it has been! And this is only the beginning…

Pebble Beach, 2019.

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SEC Allows More to Invest in Venture Capital

This August, the SEC finally came around to update its definition of an accredited investor. The old definition, while meant to protect small, individual investors, also locked many more folks out of venture capital and other alternative asset classes. These asset classes are also the most lucrative investments an investor can make. So when we talk about the wage gap, in any society quite frankly, the key differentiator is the ownership of business assets.

So I have been a huge advocate of individuals adding venture capital to their portfolio. Now I’m not advocating for blind investing. Never that. Even in the stock market, an investor should know why and what investment they are making with their money. But if you are, for example, a single individual with a net worth over $500,000, you can afford to consider even a single-digit allocation of your portfolio towards high risk, high reward alternatives.

No, the updated definition hardly opens up the floodgates for any ordinary investor. But it does allow more participation in the venture capital space, especially for people of color and young adults. And I believe that is a great thing for narrowing the wage gap. This policy change is a step in the right direction.

The new rule goes into effect this month. Find out if it makes sense for you and get invested!

We are here to help. Contact us.
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When your company has dual citizenship

It’s been a week since the CARES Act became law. By then every stakeholder of business, from accountants to lawyers from investors to bankers, have held webinars and written blogs to how a company can take advantage of the covid19 stimulus package. While my initial thoughts were based in truth, I have learned a lot more strategy this week.

So I contend that my original thought still stands: African startups domiciled in the U.S. are eligible to get this money and they should.

The SBA Disaster Loan, also called the “Economic Injury Disaster Loan,” is a newly-streamlined version of the former disaster loan. It is an online application that has been radically simplified at https://covid19relief.sba.gov. It can be completed in about 20 minutes. An important feature of the SBA Disaster Loan is that it comes with a $10,000 cash advance grant, which can be sent to your bank account in three days. The loan itself is a 3.75% interest rate with long term repayment, or 2.75% for nonprofits. There are no fees or prepayment penalties, and the amount of the loan can be changed after submitting your application. This fund comes straight from the U.S. Treasury; we encourage impacted businesses, nonprofits and independent contractors to apply.

I encourage every founder to apply for the EIDL loan to receive the cash advance.

As for the other loan programs, it will highly depend on who is on your cap table as to whether or not you get disqualified from those programs. So if you’ve done a Series A or B round, there’s an affiliation clause that actually makes large VCs a disqualifier to the IRS. Talk to your lawyers and investors. You pay a good amount of money to maintain filings in multiple countries. You may as well let it work for you!

I shared links to my sources with my email readers, clients and founders, this week. If you want the links that informed my thoughts in this post, get on my email list!

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How the CARES Act Impacts your African Startup

On Friday, March 27, 2020, after debating and politicking for a week, Congress passed the Coronavirus Aid, Relief and Economic Security Act. The president signed it on Saturday. There are plenty of provisions in this bill designed to help small business owners, which includes startup founders.

As of today, 29 March 2020

If you are a founder of an African or Latin American startup that is domiciled in the US, you should also examine the new law to see how your company can be eligible for a grant or loan depending on how COVID-19 was impacted your business. You and your tax preparer or company accountant (or both) should look through the bill and discuss any advantages the company can qualify for. Then carefully assess whether it makes sense for your business. Remember to heavily consider your current and future cash flow so that you are able to service any debt in a timely fashion. Debt can be helpful to bridge expenses to the next fundraising round, the next big client or until your target market comes back online to full business and able to pay you again.

Your investors can help with advise here or as a sounding board. They may be able to connect you to professionals you need without incurring costs. Lean on them during this time. We really do want to be of help to you in any way. Reach out to your investors even if you haven’t heard from them. Remember, they are also adjusting to quarantine life regardless of where they may be based in the world. Show us some grace as you hope they show you.

Ultimately, this season will test us all to lead with compassion and creativity. Both founders and investors alike will be remembered for how they were treated during this time. Be kind and super helpful, with healthy boundaries. We get through this stronger than ever.

Source:

Read the Senate’s full coronavirus aid package bill (NPR)

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The Mindset for Venture Capital

Early stage VC is a marathon, not a sprint. That is true in everything, from the hold periods, to the work you do with a portfolio company, to the patience you must show towards a sector you think will be important. It is hard to sustain the enthusiasm sometimes, but if you have conviction about something, you have to stay the course.

AVC

Venture capital investing requires this mindset. Fred Wilson sums it up so perfectly with this quote. Individual investors like our clients only have access to venture investing in the very early stages of a company. That means the company may have a few thousand users. That means the company is very likely not making any money yet, let alone any profits. But what the company does have is a very good product that fills a need in market. The company has a strong team in place with the skills to build and sell the product. So an investment at this stage will require the patience, endurance and confidence to work with that company to fuel its growth through the ups and downs, the highs and lows.

The other side of this quote is this: DO. THE. WORK. Too many investors throw money at an investment and then ignore it. It is very easy to do as an angel investor. But, sadly, this is the biggest reason for shrinking portfolios. If you don’t know what your portfolio looks like, you can’t know how well it is performing. Venture investing almost requires that you do work as investors. Read company updates. Offer advice and connections for the executive leadership in your portfolio companies. Put yourself in position to invest again in the follow-on rounds that are inevitably coming. We believe that even investors have to know how a diversified portfolio works in this asset class as they do in any other. Venture capital investing can be as active or as passive as you make it. Just do the work.

As such, venture investing is not for every investor. But with education and capital, it is the smartest asset class for investing in the 21st century.

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