Lessons learned from angel Investing in OrinMusic .

Orin Music.

A few months ago Tefo Mohapi of IAfrikan challenged me to share some of the lessons that i learned from investing in OrinMusic. Even though the company has been discontinued, i figured that it could be useful to share some valuable lessons we picked up along the way.

• A brief background on my music / tech investment / career

I have always been interested in music from an early age, i was involved in church choirs and also flirted with the idea of studying music production in college but i settled for studying Business enterprise however music has always been a faithful companion through this journey called life. So it was no surprise that the first official angel investment that i made in 2013 was a music app that was aiming to stream African music called OrinMusic

Orin - Yet Another Mobile Music Streaming Service For Africa

I had met the founder at the VC4Africa meet up event held in London in June 2012 and we have become very good friends till today.

VC4Africa London Meetup - June 22nd, 2012

I had just partially exited my previous company YnotPlast and i was looking for the next challenge whilst running TheFoundersHive .

At FoundersHive , we had gained a tremendous access to the people that were directly involved in the creation of TechCity as the tech scene was blowing up and i couldn’t help but see that Africa was also embracing this new wave of building technology companies but the support system for Founders particularly the early stage investing infrastructure was still very weak.

Investing in Africa focused companies became that burning challenge and i embarked on a journey that has led me to where we are today with SVH.

I quickly realised that the next chapter of my professional life needed to be working in venture capital at the seed stage because i felt that’s where i could add much value . I wanted to provide founders with the kind of support and insights that had been so valuable to me.

This experience proved very insightful and has taught me a few lessons that i wouldn’t have learned otherwise. Learning to be an angel investor is like learning to swim or to ride a bike. No matter how many books you read, no matter how many videos you watch or how many events you attend, the best lessons come when you practically start and do it. Be prepared to stumble and fall but that’s the only way to gain balance and stand upright. 4 years down the line, i have made over 12 investments and facilitated a few more through NewGenAngels part of (NewGen Venture Finance limited )

Reason i invested:

1. I believed in the vision of the founder: i had met him about 12 months before i invested and i kept seeing how driven he was so i decided to come on board. Great founders are self motivated.
2. I had strategic relationships that allowed the company to function strategically and reduce cash burn from day one.
3. It was a problem that i could relate to as a user.
4. The landscape was relatively ripe for such a player.
5. It seemed like a perfect acquisition target for a larger player so an exit was clear from a Return On Investment point of view.

Afterthought: Most of these reasons are still valid in retrospect but there in lies a few lessons too: investing for personal reasons and financial returns are two different things.

• Comparing then and now, what has changed in music tech?

Well fast forward to today, streaming is a reality and this category is relatively stable and the category undisputed leader is Spotify, the problem that Orin was trying to solve of making African music available to the world audience has been largely solved by Spotify; you can literally find amazing African artists on spotify , there is still room for a dedicated depository of African music but the cost of customer acquisition is still relatively high so i suspect that making it a viable business may still be a challenge in the current environment.

The introduction of Tidal has changed the landscape totally because now the content creators can give priority to the most devoted fans by allowing them to access the music before it is released to the general public.

The OTT market across Africa has a very good future but it needs patient capital, the numbers are eye watering as demonstrated by this recent report from Muvi

• Interestingly, despite tech advancement, we still don’t have a global single directory of all songs published (eg books have the ISBN code). Why?

To be honest with you this is something that still buffles me as well but i guess we need to find a business case for having such a registry. The Music industry is largely a publishing and touring business ,as long as those two things remain the pillars of the industry everything else will be cast aside.

• Many Afrikan music tech startups have come and gone with some still going but without the subscriber numbers like Spotify etc, do they have a future?

I think they can have a future as a way to break new artists to the world but it doesn't necessarily mean that they will be ready made or ideal for Venture investments. Spotify’s main business model is still advertising and strategic partnerships ;so African music startups can embrace the same model but the number of ear-holes will be different. What i see that could be interesting is further vertical integration so that there is leverage of the creative talent not just the content production and distribution.

• If you were to start or invest in an Afrikan music tech startup today, what kind would interest you?

I am going to stay away from this category for the next foreseeable future, having said that if the right model comes along then most definitely. I believe that ICOs could be a game changer for this space.

I believe that new players like Akon will bring a different dimension to the ecosystem .

Rapper Akon to buy 50% of African music download service

Key takeaway lessons:

1. Founders can go back to school and that’s ok too, angel investing is a people’s business and it is fantastic to see how it impacts other people’s lives.
2. Don’t look for early exits, let nature take its course
3. Always be helpful, open doors for everyone because you never where the next co-investor is coming from.
4. Lead from the front and be a champion for your portfolio companies.
5. Never stop learning, this is a marathon not a sprint.
6. You don’t have to be a billionaire/Millionaire to start investing, my initial investment was $20K.
7. Venture capital in Africa is still frowned upon and deemed too risky by limited partners who prefer Private equity hence why US VCs are becoming the leading source of capital for African companies such as Paystack, Flutterwave , Twiga etc. European/Chinese VCs need to catch up. I don’t mean to be Bob Geldoff about it but “we need more money” and this isn’t charity.
8. Unless you are the lead investor or are strategic enough to be an observer, you are as good as an outsider.
9. Investing in other people’s businesses teaches you how to treat external investors in your own business.
10. Remember who is running the company : it is the entrepreneur not the investor.

My Next Task: Building a Venture Capital Firm Founders Can Trust.

If this was useful please share it with your network and i wish you all the best with all your endeavours.

If you are in London , join our team every 1st Thursday of the month for the Venture Capital Salon a fun networking evening for professionals with various discussions on all all things Ventures and Africa.