Early fundraising lessons from VCs
After sending out my first fund-raising email, I received a lot of feedback. Some of it was generic (“Nigeria isn’t a city, idiot.”) but most was very specific advice from people who invest for a living. I won’t bore anyone with the details, but here are some themes that emerged.
Don’t go too broad
A fund cannot spread itself too thin. The entrepreneurs, VCs, and LPs (the folks giving the $ to the VCs) all benefit from focus. In my case, geography is a killer.
It’s difficult to move around Africa. After all, it’s a continent! That means I need to start with a single geographic area. This was echoed by several folks, but I took it very seriously when a friend of mine — he runs an investment company in Ghana — said it would be a deal-breaker.
So I decided to get laser focused on Lagos in Nigeria. Why? I’m glad you asked. And I already answered it.
Exploit my advantages
My wife and I built GE’s incubator in Lagos in 2014, a program that recently restarted to great fanfare and over 1,500 applications. We also developed the entrepreneurial training curriculum that the Tony Elumelu Entrepreneurship Foundation is using to train and fund 10,000 Africans between 2015 and 2025.
In other words, I have some relevant experience and know a lot of the right people. But how exactly am I going to leverage these things? The answer is part of my plan for building my own specific pipeline of world-class investment opportunities.
Build a reputation
I’m not yet an investor. I have had stock in startups that were acquired by large tech companies, but that’s not the same thing. There’s some “scar tissue” that I need to build.
How? By actually start doing deals as an angel investor. Then I can take that portfolio and leverage it to prove a few important things:
- I know what I’m doing as an investor in Nigeria.
- There are good startups in Nigeria that are undervalued investment targets.
- I know (or can easily learn) the best practices of investing.
Collect the data
LPs (or Limited Partners, the folks who would give me their money to invest) want to see more than me. They want to see the opportunity described to them in credible figures.
Collecting that data is going to take time. I will talk to hundreds of investors and entrepreneurs across Nigeria to put together the numbers I need. That’s a lot of prep work, but it’s worth it. That is exactly what’s needed to convince the right folks that they can partner with me to make a difference in the home-grown development of Africa’s urban centers.
That’s all for now. But I’m processing, always processing.
Onward!
