Venture capital firm Voltron Capital, which helped scale 53 African startups last year through its Fund 1, is taking another approach to financing more startups on the continent this year through its Fund 2.
Despite current economic hurdles and investor caution, Voltron sees more opportunities to invest in startups.
According to the founder, Olumide Soyombo, “a bearish moment is an interesting moment to build”. He believes that an entrepreneur will always be an entrepreneur, regardless of market conditions.
How Voltron Capital started
In 2014, Soyombo began investing in different startups as an angel investor using money from Bluechip Technologies, a software company he co-founded. His angel investment moves led to the success of companies like Piggyvest, Paystack, and TeamApt.
After there had been great rewards from these ventures, he decided to establish Voltron Capital, raising capital from close friends and associates to provide seed funding for various startups in Africa.
- “I started out more as an angel investor, using my own money, not anyone else’s money. However, while doing that, I used to see very, very interesting companies. And I found out that companies may be raising $200,000, I’ll put up my $50,000, and realized that I was syndicating deals by bringing in other investors, traditional Dubai investors, high net worth individuals, or even other companies. equity investors, then I would complete the round.”
- “After getting some good returns from companies like Paystack and getting out of a few secondaries, a lot of people started saying to me ‘hey Olumide, next time you’re investing, I’ve got my $50k, I’ve got my $100k, take me with you. And it was from there that I thought okay, why don’t I build a fund, but this time with a structure similar to a community of high net worth individuals and family offices who are then interested in backing more entrepreneurs. Soyombo told Nairametrics.
With its first fund launched in 2022, Voltron invested in a total of 53 startups in Africa, which equates to at least one deal per week throughout 2022, thereby raising the level of venture capital on the continent. With a focus on fresh ideas, 98% of the 53 startups were at the pre-series level.
How he chooses Startups: With limited backgrounds and proofs of concept, most early-stage investors in startups rely on their instincts and the first impressions of the co-founders to choose which startups to invest in.
Soyombo is looking for unique knowledge and domain experience on the team, and a good fit for the Entrepreneur.
- “Usually we are the first or second control in most companies, and the first thing I look for is the team and the experience of the team. What domain experience do they have? What unique ideas do you have about that problem? And what kind of entrepreneur is this?” says Soyombo.
With a proven track record of success, this strategy has allowed him to identify and invest in numerous profitable start-ups, generating significant returns on his initial seed investments. Not surprisingly, many high net worth investors turn to him for guidance and advice on where to invest their capital.
Much more than financing
Voltron not only provided funding, but also guided startups to success. Many of the startups are now in global accelerator programs, such as Y Combinator, Tech Stars, and Village Global.
Additionally, valuations of startups have risen over time, some more than three times. Soyombo said they saw 1,200 incoming opportunities and spoke to 500 startups over the course of the year, leading to 53 deals in various countries in Africa.
- “It’s a bear market right now, but I think it’s also a very interesting time to build. I always tell people that whether it’s a bull market or a bear market, a super entrepreneur is a super entrepreneur. And good entrepreneurs don’t cease to exist just because we’re in a bear market. So we still want to support very early companies. Obviously, we’ll walk those companies through their model and also focus on the positive drives in the economy as soon as possible because in today’s markets it’s going to take longer before you can generate follow-on rounds.
- “So we’re asking the companies that we’re investing in to focus on the positive drive of the economy early on, as they figure out their model, and not just burn, burn, burn, right. So we’re very excited about the market. Because we feel that even though people are scared now, it’s still time to dive in.” Soyombo said.
Voltron builds on the successes of its Fund 1 by establishing Fund 2 to help more African start-ups scale. The aim is to support start-ups on the African continent and mobilize more capital for young companies. Despite the current market sentiment, the organization is determined to continue its efforts.
According to Soyombo, Voltron’s mandate is to support early-stage companies and guide them through their model while focusing on positive drives in their economy. This is especially important in today’s market, where it can take longer to generate follow-up rounds. The company encourages new companies they invest in to focus on the positive economics of the unit early on, rather than spending funds.
- “I am getting Nigerians to back our own start-ups and the reason is obviously so that when the exits happen, the money comes back and stays here and goes back to funding more start-ups. That is why I am very passionate and have been an evangelist to get Nigerians to invest in Nigerian companies alongside foreign investors,” he said.
Many of the investors in Voltron Fund 1 are also investing in Fund 2, including high net worth individuals and corporate Nigerians. The goal is to get many Nigerians to own their own unicorns and for the money from the exits to come back and stay in Nigeria to fund more start-ups.
Voltron is a Delaware registered fund managed by Soyombo and is also managed through AngelList at www.angellist.com. The fund has an investment committee that reviews new companies and makes investment decisions.
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