Ventures Platforms is one of Africa’s most prolific startups. In eight years, it has invested in 78 startups, scoring big wins with Piggyvest, Remedial Health, and Paystack—which Stripe acquired in October 2020 for over $200 million.
After these Nigerian successes, it’s turning its attention outside Nigeria and aiming to become more pan-African. Since Kola Aina founded Ventures Platform in 2016, it has only invested in 12 non-Nigerian startups.
“Even though we started from Nigeria and most of our investments are based in Nigeria, we always set out to be a pan-African investor,” said Dotun Olowoporoku, the managing partner of Ventures Platform.
The firm’s $46 million fund, which was launched in 2021, typically invests $250,000 to $1 million per startup. As it deepens its roots outside Nigeria, it will only invest in “key strategic markets” with a stable political environment, homegrown technology talent, and angel investors. Its most recent investments outside Nigeria have been in the Francophone West Africa region, which satisfies these benchmarks.
“Startups only breed where the ecosystem has been put together,” said Olowoporoku. In 2023, the sector-agnostic fund invested in twelve startups, making it one of the most active investors on the continent in a year when funding declined 36% year-on-year.
Besides its vast portfolio, Ventures Platform made its name by being a hands-on investor for its startups. In November 2022, the firm appointed Damilola Teidi to lead a team solely focused on supporting its portfolio companies.
“As a founder whose aspiration is to build a business that generates a ton of free cash flow, there is no better fund. In my lowest moment as a founder, when we went down to zero revenue, Ventures Platform was there. When I needed to recruit talent, Kola Aina had time on his calendar to speak to an engineer,” Njavwa Mutambo, the CEO of Caantin, a non-Nigerian Ventures Platform portfolio startup, told TechCabal.
Ventures Platform: Lake versus Ocean Strategy
VC investing is like fishing; you cast your net into a vast ocean and hope for the best. While that’s a simple analogy, VCs and fishermen head to sea every time to take their chances based on robust analysis and hope for outsized returns.
For Ventures Platform, fishing either happens in lakes or oceans. The Big 4 (Nigeria, Kenya, Egypt, and South Africa) are seen as oceans where multiple “sharks” can exist in the same market and still thrive, while smaller ecosystems are seen as lakes where there is mostly only one “shark.”
Francophone West Africa ties into the firm’s lake strategy, as the firm sees the region as pockets of lakes. The firm will invest in startups in the region as long as they can “dominate the market quickly,” own up to 80% of the market share, and be able to expand into neighbouring countries.
“It’s easy for companies to start in Senegal, expand to Cote d’Ivoire and Cameroon, and become huge businesses without coming to Nigeria,” Olowoporoku said.
However, acquiring a significant market share can be expensive and capital-intensive. In recent months, the African tech ecosystem has adopted a more conservative approach to spending after the end of the zero-interest rate policy, which reduced startup funding.
But Olowoporoku told TechCabal that his firm would still back a startup in the region that is raising money to acquire customers and can retain them. The firm recently invested in Tanel, a health insurance company, and its fourth investment in Senegal. This has not previously been reported.
Ventures Platform is also looking to invest in Francophone West Africa, where startups have an easier path to exit due to French companies’ interest in entering the region through acquisitions, according to Olowoporoku. “We want to go to that market and look for companies that other people might have ignored because they look at that market from a narrow point of view,” he said.
Ventures Platform’s GRMTT metrics
Venture capital firms often have a thesis for building their portfolios, and Ventures Platform is no different. The firm has five prerequisites for investing in a startup.
The firm considers a startup’s growth rate, which must be “incredible” before it cuts a cheque. “Venture investors invest in high-growth companies,” Olowoporoku said.
Ventures Platform also considers the startup’s revenue before investing, as it only invests in startups making money. The firm considers the startup’s revenue margin, which helps it determine valuation, and the diversity of the revenue source, which can help startups adapt to exchange rate volatility. “Revenue is important because it’s a reflection of whether they’re creating value and whether someone is willing to pay for that value,” Olowoporoku said.
The firm also considers the current reality of the market and the potential of the market in which a startup operates before investing. “A fast-growing business in a capped market is less valuable than a slowly growing business in an uncapped market,” Olowoporoku said.
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