A number of prominent African digital company entrepreneurs are among the LPs of early-stage venture capital firm Microtraction, which makes pre-seed investments in African internet firms. Microtraction has announced a US $15 million first closure of its second fund.
Microtraction was established by Yele Bademosi and Kwamena Afful in 2017 and has since invested in 36 businesses in Nigeria, Ghana, Kenya, and Rwanda, with the support of PAVE Investments, Michael Seibel, Andy Volk, and Chris Shultz.
Accounteer, Riby, Thank U Cash, CowryWise, Wallet.ng, Schoolable, 54gene, Termii, Pivo, Bit Sika, and Raise are some of the portfolio firms that have collectively secured more than $10 million in follow-on investment.
Microtraction said that it had “carefully and consciously” sought out the entrepreneurs, GPs, and LPs that make up its investment base for its second fund, the Community Fund. With LPs like a first close of US $15 million has already been made. More than 30 founders of African startups with venture capital backing are LPs in this community fund, including Shola Akinlade of Paystack, Razaq Ahmed of Cowrywise, Francis Osifo of 54gene, Odun Eweniyi of Piggyvest, and Jesse Ghansah of Float.
With the option for a quick top-up of up to US $350,000, the fund will write initial checks for US $100,000 for 7% of early-stage African companies in various sectors and regions of Africa, as long as Microtraction does not make up more than 25% of the company’s subsequent official fundraising round. With this vehicle, the company plans to invest at least 60 dollars, with the following round’s rapid top-up going to about 20. Through this community fund, 20 investments have been made thus far.
“This year marks the 5th anniversary of Microtraction and over the past few years, we’ve been fortunate enough to witness and contribute to the growth of the African tech ecosystem. We are grateful to have partnered with some of the most innovative, mission-driven founders solving some of the continent’s most pressing challenges,” said Kwamena Afful, founding partner at Microtraction.
“As a team, we constantly ask ourselves: ‘What do founders need right now? How do we improve our offering to founders? How do we differentiate ourselves from other investors?’. We realized, very quickly, that the difference between founders that are on the right track to building successful businesses and those that are not quite there yet, is access to a rich and valuable community that increases the odds of success,” said Dayo Koleowo, partner at Microtraction.
As the first African fund with community tokens for its members, Microtraction is also foraying into the Web3 space in order to foster an engaging experience within the community. Social tokens will be used to motivate and gamify the experience of members who will add value to and support the fund and founders. For the time being, the DAO will only be accessible by invitation and will begin with a variety of benefits, including exclusive access to events, investment possibilities, in-depth analyses of certain industries, and more.
“As a group, we are never shy of experimenting and creating a blueprint others can build upon. We believe that the African startup ecosystem is still in its infancy and it’s going to take a community of connected, aligned, and incentivised members to contribute, grow and accelerate its development. As a fund and community, we look forward to continuing to innovate on Africa’s innovation infrastructure alongside our members,” said Yele Bademosi, founding partner at Microtraction.