For a founder, the world of startups is an exciting but very stimulating world.
While there have been many successful startups over the past two decades, globally the majority fail to get past the early stage for a number of reasons; inadequate funding, business model / strategy failure or product / market challenges.
The chances are even greater for startups based in emerging regions like Africa, where there is a lack of funding, an infrastructure deficit crippling the economy, a massive consumer base with low purchasing power. , political hostility and uncertainty, and fragmented markets.
Lack of access to capital is often cited as the main reason businesses fail in Africa and other emerging markets. But in addition to funding, it can be helpful for founders in these markets to also benefit from mentorship – preferably from people with first-hand experience – as they embark on their startup journey. with unknown and unknown paths.
With this in mind, a global collective of startup founders with expertise in multiple sectors and geographies has been providing both access to capital and mentorship to startups and start-up founders for over three years.
A founders’ fund for founders
MAGIC Fund, launched in 2017, is a start-up venture capital fund built by founders who became investors. It has 12 founders from around the world who act as general partners with Helium Health co-founder and CEO Adegoke Olubusi as managing partner, and Matt Greenleaf as operating partner.
The fund is based on two theses. First, pooling the funds and resources of individual founding investors opens up the group to more investment opportunities, which they could then better assess using their various skill sets.
Most founders-turned-investors opt only for angel investing or venture capital, a practice that often comes with geographic and expertise limitations.
Realizing this, Greenleaf and the other MAGIC partners – who met Olubusi when Helium Health was on the Y Combinator accelerator program in 2017 – are co-investing together.
“MAGIC is like a fund of micro-funds built by founders,” Greenleaf told TechCabal in an interview. “Before we started, we were all in some sort of investment as founders, but we realized that with our expertise in particular industries, it would make more sense to consolidate our collective intelligence and streamline our investment practice. angel via a fund, ”he explained.
MAGIC Fund 1 was $ 1.5 million, including personal funds from the founders according to Greenleaf.
With its first fund, MAGIC has invested in more than 70 companies in the pre-seed and seed stages in Africa, Europe, Latin America, North America and South East Asia.
Supporting the founders on their journey
Second, MAGIC believes that smaller funds managed by founders perform best in seed investments. Thus, the fund supports startups that solve challenges around the world in their early stages.
MAGIC provided the founders with more than money, notes Greenleaf.
Unlike traditional investors whose main goal is to get good returns on investments, MAGIC founders-investors with start-up experience are also looking for the value they can generate for the startups in which they invest.
MAGIC’s investment is accompanied by support for the founders through knowledge sharing and sessions with experts in relevant fields. In this way, they help early stage founders find a fit with the product market, refine business models and fundraising strategies for successful start-up cycles.
According to Greenleaf, the Fund’s partners offer mentoring, advice and network connectivity to help founders of investors grow their businesses.
“We bring this general knowledge and know-how to help other founders run a business from zero to 100,” he said. “We have people on the team who have started multiple businesses and have access to people who have helped build unicorns. With this collective knowledge of the team, we offer mentoring.
Some of the startups that MAGIC has invested in and supported so far include Bankly, Mono, Eden Life, Evolve Credit, Indicina, Bamboo, Chronus Health, Oxygen, Kiwibot, etc.
By investing in startups and sponsoring start-up founders, Olubusi believes that the way MAGIC Fund works offers general partners an opportunity to give back to their ecosystems.
“Later-stage founders whose companies are beyond the initial stage of pre-seed, seed or product market suitability have a very critical role to play in facilitating and helping to develop their ecosystem,” he said. -he declares. “And that’s one of the things we can do at the fund.”
And after that ?
After seeing the success of its investments – MAGIC Fund 1 achieved 5x over the three-year period, according to Olubusi – the company raised a second fund of $ 30 million announced recently.
“We had fully deployed the first fund, so we thought, why not step up the strategy since it has worked so well and bring a few more people on board? Said Greenleaf. “We didn’t have a dedicated full-time team for Fund 1, but now we have this team and 15 general partners helping in different industries. Obviously, $ 30 million is a lot of money to deploy and manage.
Some of the new partners who join the MAGIC team are the founders of startups invested under Fund 1 but have left. According to MAGIC, a third of the new fund was provided by the founding-general partners.
MAGIC’s sponsor base is diverse, with 50% black and 33% women. Some of the LPs are Shola Akinlade of Paystack, Olugbenga Agboola, the CEO of Flutterwave in Nigeria, and Hendra Kwik of Payfazz in South East Asia, Katie Lewis, Michael Seibel, Kirsten Connell of Octopus Ventures, Tim Draper, etc.
Evercare partners are Temi Awogboro, Troy Osinoff, Tom Chen of Stitchroom, Elvis Zhang of Oxy2, Adeel Yang of Medumo and Michael Lisovetsky of Juice.
Magic Fund 2 will write 100,000 to 300,000 checks in the pre-seed and seed stages, Greenleaf revealed. The global fund is industry independent and plans to focus on FinTech, healthcare, SaaS and enterprise, women’s health, development tools, and more.
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