Iyinoluwa Aboyeji, Founder of Flutterwave and Andela, and General Partner of The Fund for Africa’s Future speak with Founder Africa on his journey and views on entrepreneurship and angel investing.
As one of the prolific entrepreneurs/angel investors on the continent, kindly give us a quick run-through of your journey up until now.
Iyin: I ventured into entrepreneurship in 2010 when I co-founded Bookneto.com during my time at the University of Waterloo. From there, I grew through a series of failed enterprises to help build *** First Fora in 2012/2013 and ultimately Andela in 2014. After Andela, In 2016, I went on to build Flutterwave which I left in 2018. In 2018, I took some time off and returned to the market in 2020 to establish the Funds for Africa’s future. That’s being my journey so far.
For those who don’t know, two of the start-ups you mentioned are unicorns. Can you remember your first fail or some of the start-ups you failed at?
Iyin: With Bookneto, we were a team of 8 founders and what we were trying to achieve was to destroy blackboard which was the learning management system our schools used. We didn’t realize that the school wasn’t going to risk giving a platform to a bunch of students in the same school. It didn’t occur to us all the different conflict issues that would arise from that. So, we had to pivot, and we pivoted to building because we had this very sleek reader. We started to build a platform that essentially helped university students access past questions papers, comment on them, and solve the problems together. So, we pushed that, but it was somewhat slow. But the functionality was useful for a group of professors. First, the professors came together and sued us for using their intellectual property to make money. So, we had to shut down the site or pivot it. One of the professors asked us to come work with them to help them build a product where they can teach courses outside the university system because they didn’t have any. That was one!
As someone very close to the ecosystem, do you think angel investors can still play a significant role in the African ecosystem with the new ways of raising funds?
Iyin: There is always a key role for angel investors to play beyond just giving cash to founders. So, yes there are a lot of funds, but you still need somebody who can get early-stage companies through their… They need someone who can get them to the point where they can establish their unit economies and then scale from there. That requires a lot of work, and a lot of that work isn’t often with people who are in your team, realistically. So, what tends to happen is you need to pull in people who have had some experience in the business or some life experiences in adjacent fields and they need to help.
Is it fair to say that angel investors should keep **** As the trend continues you would probably see angel investors that roll up their sleeves to get more involved?
Iyin: Angel investors need to get more involved and add value and they will be considered useful to the ecosystem. But if all they want to do is kind of invest like everybody else, the system of investing would make it even more complex than it needs to be.
Another thing that we are seeing in the ecosystem right now is inflated valuations. Would you say that there is a bubble right now?
Iyin: I guess some parts of it are bubbly. I think that it might be a mistake to categorize all of it as bubbly.
So, would you say, a bit inflated unnecessarily and a bit is a real value?
Iyin: There’s some bubbly behavior but I think that some of them are because of the promise and the scale of the problems the companies are trying to solve and if they successfully solve those problems the valuations will come back to normal. I think some of it is also due to the rising cost of starting a company in this country, particularly the cost of talent. And I think some of it is purely bubbly behavior, but I wouldn’t chunk everything up to being bubbly.
What would you consider the biggest challenge first for founders and next for investors on the continent right now?
Iyin: For founders, the biggest challenge is talent. How can you find people that are competent and passionate? That’s very difficult because we don’t have enough good talent in the country. The educational system which should be generating them is comatose. It doesn’t exist. And there is no corporate ladder for them to go through.
For investors, at the end of the day, the biggest challenge is still investors being able to align their appetite and expectations with the reality of the deal flow on the ground.
Do you think investors expect too much?
Iyin: Many investors don’t seem to be. I’d hope they would be investing for the right reasons. But sometimes, it’s not possible.
Let’s talk about future Africa. You called it something else at the beginning. Did you rename it?
Iyin: Future Africa is the colloquial name. The full name is the fund for Africa’s future.
What is Future Africa and the number one objective?
Iyin: Future Africa’s goal is to build support for founders, invest very early and support founders that are solving hard problems in large markets. We do it through the funds that we’ve been assigned. We do it through the collection which is our community of angel investors that invest alongside us. We also build companies that help solve real problems.
You are now an investor as opposed to an entrepreneur. Why did you make that switch?
Iyin: Am I really an investor? I still think of myself as an entrepreneur. The investment process was broken for founders. So, it made it difficult for the right kind of founders who were solving big problems to come to the floor. So, what we wanted to do was to design a business that could support founders that are trying to solve very hard problems as we did. We want to make that road easier for them to go through the path of impact.
Are there particular sectors that really excite you guys at Future Africa right now? Or are you sector agnostic?
Iyin: We like to think of ourselves as sector agnostic but there are particular things we would like. The four areas where we tend to pay a lot of attention and try to understand what is going on are learning/talent in general, infrastructure (physical and digital infrastructure), mass media, and movement (like why do people like this particular brand), and the final one is the environment.
Are you similarly spreading your investment across Africa as well or are countries you’re interested in focusing on?
Iyin: We want to reflect economic activity across continents both now and into the future. So, we have conquered that lens when we think about what it is that we focus on.
Does this mean that you want to pick out certain areas, but it doesn’t mean you’re not looking at other areas?
Iyin: Yes. We are always ready to be told that our thesis is wrong and that we should look at other areas.
Exits! Is Future Africa going to exit? Is there any big news coming up, this year or next year?
Iyn: We have exited quite a few deals in the last three years. We tend to look at exits from the point of view of being able to give our investors some liquidity to hold on to while we ride with the company, we believe in. That’s how we think about exits. I mostly don’t glorify it, but the mechanisms of secondary transactions have made exits different from what they used to be. But we hope to take full advantage of these openings to give founders and angel investors some liquidity that they can use to invest going forward.
Interesting. So, I got the opportunity to speak to the founder of Cedars, sometime last year or the year before, and one of the things he was excited about for Cedars was the idea of a secondary market. Where early investors can go in and buy things just like you’re going to the stock market and then sell stocks in companies. You can do that in some of his start-ups. Is that something you see that could work in Africa? Is it something future Africa would be considered in the future because I think that liquidity is a big issue for a lot of investors? I’m wondering if it’s something future Africa will potentially look at down the line
Iyin: I think we might. We might look at it down the line just so we can be proactive. Yeah
I guess the evolution of the ecosystem globally would begin to tell. Hopefully, as things start happening in other places they start happening here as well and we will see the players that would get involved in that. Like I know very well first-hand that not everything that works in the US/UK necessarily works in Nigeria or Africa.
Iyin: Exactly. That’s why we need that extra hand to provide the necessary guidance along those lines.
What value do you think the diaspora can bring to start-ups in Africa?
Iyin: I think the diaspora can bring talents and networks that founders don’t have to the table. So, if you’ve worked in the upper echelons of America and particularly started a company from scratch you know that there are essential customers you must have along the way. And It’s always a delight when those people are equally enthusiastic about what it is you’re trying to do. What I often tell people is that it is just essential to have a network-based approach as opposed to a capital-based system. It’s not to say we don’t want your money. Money is important. But the networks that you can bring for these start-ups go way farther than where any amount of money can go to. That’s my two cents there.
It’s interesting you raised that cos I have had a conversation recently saying that in Africa right now, money is still a thing that they need, but I think it’s beginning to move away from just the money but more the network and how to penetrate markets, etc.
Iyin: Exactly
Quickfire questions, just very prompt. Yes/No or more.
First, do you listen to podcasts?
Iyin: I do.
Do you want to share one that you would recommend to a founder or investor?
Iyin: “Invest in the future” is a good one. I listen to that one. That’s our podcast. I like “invest like the best” it’s also another very good one. Those would be the two I would recommend for now.
What three habits or characteristics do you look for in a founder early on, before you invest?
Iyin: I really want to see a sense of mission. Like a selfless mission. This person is willing to put themselves and everything they have in service of the mission. Also,I like to see somebody who can collaborate with others. A sense of leadership. And most importantly I like founders that know their numbers.
Is there a book you would recommend to founders to read?
Iyin: There are many books but I would really recommend zero to one by Peter Theil. It’s a really good book.
Do you have any hobbies and if you do what are they?
Iyin: I don’t have many hobbies. I like my work. Talking to founders is my best hobby.
Is there anything people don’t know about you?
Iyin: In terms of what people don’t know about me, I once worked as a bouncer in a club.
Thank you so much for your time.
Iyin: You are welcome
