Immerse Africa VC Fellowship: A Journey Through Venture Capital

Congratulations to Cohort 2 of the Immerse Africa VC Fellowship program by Immerse Africa VC Academy! This intensive 6-week program equips existing and aspiring VCs with the knowledge and skills to navigate the exciting world of African venture capital. Let's delve into each weekend and see what these ambitious fellows accomplished:

Weekend 1: Foundation & Fundamentals

• VC 101: The program kicked off with a deep dive into the core concepts of venture capital, including its business model, the Power Law principle, and how VC funds generate returns.
• Building Blocks: Fellows learned the ropes of building a simple Fund Return Model and a model for the Management Company, understanding how these models function in VC operations.
• Investment Goals: They explored the challenges and benchmarks for achieving a 3x return on a fund while investing in African startups. This set the stage for understanding the high-risk, high-reward nature of venture capital.
• Industry Insights: The weekend concluded with insightful conversations. Ibraheem Babalola , an entrepreneur, shared his perspective on what VCs look for in startups, while Labi Idan Williams , an LP (Limited Partner) investor, shed light on the expectations LPs have from VC funds.

Weekend 2: The Language of Finance

• Financial Literacy: Understanding financial statements is crucial for VC analysis. Fellows spent the weekend mastering the Income Statement, Balance Sheet, and Cashflow Statement, learning how each statement measures a company's financial health and how they interlink.
• Excel for Finance: A solid grasp of Excel is essential for financial modeling. Fellows brushed up on their Excel skills and began building their first financial model, setting the stage for more complex modeling in the coming weeks.
• Corporate VC vs. Traditional VC: Victor Sada of Interswitch Group offered valuable insights into the world of Corporate Venture Capital, highlighting the differences between corporate VC and traditional VC firms, including valuation expectations.

Weekend 3: Building & Analyzing Startups

• Financial Modeling Power: This weekend saw fellows hone their financial modeling skills by building a startup financial model from scratch. This hands-on exercise allowed them to understand how financial statements connect and inform investment decisions.
• Model Validation: The thrill of seeing their models balance brought a sense of accomplishment. Fellows learned to troubleshoot and refine their models for accuracy.
• Startup Valuation Demystified: Understanding how startups are valued is key for VCs. Fellows explored valuation methods like Comparable Trading Multiples and Precedent Transaction Multiples.
• Term Sheet Talk: The introduction to terms like liquidation preference and anti-dilution clauses equipped fellows to understand the language of deal terms used in VC investments.
• Guest Star: The icing on the cake was a session with Damilola Teidi of Ventures Platform Fund, who emphasized the importance of "Value Creation and Capture" in successful startup investments.

Weekend 4: Deal Terms & Advanced Modeling

• Model Stress Test: This weekend challenged fellows to add new financial assumptions to their existing models without breaking them. This exercise simulates real-world scenarios where VCs need to adapt their models based on changing circumstances.
• Debt & Long-Term Planning: The complexity of financial modeling increased as fellows incorporated debt schedules, interest payments, and principal repayments. This broadened their understanding of how debt financing impacts startups.
• Startup Valuation Deep Dive: The exploration of valuation methods continued with Convertible Notes, which are commonly used instruments in early-stage investing. Fellows saw how valuation caps and discounts affect convertible notes, adding another layer of complexity to their valuation toolbox.
• ESG in Focus: Ofure Isenmila of Norrsken22 led a crucial discussion on ESG (Environmental, Social, and Governance) factors, often overlooked but crucial considerations in responsible investing.

Weekend 5: Legal Landscape & Investment Process

• Exit Strategy: This weekend focused on building exit scenarios for the startup they had been modeling throughout the program. Fellows explored various exit scenarios, including equity raises, convertible note conversions, and complete acquisitions, calculating metrics like MOIC (Multiple on Invested Capital) and IRR (Internal Rate of Return).
• Legal Deep Dive: The legal side of VC came into play as fellows learned about the different legal documents used in VC deals, such as Term Sheets, SAFEs, Convertible Notes, and Preference Shares. They also delved into the meaning and implications of key terms in these documents, equipping them to understand and negotiate deals effectively.
• Investment Process in Action: Dolapo Morgan of Ventures Platform Fund provided valuable insights on the real-world investment process, validating the concepts and simulations explored in class.

Weekend 6 (Open Class): Sharing the Knowledge

• Open to the Public: This weekend saw the program open its doors to the public for a special session. With limited space available, around 30 attendees had the opportunity to learn from the experts.
• Demystifying Valuation: A core concept in VC, valuation was a key focus. The session unpacked the realities of VC and the limitations of traditional valuation methods. Fellows learned that practical approaches are often used, considering dilution factors and industry benchmarks.
• Building a Model in a Day: The attendees witnessed the power of financial modeling firsthand. In a condensed session, they were guided through the process of building a financial model for a startup and understanding the assumptions, calculations, and structure that go into a well-built model.
• Valuation in Action: The attendees were introduced to valuation methods using real-world examples. They learned how to find comparable companies and use multiples based on revenue to arrive at a valuation for a target startup.
• Building the Cap Table: Understanding how ownership is divided in a startup is crucial. The session covered creating a cap table, considering factors like co-founders' shares and employee stock option pools (ESOPs).
• Simulating Investment Scenarios: The attendees participated in simulating investment scenarios using Convertible Notes. They saw how these instruments work, with different outcomes depending on conversion triggers like valuation caps and discounts.
• Guest Speaker Spotlight: Oluwasola Osonuga (ACA) from Ventures Platform Fund joined the session, sharing her expertise and insights.

Weekend 7: Culmination & Celebration

• Sharing Deep Lessons: The final weekend began with a special guest speaker, Ogechi Yvonne Obike, ACIBN,MBA . She offered invaluable personal experiences and lessons learned from her work at Payday, providing a unique perspective for the fellows.
• Investment Committee Simulation: The grand finale arrived with fellows presenting their investment theses to a simulated Investment Committee. Divided into teams representing different VC firms, they had chosen startups to present, aiming to convince the committee to approve funding. The committee, comprised of industry professionals like Amaka Okechukwu Opara , Olúwatóyìn Emmanuel-Olubake , and Taiwo (Kamson) Ketiku played a vital role by providing feedback and guidance.
• A Network Built to Last: A special thank you went to the VC funds that sent their analysts and associates to participate in the program. This not only benefited the fellows by allowing them to learn alongside experienced professionals but also fostered valuable connections within the VC ecosystem.

Looking Ahead: With the successful completion of Cohort 2, registration for Cohort 3 is officially open. Register HERE to be a part of Cohort 3 starting in 1 week (26 April 2024). Looking forward to seeing you soon.