Key Takeaways from the inspiring African Venture Finance Programme (AVFP) at the Oxford Saïd Business School!
It was an incredible privilege to learn from and with Prof. Thomas Hellman, Aunnie Patton Power (along with many amazing guest lecturers), and brilliant VC leaders from across Africa.
Here are some key takeaways that resonated with me:
Africa's VC Landscape:
- Early Stage, High Potential: While younger compared to US/Europe, African VC is thriving with exciting opportunities for those willing to commit.
Deal Evaluation:
- Consistent Framework: Develop a framework to consistently evaluate deals, focusing on key value drivers for your investment approach.
- Founder Focus: Look beyond financial metrics. Seek founders with unique insights, strong values, and a clear vision you can champion.
Investment Thesis:
- Know Your "No": Understand your investment focus and what you're not pursuing.
- Beyond Unicorns: Consider managing portfolios for reasonable exits, not aiming for a single "unicorn" returner.
Seed Funding:
- Valuation Reality: Be mindful of seed valuations and the typical exit range ($10m-$20m).
SAFEs:
- Complexity Behind Simplicity: While designed for simplicity, SAFEs can create investor-entrepreneur misalignment. Understand the mechanics to ensure alignment.
Distressed Assets:
- Learning from Failure: Conduct thorough exit interviews to learn from past mistakes and refine investment strategies.
Valuations:
- Competition is Key: Competition is the primary driver of valuation.
- Beware the "Rising Tide": High valuations can lead to myopia and eventual crashes. Be mindful of this cycle.
Exits:
- Early Planning is Key: Start building relationships with potential buyers early. Strategic updates can be a powerful tool.
- Know Your Buyer: Understand your exits - who are the buyers and what drives their decisions?
- Financial Runway is Crucial: Companies need at least 1 year of runway to negotiate strong exits.
What Kills Returns?
- Misalignment: Misalignment between investors, boards, management, or co-founders can significantly impact returns. Fund life mismatch too.
- Poor Culture: A toxic company culture is a red flag for investors.
- Legal Battles.
Monitoring & Focus:
- Backing Winners: While challenging, VC firms focus on backing winners, not saving failing companies. Allocate resources strategically.
- Co-Investor Alignment: Understand your co-investors' KPIs to ensure alignment.
The Future of African VC:
The AVFP experience left me more excited than ever about the future of Venture Capital in Africa. We have a fantastic community of experienced people ready to drive change and create value with the continent's entrepreneurs.
Thank you to the AVFP team and my fellow participants for the incredible learning experience! Thanks to David van Dijk for the opportunity. Let's continue the conversation and build a thriving African VC ecosystem.
#AfricanVC #AVFP #OxfordSaid #Entrepreneurship #Investment #Africa
