It seems that early-stage startups on the African continent are continuing to see some notable growth, both in terms of their business and from investors looking to back them. Microtraction, an early-stage venture capital firm based in Lagos, Nigeria, saw funding nearly quadruple for its portfolio. The firm noted that 21 companies in its portfolio have raised more than $33 million in funding. This represents nearly four-fold growth over a year ago, when its portfolio raised $6 million (and just $3 million in 2018). The companies’ combined valuation stands at more than $147 million, according to the firm. Microtraction arrived on the continent’s early-stage investment scene with all intent to be the most accessible and preferred source of pre-seed funding for African tech entrepreneurs.
Microtraction does not specify the size of its fund, but what is clearer is that it has attracted a great deal of attention and has built a strong network in part because of who backs it. Some of these investors know what it takes to build a startup in the U.S. But it’s completely different in Africa. With no on the ground knowledge as to which startups to fund but an interest to do so, for portfolio diversification and other personal reasons, Microtraction and a few other early-stage investors present the best bets to accomplish this goal. Microtraction’s standard deal was to offer portfolio startups $15,000 in exchange for a 7.5% equity. But as a sign of how the market is firming up, that changed last year, and now the firm invests $25,000 for 7% equity. Microtraction revealed that it accepted more than 500 applications from startups in Nigeria, Ghana, Zambia and Mauritius in its first full year of operation. Total investments raised in 2019 and 2020, 54gene contributed more than half of those numbers by raising $4.5 million in seed and a $15 million Series A investment. With an ingenious solution to solve the underrepresentation of African genomics data in global genomics research. Microtraction-backed ThankUCash and a second unannounced startup have also joined cohorts at 500 Startups. On the other hand, Festival Coins is the only startup to be selected into Google for Startups Accelerator. With all accounted for, 11 out of the 21 startups are either backed by Y Combinator, 500 Startups or Google for Startups.