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Nigeria’s emerging investment syndicate leaders

get.Africa
Nigeria’s emerging investment syndicate leaders
By get.Africa Weekly • Issue #59 • View online
Ẹ kàárọ̀,
That’s “good morning” in Yoruba
One of the reasons why Naval Ravikant, or simply known as Naval, is revered in the global tech community is because he helped to change angel investing.
In 2013, Naval’s company AngelList fought for and received a letter from the Security and Exchanges Commission (SEC) that allowed their online syndication network to thrive.
Syndication is an investment model that allows investors, called backers, to co-invest with more prominent investors, called leaders. It also allows entrepreneurs and founders to interface with single entities, called syndicates, rather than with several individual investors.
In Nigeria, a new class of syndicate leaders is starting to emerge.
Democratized access
Three names feature prominently: Jason Njoku, Iyin Aboyeji and Bosun Tijani.
Njoku has the 8-year-old SPARK and the recently launched Investzilla, Aboyeji has the Future Africa Collective, while Tijani has the new-ish CcHub Syndicate. 
Read a feature story on them, their syndicates, and the specific problems they are trying to solve for investors and founders.
Being successful founders or former founders themselves, all 3 possess access to capital, so you know they’re putting their money where their mouth is. And being titans of industry, they possess first-rate access to deal flow.
Deal flow is a term used by investment professionals to refer to the rate at which they receive business proposals from entrepreneurs and founders.
For investment syndicates, this is key. That’s because the more prominent the syndicate leader is, the likelier they are to have access to the next rocket ship, like a Paystack. 
Back-of-the-envelope calculations
Njoku explained how investors who participated in the Paystack seed round in 2016 made +1,440% ROI after the Stripe acquisition.
At the time, SPARK asked co-investors for a minimum of $100,000. If you were one of them, you would have made more than $1.4m in 2021. That’s excluding carry and other charges.
But checks of that size can be difficult to write, so one other thing that the syndicates are doing is reducing the barrier to entry for investors.
  • Investzilla’s backers pay a $500 annual membership fee and thereafter can invest a minimum of $5,000 annually in a number of startups.
  • Future Africa Collective handpicks backers and charges $1,000 a year in membership fees. Each quarter, backers are presented with 5 startups and are allowed to invest a minimum of $5,000.  
  • CcHub Syndicate’s model is still unclear.
Back to the big checks again. And more important than being difficult to write, checks of that size can be difficult to write off
The year before Paystack was founded, Njoku announced that SPARK was pulling the plug on 4 startups, all of which eventually failed. 
You see, startup investing is risky and difficult. But the benefit of co-investing with elite syndicate leaders is that they help to manage the risk and reduce the difficulty.

get.Africa is a weekly roundup of the most interesting stories in African tech. To support, follow us on Twitter, subscribe to our YouTube channel, share this issue or send us an email. You can also check our archives.
Credit: Ryul Davidson (@ryuldavidson)
Credit: Ryul Davidson (@ryuldavidson)
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