Last Updated June 2023
If I've completed my pre-seed round already, is it too late to talk to you?
No, it’s not. Although we are pre-seed investors and like to be the first institutional check, we understand that we may be too late to some deals at their earliest stages. We are also constantly innovating on different initiatives to enable us invest at the seed stage of companies as well. We very much prefer to be the first institutional partner that any early stage company thinks about while raising their first round of investment.
Does Microtraction only invest in certain areas or industries?
No, we are sector agnostic and we can invest in companies, as long as they meet our decision-making criteria.
Is it ever too early to get in touch with Microtraction?
It’s never too early to get in with us. We have conversations with founders at their earliest stages and provide useful advice and context for how to go about their fundraising journeys. Here, we aim to be the first check that backs Africa’s most ambitious founders building global companies, and we aim to remain as a committed partner for the long term. So, even if you don’t think you’re ready, we’d still like to get to know you.
How many investments do you make per year?
We typically aim to make between 15 and 20 investments each year, including follow-ons into our existing portfolio companies.
Do you invest in companies outside of Africa?
Yes, at Microtraction, we pay particular attention to investing in African technology founders building global businesses. We are a sector-agnostic fund investing in all countries worldwide.
What do you look for in a founding team?
Building a company is never easy, no matter how you put it. Even if you have built and exited a company before, To answer this simply, we look for committed founders who are innovative, resourceful and resilient. Founders who have domain expertise, can deliver a compelling narrative and have a keen willingness to learn are also always welcome to the Microtraction family.
What key aspects of a startup affect your decision-making?
At the stage in which we invest, we are making a bet on the founding team, and that’s the biggest factor in our decision-making process. How much conviction do you have in the company you are building? Why are you solving this problem? What unfair competitive advantage do you and your company have? Why will you succeed where others have failed? What are your key strengths and why do you work well together? From speaking to thousands of founders, we know that execution ability and good, quick decision making sets the best founders apart. We want to understand your thought processes and how you execute.
What is your investment process like and how long does it take?
Our investment process moves at the pace of the founder. Generally speaking, our aim is to get from an initial meeting to an investment decision in 4-6 weeks. This is highly dependent on the information the founder has available and if not, how readily they can provide it. We understand that fundraising takes a long time, and we aim to reduce the stress of these conversations with founders, so they can return to running their businesses.
How should I get in touch with Microtraction?
Warm introductions are best. If you know any of our portfolio company founders already, we recommend speaking to them to get an honest account of how we work with founders, and then ask for an introduction. Companies that come through warm referrals from a trusted source usually move quicker through our investment process. Feel free to check out our team page and reach out to any of our team members via LinkedIn or email. We also review applications from our website every week, and reach out to companies that pique our interest. Of course, we understand that ideas are easy to describe on paper, while people are not. And this is why we prefer the warm introductions. Whichever way you choose to get in touch with us, if we believe you have a compelling idea and robust founding team, we are always happy to speak.
Will you sign an NDA?
No. We’d explain why in detail here, but we think Brad Feld does a great job in his blog post, Why Most VC’s Don’t Sign NDAs.
Will Microtraction only invest if it can lead a round?
No, we are happy to follow other investors in financing rounds. To give you a heads up, our SAFEs come with a Side Letter specific to Microtraction only.
How much do you usually invest in a company?
Our standard terms are $100,000 for 7%. This is negotiable, based on the size and stage of the company when we engage you. We also offer up to an additional $350,000 during future fundraising rounds, as long as we are not more than 25% of the total round.
Where are you located?
As we stated above, our latest fund is a Community Fund and our LPs include 30+ venture-backed founders of African companies like Helicarrier’s Ire Aderinokun, Paystack’s Shola Akinlade, Cowrywise’s Razaq Ahmed, 54gene’s Francis Osifo, Paga’s Jay Alabraba, Spleet’s Tola Adesanmi, Float’s Jesse Ghansah. We also have GPs of global VC funds like Ribbit Capital’s Micky Malka, Hustle Fund’s Elizabeth Yin, Sebastes Capital’s Jason Fish, a16z’s David Haber, Y Combinator’s Michael Seibel, 776’s Alexis Ohanian, Bonow Ventures’ Tilo Bonow, Precursor Ventures’ Charles Hudson, Better Tomorrow Ventures’ Sheel Mohnot, Broadhaven Ventures’ Michael Sidgmore, etc.; Web 2.0 and web3 operators; local and international HNIs; sport and entertainment icons; and PAVE Investments (the anchor LP in Microtraction Fund I), which has committed $1.5 million into the community fund.
Do Microtraction partners take board seats?
No, but we take board observer seats. All the information on the situations in which we will get involved in board decision making is outlined clearly in our Side Letter.
How do you help your companies raise money? Especially in future financing rounds?
Every portfolio company at Microtraction is assigned a Partner Lead, who will handle most aspects of your relationship with Microtraction. When you decide to raise capital, your Partner Lead will help you think through the strategy during your bi-weekly or monthly office hour meetings. Here, he/she will help you figure out which VCs you should pitch, based on our relationships and experience co-investing with almost every tier one investor in Africa today and most global investors out of Silicon Valley, who are also LPs in our fund. Once the fund-raising strategy is determined, we advise you on how to build a robust fundraising plan and a compelling narrative to pitch the very best aspects of your company to potential future investors. Your Partner Lead is also available for practice sessions to run through your pitches. Here at Microtraction, we value community-based activities, which is why we also have a Founder Experience Sharing program. This initiative allows for more experienced founders in our portfolio to share their thoughts and advice on how to navigate important milestones in your company-building journey, such as fundraising. During these sessions, you will learn best practices to fundraise, grow your team, deliver on the customer experience, among others. And of course, you will have a chance to ask your most pressing questions.
What makes Microtraction different?
Microtraction is really a Founders’ Fund, considering all our Partners have built or are currently building companies. So we understand the challenges of building a wordless business, and as a result of this, we strive be recognised as partners that founders make for advice in whatever situations they find themselves in. As a fund, our North Star Metric is Founder Love, and the more we can show our founders that we empathise and are willing to dig deep to support them, the more we hit our internal goals. Outside of this, we aim to be the first check into our portfolio companies and help them with strategic guidance to get them from 0-1, meaning we help teams with everything they need to prepare for a seed raise of at least $1m, and provide a playbook to do that in 12-18 months, provided the company meets certain metrics. After our companies raise their seed rounds, we provide additional support through our Community of Champions, who are Microtraction LPs and broader network. We are also highly recognised as one of the oldest and most experienced venture funds in Africa. Our level of dedication to developing African founders building global companies is unmatched, and with the experience we bring to our portfolio companies, we are able to help build the next generation of global businesses.