Making MAGIC happen: Founders Investing in Founders
I have always been passionate about building and cultivating disruptive, transformative institutions that will emerge as today’s regional champions and tomorrow’s global challengers.
My journey over the last decade has taken me through private equity, venture capital and entrepreneurship across four different countries, as a private equity and venture capital investor, a founder and an operator. I have been privileged to invest in companies across various stages of their life cycle and across different geographies.
In 2017, I joined the Kauffman Fellows Programme, one of the most formidable and inspiring group of investors globally. As part of the programme, we are required to complete a Thought Leadership Project (‘TLP’). My TLP abstract in 2018 read “I am seeking to create an investment platform that links/bridges entrepreneurial ecosystems. The platform would leverage global relationships and networks to provide investors access to fund the best opportunities globally.” Fast forward to today, what was intended as a research project, has been brought to life with the Magic Fund, a case of ‘life imitating art.’
The Essence of Magic
Founded in 2017, Magic Fund is an early-stage fund built on the thesis that smaller funds run by diverse founders perform best at early-stage investing (pre-seed/seed).
We launched Magic I because we
believe in exceptional & diverse
‘founders backing founders.’
Since Magic Fund launched, we have been forging our path as strategic partners and invested in 70 companies through Fund I. Some of the companies we’ve backed at the pre-seed and seed stages include: Novobank (US), which just raised a $40.7 Million Series A, Payfazz (Indonesia) raised a $53 Million Series B in July 2020, Frubana (Colombia) raised $65 Million in Series B funding in June, Mono (Nigeria) which raised $2.6 Million in Seed funding in May and Retool (US), valued at nearly a billion dollars.
Some Magic Portfolio Companies
Magic Fund’s support for its portfolio companies has gone significantly beyond the capital. Each partner is well-positioned to provide significant value by leveraging their unique experience and network in the sector, guiding founders through the rigorous discovery of product-market fit, facilitating key introductions for raising successive financing rounds supporting expansion into new markets and strategic hiring, amongst other things.
Magic Fund I was $1.5 million, the investments performed 5x over the period of three years. As some of these companies exited, their founders invested in MAGIC and came on board as Fund 2 partners. Given the clear success of this approach with Magic Fund I, we were compelled to raise Magic Fund II at $30 million in June this year with an expanded vision. The Fund will continue to support early-stage startups globally, with funding between $100,000 and $300,000. The focus will be on Fintech, Healthcare, Software as a Service (SaaS) and Enterprise, Women’s Health, and Developer Tools.
The Case for Founders Investing in Founders
Experienced founders-turned-investors are redefining early-stage venture capital as we know it. This is because
Founders want to know that
the people they are taking money from
have first-hand experience”
– Naval Ravikant, AngelList.
Similar to AngelList’s Spearhead, the founders-backing-founders model ensures that startups receive capital from helpful advisors, and it also compensates the investing founders for their advice. I have spent most of my career as an investor, from early-stage venture capital to late-stage buyouts and everything in-between. Building and scaling a company from inception has given me invaluable insights and a newfound appreciation for the importance of founding/operating experience as an early-stage investor.
Magic LPs are so convinced by this model that for Fund II, one-third of the entire fund was contributed by our founder GPs. We are a team of experienced founders hoping to sprinkle our magic in every corner of the world. All our partners have built and operated leading companies across the globe. Founders experience the daily, nerve-racking, process of building a startup and we can’t think of anyone better to support them than those who have gone down the same path.
Magic is Building a Global Community
Magic is a truly global collective of founders that came together to disrupt the traditional VC model. Together, we are building a community of the most astonishing entrepreneurs solving daunting challenges across the globe. There is nothing more powerful than this network of founders and entrepreneurs, reaching across divides (gender, ethnicity, geography) to help one another build businesses that will transform their respective communities and the world.
The reach of our collective network enhances the value we give our founders. We are able to connect a founder building a food logistics company in sub-saharan Africa and provide a path to engage with our founder in Latam whom we have supported from inception through to his Series B raise. This provides invaluable insights for the entrepreneurs but also provides potential new market/growth opportunities. It is a win for all!
The Power of Diversity
Despite a much higher level of consciousness, investors are still failing to back founders from diverse backgrounds and the majority of venture investments go to white males founders.
Nevertheless, diverse teams perform better.
According to research by First Round Capital, recorded over 10 years, teams with at least one female co-founder performed 63% better than male-only teams. The same research suggests that racially diverse teams also perform 35% better than their industry peers. Yet only 8% of venture capital money went to women-led companies, and 1% to companies with a black founder as of 2015.
At Magic, we have been very intentional about building our Partner network. It was important that our LPs shared this unique vision and approach to supporting early-stage companies. Mirroring Magic’s DNA of equity and inclusion, more than half of our LPs are Black, and over one-third are Women. Some of which include: Y Combinator’s Michael Seibel, Tim Draper, Ace & Company, Rappi’s Andres Bilbao, Octopus Ventures’ Kirsten Connell, Paystack’s Shola Akinlade, Flutterwave’s Gbenga Agboola, and Katie Lewis, among others.
I am excited for the next generation of Magic founders. Magic is accepting pitches from founders through its website, and is very excited to bring some money and magic their way! Watch this space…
SOCIAL MEDIA
