NewGenAngels, a members-only investment club for high liquid professionals and sophisticated angels, ultra high net worth individuals, venture capital firms, family offices and angel networks with an interest in Africa aims to shake things a little bit. The fund aims to invest US$150,000-US$500,000 into each startup and also aims to activate 1000 angels by 2020.
It’s core source of angel investors, the investment club says it the diaspora market, a group left out of developments in their home countries apart from just sending money. The Diaspora will now be able to invest in the talented founders or innovative ideas coming out of Africa plus get them mentorship says the founder.
Though angel investing is nothing new in Africa, the investment club says its method of having the diaspora invest in early stage companies in Africa is not widely used. The Newgenangels model is built on 3 key pillars: Mentorship, Funding and Context.
Sean Ndiho Obedih the founder of NewGenAngels says,“Our model relies heavily upon syndication of skills and funding from members of the African Diaspora and friends of Africa. We also syndicate deals alongside the strongest investors in the local market. We have partnered with Ghana Angel Investment Network and Africa Angels Network to kick-start this initiative because we believe that Local knowledge always beats any financial analysis and most often possesses great professional experience and networks across many sectors.”
According to Obedih, the Angel investment landscape in Africa is very fragmented and very focused on local activities but NewGenAngels believe that hinders the Angel community from truly benefitting from the economy of scale that a larger network can bring to bear, In the past, money sent back home to home countries was often small scale and geared to families to support basic living and education but there is also an increased demand from a growing and well-resourced African Diaspora to channel funds into “Viable projects’ contributing to economic development in their home countries and to which they would otherwise have limited access.
NewGenAngels prefer service and technology based businesses with strong growth dynamics, fragmented competition, a sizeable industry, low exogenous risk and straightforward operations.
NewGenAngels has a nominee structure, whereby it holds and manage the shares of companies on behalf of the underlying investors after an investment is completed. The structure, the firm says is essential to mitigate the risks and protect its investors and also enable investors raise follow-on funding.
NewGenAngels has invested in Nigeria’s Orin, the founderhive, and Sobek Ventures. The investment club is a member of EBAN an association representing the interests of business angels, business angels networks (BANs) and federation of networks, seed funds and other entities involved in bridging the equity gap in Europe.