Subsequent Wave: Do VCs nonetheless imagine in VCing?

First printed 15 October 2023


This week’s Subsequent Wave is a double-decker. First, TechCabal’s Moonshot is nicely on its approach to defining the worth that expertise business occasions in Africa can create, I’m proud to report. And I’ve a query for traders getting chilly ft and second ideas about VCing.

I had initially written about tech occasions needing a little bit of inventiveness to change into related. However what TechCabal’s Moonshot convention taught me was that typically new issues are overrated and that the essential pillars of actually worthwhile occasions do not likely change. If you happen to make folks be ok with being in a room with others, present alternatives for them to satisfy folks they respect, ship stable content material and minimise boring paternal keynotes in favour of perception and enjoyable, your occasion will win! Particularly if the occasion execution is as near excellent as you’ll be able to humanly handle.

It additionally helps to construct as much as the occasion. It’s in all probability no coincidence that TechCabal’s greatest and finest annual occasion to this point was organised 10 years after the primary TechCabal article was printed. 100 and twenty-one months in the past, Odunayo Eweniyi was writing (as a TechCabal reporter) about attention-grabbing tech occasions to attend in July 2014. Final week she was talking on the greatest tech occasion of the week in Lagos, and Piggyvest was a key sponsor. The world goes spherical and isn’t flat.

Somebody mentioned Moonshot has the potential to change into that one pan-African tech business occasion that everybody appears to be like ahead to yearly. Which means we sowed a great seed, and we’re wanting ahead to the following Moonshot in October 2024!

Subsequent up on the occasion path, I’m within the Dubai World Commerce Heart for GITEX International all through this week and looking out ahead to “Capital Meets Innovation” at Norrsken Africa Week Kigali in early November. If you happen to’ll be on the Dubai Harbour or DWTC, hit reply and we are able to discover a while to speak tech occasions, what I’m researching about Africa’s digital market, and the extra essential stuff like… whether or not VCs nonetheless imagine in enterprise capital (see beneath).

What number of VCs nonetheless imagine in VCing?

It’s straightforward to speak about how African entrepreneurs will face extra challenges with elevating funding as a result of VCs dashed (a Nigerianism for a present, usually in money) hundreds of thousands of {dollars} to poorly thought-out enterprise experiments or outright faux companies. Lots of people like to speak about this and go on and on about it. I don’t. I intensely dislike the dialogue as a result of not solely is it distracting, it’s fodder for dangerous assumptions and priors. Priors on this sense is the statistical probability of an end result no matter unknowns. For me, the that means of recent stories detailing dangerous founder behaviour is easy. Everybody must develop up and cease being sheep.

Talking about being sheep, from late 2022 it started to be apparent {that a} bubble burst was underway. The battle cry from the worldwide VC group switched from speed-writing cheques to calling for profitability virtually in a single day. Sheep can activate command, however whaling ships can’t do snap turns regardless of how loud the captain shouts on the steering wheel. Extra notably, the complete level of being a enterprise investor, if we return to the unique legends that spawned this asset class, is that VCs are specialised middlemen who join terribly promising danger with capital sourced from sombre pockets.

The second we miss this and start to construct an asset class that behaves roughly just like the human model of a hedge fund buying and selling algorithm, the extra we arrange enterprise capital to change into a perpetual cyclical machine that’s 100% in sync with public market sentiment. That is the other of a largely outlier-defined funding class. In September I tweeted: “What number of VCs nonetheless imagine in Vcing?” And right here’s a tweet by Stephen that captures a giant a part of my fear.

I am very apprehensive African VC goes to entrench itself in multiple-based tunnel imaginative and prescient on the earliest levels.

Conservatism was wanted after ’20-22 however exchanging the consolation of momentum-based investing with inflexible metrics-only investing is a disservice to founders with imaginative and prescient.

— Stephen Deng 邓广藻 (@mrstephendeng) October 5, 2023

To place this one other approach. If blindly following developments introduced us right here, what makes metric-focused traders assume that driving a tough discount primarily based solely on comparatively arbitrary measures in Africa’s nonetheless largely untested markets won’t yield the identical averaged-out results of mediocrity if not failures?


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In the previous few months or so, I’ve seen numerous takes about enterprise capital. Everybody from purebred enterprise capitalists to social influence VCs, hedge fund and conventional fund managers, to public market analysts have an opinion, hand-wringing or unabashed schadenfreude they derive from the collapse of the short-lived roaring 2020s in VC land.

Some elements of this are worrying, however different elements are humorous to observe or learn, particularly the full-throated gloating feedback on Monetary Instances articles by conventional asset managers. What is obvious, although, to me is that the world of enterprise capital is present process an id disaster like by no means earlier than—even the notorious dot-com bubble didn’t create the sort of self doubt. One European VC even printed a missive on Sifted.com itemizing the “Five deadly sins of VC”. Shout out to you, Elena Mazhuha. I recognize the boldness even when the unique heading was edited.

A whole lot of the VCs I do know and work together with typically, and deeply respect, don’t conform to the picture Mazhuha painted. However as I texted an investor I respect some weeks in the past, taken along with the Twitter threads, podcasts and whatnot, the enterprise capital asset class is sliding ever deeper into an id disaster that strikes deep on the coronary heart of its founding philosophy. And African traders should not immune.

Right here’s a Sam Lessin tweet that, for my part, captures one body within the shifting movie of the enterprise capital id disaster. Identification crises create the right atmosphere for lack of confidence and plenty of second-guessing. Tweets like this from Will Manidis, a Thiel Fellow and former fund supervisor that poke innocent enjoyable at VC returns on common, don’t assist fragile egos or the “vibe” if you happen to’re a VC drowning in depressed returns, courtesy of 2023.

However moments of widespread business self-doubt are additionally moments the place management emerges. It was true within the dowturn of the Paul Volcker price hikes of the late Seventies, and within the aftermath of the dot-com bubble. And it could simply be true for the traders nursing bubble illness in the present day — if the appropriate classes are discovered. Within the subsequent Subsequent Wave, we’ll talk about what this management might appear like. Within the meantime, be at liberty to drop me an e mail to share your ideas or discover a time to speak. My e mail is abraham[at]bigcabal[dot]com.



Abraham Augustine,

Senior Reporter, TechCabal.



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