How Magic Fund’s Temi Marcella Awogboro uses her experience as an operator and investor to help portfolio companies


When Temi Marcella Awogboro was on the verge of beginning her studies at a college or university, a guide advised her to "stay close to the money." And she did exactly as she was told, first enrolling in economics classes at Cambridge University and then beginning a career at Goldman Sachs straight after graduation working in the volatility trading department.

Even though she was able to learn, develop, and have some degree of autonomy at Goldman Sachs, she ultimately decided that she wanted to be more directly involved in the process of building companies. As a direct result of this, she decided to pursue an MBA degree at the Stanford Graduate School of Business.

Following the completion of her MBA, she made the decision to concentrate her professional efforts on the field of investing. She then secured a position at The Abraaj Group, where she was responsible for leading investments across Africa and the Middle East. She continued to work at her day job, but she never lost interest in early-stage investing. In 2017, she co-founded an angel investing syndicate called Kairos Angels, and the following year, she established Magic Fund.

Temi's perspective on the development of the startup ecosystem in Africa

According to data compiled by Disrupt Africa, African startups in the technology sector brought in a total of $185 million in funding in 2015. Six years later, in 2012, African startups raised close to $5 billion from investors; this is just one example of how the African technology ecosystem has grown over the past ten years.

Temi, who has been an investor in African startups for some time, notes that the investment landscape has changed recently, with more foreign investors getting involved in early rounds and startups raising larger amounts of capital than before.

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" When I first started looking into early-stage investment opportunities, the majority of the investors who were coming in were local, and the amount of money that was being raised in each round was much lower. You are seeing pre-seed and seed rounds that are significantly larger than what we've seen historically. However, you are also seeing more international investors playing a role in the African ecosystem, which I think is great for the long term.

temi marcella awogboro images 20 1024x682 0 607Temi Marcella Awogboro. Source: Supplied

Due to the increased flow of capital into African startups and the increased competition for the best deals, investors are required to provide these companies with more than just money. In Temi's opinion, the fact that she has a wealth of experience as an investor in private equity and venture capital, in addition to having established and managed one of the largest private hospitals in Nigeria, is a benefit for founders. In addition, Temi has extensive experience in the healthcare industry.

" I have seen, with my own eyes, how a business can go from being nothing to becoming something. And I believe that these are extremely important insights for companies that are looking to build, particularly at the pre-seed and seed stage where they are just starting out. Therefore, you will find that I have a tendency to be quite hands-on with portfolio companies, assisting them with the product-market fit, building teams, advising them on how to position themselves to raise successive rounds of capital, and opening up my global networks to support them in their future capital raises.

This frame of mind is reflected in the work that she does at Magic Fund, where she is a partner. When it comes to the early stages of a company's development, Magic Fund is of the opinion that founders who already have experience in constructing and running businesses are in the best position to invest in said businesses.

During its first four years of operation, Magic Fund provided financial backing to seventy businesses located on five continents, resulting in two "unicorns" and four acquisitions. Despite the fact that the company is not focused on any particular industry, the majority of its investments are made in African and Latin American startups that are involved in the financial technology, health technology, and business-to-business software markets.

As an investor in early-stage startups, Magic Fund makes it a priority to choose the right founders for the companies in which it invests.

Because of the stage at which we have been investing, the vast majority of the thesis actually boils down to ensuring that you are supporting the appropriate founder. As a result, we invest a significant amount of time and effort into comprehending the mentality of the company's founder and the founding team. Because we are aware that there is a great deal of work that goes into establishing a business, we give preference to individuals who have previously established successful businesses.

Advice for investors regarding their roles in the formation of corporate governance

During a mentorship session in June of 2020, Kelechi Udoagwu leveled allegations of sexual harassment against Kendall Ananyi, the CEO of Tizeti. Despite the fact that the company ordered an independent investigation to be conducted, the findings of the investigation did not meet the expectations of many participants in the ecosystem. As a result, 4DX Ventures resigned from their position on the board of directors of the company.

The Chief Executive Officer of Flutterwave, Olugbenga Agboola, was accused of financial impropriety and insider trading in April of 2022. Similar to the Tizeti incident, very little was done to address the situation beyond expressing outrage on social media, and it was quickly forgotten.

After hearing the news about the allegations leveled against Agboola, many people suggested that such behavior could influence how people outside of the Nigerian tech ecosystem view the country. However, Temi believes that it will be unfair to judge an ecosystem based on the actions of a few people while at the same time pointing out that investors need to make sure that startups act responsibly.

 2 607MAGIC Fund partners. Source: TechCrunch

"There is an obligation to act responsibly and live up to the fiduciary responsibilities that surround oversight and making sure that you are actually mentoring that founder, and this obligation falls especially heavily on investors who sit on boards. Assist founders in mulling over potential governance structures, and make it a point to ensure that both the company and the founders are held accountable to any internal frameworks that are established. This helps to bring issues to light so that they can be addressed before they get out of hand.

In addition, Temi recommends that even though early-stage companies might not be able to establish formal corporate governance structures, they can establish informal structures such as advisory boards.

You need to construct it as though it is already an established and successful business. You want to make sure that you have your audits set up, and you want to do all of those things, because doing so will make it easier for you to implement them in the future.

Insightful guidance for effectively managing the dynamics of the founding team

A deterioration in the relationships between the people who co-founded the company is one of the many things that can lead to the failure of a startup. Although there is no one way to ensure cordial relationships between co-founders, Temi is of the opinion that transparency ought to be built into the relationship from the very beginning.

" One needs to give a lot of thought to the people they invite to join them in the venture as co-founders. It's likely a more important relationship, or at least one that's on par with the importance of the marriage or life partnership you're currently in. "Don't go into it blind; do the work to get to know one another in different scenarios before you get into the partnership, and then be absolutely transparent to avoid the pitfalls down the line." "Don't go into it blind; do the work to get to know one another in different scenarios before you get into the partnership;"

It is well known that entrepreneurship is notoriously difficult, and this is especially true in Africa, where business owners must contend with a wide variety of infrastructural obstacles in order to give their companies a chance to be successful. Therefore, for entrepreneurs to be successful, they need all the support they can get, and Temi believes that putting up structures at an early stage in the company's development is essential to the company's success.

 3 607Temi Marcella Awogboro. Source: Supplied

One of these systems is the founding team of the startup, and she recommends that founders who are looking to build their first teams give serious consideration to the task of developing a fantastic culture.

" Culture is one of the things that I've always made sure to pay attention to, especially in the beginning. Founders are typically my clients, and one of the first things I advise them to do is define the company culture as soon as possible. Doing so will help them attract the kind of talent and team they are looking to build. Your responsibility as a leader is to assemble a group of people or a team that not only completes you but also contains highly intelligent individuals from whom you can gain new perspectives.

In addition, she warns that founders should be careful when hiring people who are capable of doing the job while also being clear on their job description and the responsibilities they are expected to carry out.

Developing the capabilities of the company's founders

The expectations placed on the founders of African startups will inevitably shift as the companies mature and either become publicly traded or are acquired. Temi believes that founders can prepare themselves by being open to feedback and recognizing that investors may request that more experienced people be brought in to serve as CEOs.

Because managing a publicly traded company is not the same as managing a private company, I anticipate that you will see a change in the profile of the management of companies that are looking to list on the stock market. Some of the company's founders will be able to move past that inflexion point, while others may decide to do so on their own or may be required to do so in order to make room for a manager with more professional experience.

Because I believe that it is essential to examine a company from the point of view of its long-term viability, I recommend that startup founders maintain an openness to receiving feedback. Therefore, maintain an openness to the feedback that is provided, maintain an openness to the opportunities for growth, and maintain a close working relationship with your investors to determine whether or not and when this must take place.

" You also need to be able to manage that transition, to make sure that the business continues sustainably with or without you because that's ultimately what the goal should be at a certain level, especially when raising third-party capital. " " You also need to be able to manage that transition."

Potential domains for innovation

Temi does not believe that there are an excessive number of fintech startups in Africa, despite the fact that these companies receive the majority of the continent's funding. Rather, she thinks that there are too many new businesses competing for the same market share, which is a problem that she anticipates will be solved through mergers and acquisitions.

In spite of this, she emphasizes that there is a great deal of room for creative solutions to be developed in order to bring education and healthcare to a wider population.

" I'm really interested to see who will come in and disrupt the edtech space, because it's something that's been on my mind a lot. Although there have been Andelas in this world, there is still more work to be done in terms of education on a larger scale.

On the healthcare side, I'm very excited about businesses that are looking to address the issue of ability to pay because it remains the single biggest issue in healthcare, where you still have less than 5 percent insurance penetration, but people need to access care, and so there's a scope for technology to provide a solution there. "On the healthcare side, I'm very excited about businesses that are looking to address the issue of ability to pay because it remains the single biggest issue in healthcare, where you still have less than 5 percent insurance penetration,

" I am also interested in technological solutions that can improve the interoperability between different healthcare platforms and the overall healthcare system. In addition to this, I believe that the implementation of buy now, pay later policies in the healthcare industry will be interesting.