ImpactAlpha, August 23 – Microtraction launched in 2017 with a Y Combinator-approach to investing in African tech startups: it cut a $25,000 check from its $1 million fund for a 7% stake in very early-stage companies.
The The Lagos-based venture firm’s second fund is increasing the check size to $100,000 for the same stake, TechCrunch reports. The fund will have the ability to do follow-on investments of up to $350,000.
“There’s a lot of first checks available” compared to five years ago, said Microtraction’s Kwamena Afful. “We now think, beyond the first check, founders need a community of champions to support them in growing their business.”
Microtraction’s second fund is backed by entrepreneurs from its first fund, including Cowrywise’s Razaq Ahmed and 54gene’s Francis Osifo, as well as a16z’s David Haber, Y Combinator’s Michael Seibel, 776’s Alexis Ohanian and others.
Microtraction has made nearly 40 investments. It was one of the first investors in 54gene, a Nigerian genetic testing and biotech company that has gone on to raise $45 million. It backed wealth management app Cowrywise and education finance venture Schoolable (formerly Allpro).
Microtraction’s founders say portfolio companies have raised more than $100 million in follow-on funding.
“We’re trying to provide the same value as Y Combinator but with a better understanding of the African market, which can help a founder raise better and build more sustainable businesses,” said Microtraction’s Dayo Koleowo.