A company supporting businesses in Africa and Europe, OpenseedVC successfully secures funding worth $10 million.
Founder-market fit is a critical determinant of a startup’s success, and individuals who have transitioned from operational roles to founding positions have an almost unjustifiable advantage in identifying this fit. According to the data, the need for more business acumen and expertise among founders is a factor in the failure of venture capital investments.
A similar principle can be applied to operator venture capitalists, firms that erstwhile startup founders often establish. Although conclusive evidence is lacking, recent research suggests that founders and operators transitioning into venture capital are considerably more effective at providing financial support to companies than traditional investor venture capitalists.
Operator venture capitalists have an extensive track record in Silicon Valley. However, their implementation could be more comprehensive in Europe and Africa: former operators lead a mere 8% of venture capital firms in these regions, as opposed to nearly half in the United States. With a new fund, OpenseedVC is implementing the model in Africa and Europe.
The organization intends to be the initial evaluator of early-stage ventures established by operators in both regions. It has completed the initial close of its $10 million angel-style fund. General partner Maria Rotilu stated without specifying the amount, “The first close is well into the millions, and fundraising is still in progress.” She added that OpenseedVC was anticipating the conclusion within a year.
Providing financial support to operators… and operators
Established by Rotilu, OpenseedVC was designed to provide early investments to seasoned operators enthusiastic about launching their technology companies. OpenseedVC stated that it would lend financial resources and early-stage conviction to these entrepreneurs and the assistance of a community of over fifty seasoned operators.
Providing assistance to operators who have identified a problem and are embarking on developing their technology reveals a shared obstacle: the requirement for financial resources and mentorship from seasoned professionals. In response, Rotilu explained to TechCrunch that our attention is directed towards improving the operator network in four critical domains.
“During the initial phases, software engineering expertise is critical.” You would need someone with knowledge of infrastructure design, recruitment of technical talent, and team development expertise; such a person would provide invaluable firsthand experience. Therefore, if that is the unifying factor, we optimize for firsthand experience in software engineering, product development, go-to-market, and people and talent.
Most of OpenseedVC’s operator network members are individuals with whom Rotilu has had prior collaborations or been referred. Additionally, some are limited partners in the fund, although they no longer accrue carry. According to Rotilu, additional limited partners consist of industry pioneers and executives from both traditional and technology sectors and affluent individuals from Africa, Europe, and the United States.
Supporting pre-seed European and African enterprises
OpenseedVC, based in London, aims to fund at least sixty businesses within the following five years. Up to $150,000 will be awarded to startups concentrating on the future of work (productivity), commerce (including B2B software, AI, and fintech), and digital health. The early-stage fund claims to have an open application process, and founders may submit applications without requiring an introduction.
“Our focus is on the initial phases; that is our area of expertise. Openseed is interested in making pre-seed investments, but only in the early stages, as traditional venture capitalists are more prevalent in the later stages. “Before we invest, we tend to move swiftly and independently; a founder securing a lead investor or anything similar is not necessarily necessary,” Rotilu stated. Furthermore, she noted that the fund is keen on particular founder characteristics that fit its operator-centric framework: second-time founders who have established and sold a startup and domain experts (including first-time founders who are operators at high-growth technology companies).
The early-stage fund has thus far invested in two companies: an under-the-radar supplier dispute resolution software developed in the United Kingdom and Intron, a speech-to-text transcription model intended for underserved dialects, beginning with Africa.
“We selected Africa and Europe as the regions to implement our thesis.” “Our thesis is that you can build a diversified portfolio that generates incredible returns for investors and provides critical support to ambitious operators when they need it most by investing in early-stage ventures of experienced operators with the right capital and peer operator support,” said Rotilu, who, before joining OpenseedVC, managed investments across multiple regions with different funds.
Prior to establishing her fund, Rotilu held a variety of operational positions, including country manager at Uber and general manager at Branch in Nigeria, both of which she assisted in expanding to millions of consumers for those technology companies. She subsequently attended Oxford for an MBA, where she assumed the role of managing director at the Oxford Seed Fund, a prominent student-led investment fund in Europe.
Aiming to construct a diversified portfolio
During her MBA, the operator-turned-investor, who previously worked in computer science, completed an internship at Hustle Fund, an early-stage fund in the United States. During this time, she acquired experience investing in startups spanning sub-Saharan Africa, Latin America, the United States, and Southeast Asia. Following her appointment as principal and fund manager of First Cheque Fund, Octopus Ventures’ £10 million early-stage fund for European entrepreneurs in the B2B software, fintech, and health sectors, she joined Octopus Ventures, one of the most significant funds in Europe.
Rotilu stated that she realized at Octopus that she needed to emphasize more on Africa, a continent where she had previously invested angel funds on multiple occasions. This was impossible through the London-based venture capital firm, and Rotilu, who desired autonomy and clarity to develop a strategy reflecting her experience as an investor and operator in Africa and Europe, viewed this as an opportunity to establish her own venture capital firm.
A positive trend is the global increase in the number of venture capital firms led by women, even though it remains challenging for women, especially those of color, to raise capital or pursue funding. With the increasing involvement of women in venture investing and the support of more LPs and firms, this trend will result in augmented financing of startups led by women. This will pave the way for the success of all stakeholders involved. Given the recognition of this importance by the majority of funds led by women, it is unsurprising that OpenseedVC will actively pursue opportunities to support ventures founded by women as well.
“Women lead few funds worldwide, and our viewpoint on what constitutes a diversified portfolio is unique.” Rotilu stated, “We prioritize diversification across industry, gender, and geography.” “A substantial amount of effort is devoted to diversity, and our fund’s portfolio strategy is viewed through the lens of gender. She stated, “We strive for a 50/50 split in co-founding teams to provide a truly diverse portfolio.”