Nivesh_P 🇿🇦

Trying to support African founders + learning as I go | African VC @norrsken22. Prev: @newtownpartners + @LaunchAfricaVC | Terrible golfer

[Nivesh_P 🇿🇦 @Nivesh_Pather]

@kevinlu625 Orchids

[Phumzile Van Damme @zilevandamme]

A call for a positive portrayal of South Africa answered: How many young people embrace unity, free from ingrained racism. A thread of the cherished tradition returns: inter-school competition cheers and war cries.

[Nivesh_P 🇿🇦 @Nivesh_Pather]

@mrstephendeng Already here!

[Stephen Deng @mrstephendeng]

African VC has shifted post-ZIRP. There's a conviction dead zone. We need to get back to first principles.

Here's an update to what we're thinking about @TheDFSLab. It's time to state our convictions about the market and the shape of the opportunity.

https://t.co/wVg2Z6mJms

[AB de Villiers @ABdeVilliers17]

Hold your heads high, @ProteasMenCSA. You went further than any SA team. You are all heroes. The best is yet to come. 🇿🇦 Congratulations to India. 🏆 #T20WorldCupFinal

[Anthony William Catt @AnthonyWCatt]

Fun early morning with some of Africa's finest VC operators for spot of #Paddle 🏓 to see out a busy week of conference bingo in 🇿🇦 #Joburg

#Africa #Investors #Events #V54

[Nivesh_P 🇿🇦 @Nivesh_Pather]

@AnthonyWCatt 😂 have a back up mate - KQ going to do KQ things

[Nivesh_P 🇿🇦 @Nivesh_Pather]

The only thing less reliable than Manchester United these days is Kenya Airways.

[Nivesh_P 🇿🇦 @Nivesh_Pather]

@Thane_HRH Close battle for the worst entities in the planet

[Nivesh_P 🇿🇦 @Nivesh_Pather]

@Hope_N_D Definitely any relevant data for market sizing. Always first question in IC and very limited reliable data available - # of smes, banked consumers, B2B transaction flows, est. credit gap (consumer and business) etc.

[Nivesh_P 🇿🇦 @Nivesh_Pather]

@NUCLRGOLF @Thane_HRH

[Nivesh_P 🇿🇦 @Nivesh_Pather]

If you’re around #africatechsummit in Nairobi this week - join us!
#ATSNBO

[Norrsken22 @Norrsken22]

Our Norrsken22 team will be at ATS this week and we are excited to be hosting a masterclass diving into the African CFO Stack. Come and join us to learn more about our investment thesis in this space and hear from leading founders Clara Odero, Paul Kimani and Yele Oyekola!

[Nivesh_P 🇿🇦 @Nivesh_Pather]

@PaulDamalie @BlueChesseSport Killing it Paul!

[The Flip @TheFlipHQ]

Ever wondered what trends you should be paying attention to as a VC or founder interested in Africa?

Here are the three megatrends Norrsken22 is investing in:

1. A young demographic
2. Digital infrastructure
3. Urbanization

Watch the full episode with Natalie, Ngetha and Lexi, partners of the $205 million growth fund Norrsken22, here: https://t.co/40RzdP4Eu7

[D @Dario__Gln]

Super excited as @briterbridges' #AfricaInvestmentReport 2023 is finally out. 💥

👏🏽 A big shoutout to the team and the dozens of investors who regularly support our work!

⬇️ Download for FREE: https://t.co/hXftTPyQJN

[The Flip @TheFlipHQ]

Last year, @Norrsken22 closed one of the biggest funds in the African tech ecosystem.

A $205 million fund run, by local partners on the ground in Nigeria, Kenya & South Africa, to close the gap at the growth stage.

In this episode of The Flip, we're joined by Norrsken22's partners - Natalie Kolbe, Ngetha Waithaka & Lexi Novitske (@anovitske), CFA - to talk investment strategy, valuations, perspectives for the ecosystem, exits, and much more.

—

To watch or listen to the full episode, check out the link in the comments below ⬇️

[Nivesh_P 🇿🇦 @Nivesh_Pather]

Great insights into how excessive valuations and broken cap tables hurt startups later on.

The challenge we have in Africa is that given the lack of capital and generational wealth, founders often have to give up significant equity early almost inevitably creating these issues.

[Chris Harvey @ChrisHarveyEsq]

With Down Rounds at 20%+ of all venture deals closed in 2023, a second order effect is coming into play: Broken cap tables.

What are broken cap tables?

• Simply put: Taking too much dilution, too early.

Broken cap tables and down rounds go hand-in-hand. Why?

Sam Altman said this about down rounds:

> “Don’t forget the prime directive of fundraising strategy: set things up so that you never do a down round. The badness of a down round is difficult to overstate; in fact, the threat of that is the best reason not to take a super high price when you’re offered one. If you raise at such a price, everything has to go perfectly in order for your next round to be an up one.”

What Altman is talking about is what many in venture capital overlook when it comes to VC financing: It's not just the amount raised, it's also the dilution.

A good litmus test of a broken cap table (and therefore too much dilution, too early) is if an early-stage company has the founders and employees owning less than 50%.

Another quote from Altman:

> “The amount of dilution early-stage startups now take (to be fair, for lots of capital) feels like malpractice on the part of investors. Founders don't understand how much it hurts them to have sold >50% of the company after their pre-pre-seed, pre-seed, seed, and A.”

Why is that? Because a large dilutive round will make it more likely to lead to a down round, and risk a broken cap table.

Here are the median founder dilution percentage decreases:
• Seed: 20.5%
• Series A: 19.5%
• Series B: 17.2%
• Series C: 12.6%
• Series D: 10.3%

If the company is at a later stage with lots of revenue and high growth, it doesn't matters who owns 90% of the company at that point. Everybody wins.

In sum:
• Raise at the right valuation, not the highest valuation
• Raise the least amount possible to achieve goals

But you can't be too prescriptive here and if the choice is literally no funding or heavy dilution, founders typically have only one choice.

A good follow-up post would be:

• What do you do when a company that you want to invest in has a broken cap table?

That answer will have to wait until later.

[Nivesh_P 🇿🇦 @Nivesh_Pather]

@mrstephendeng @Jayriq Let’s def try to find some time @mrstephendeng 🤙🏾

[Nivesh_P 🇿🇦 @Nivesh_Pather]

@TiiimaT @norrskenEA The best!

[Nivesh_P 🇿🇦 @Nivesh_Pather]

@AnthonyWCatt @calebmaru @Jasielinvests @Ventures54 @LondonAfrica_ @peaceitimi @blessingabeng_ @margentambi @euniceajim Great cheat sheet by @AnthonyWCatt to help plan your time during #africainvestorweek with @AESIS_summit, @AFRICARENA grand summit, and @SuperReturn on the go.
Let’s go