Nigerian early-stage VC firm Microtraction has changed its standard deal by increasing its investment to US$25,000 from US$15,000 and reducing the equity it takes to seven per cent.
Founded in 2017, VC firm Microtraction invests in startups at the very earliest stage of their development, and has so far backed a host of Nigerian startups, like Accounteer, Riby, Thank U Cash, CowryWise, Wallet.ng, Schoolable, 54gene, Termii and Festival Coins, as well as Ghana’s Bit Sika.
Having thus far been investing US$15,000 in return for 7.5 per cent equity, the company has now increased its ticket size and reduced the percentage it takes. The company will continue to offer an additional US$50,000 convertible note at a US$1 million valuation cap in companies that show significant progress.
“We believe our financial investment is a small part of the benefits of being a Microtraction portfolio company. But we also understand that startup costs have increased over the years with a maturing African market. In order for companies we invest in to stay focused on building their product without having to worry about fundraising soon, we thought it best to increase our investment by US$10,000,” Microtraction said.
“Our core goal from day one has always been to be the most accessible and preferred source of pre-seed funding for remarkable African tech entrepreneurs. Though minor, we strongly believe that this change in our standard deal is important in helping us achieve that goal as we continue to expand across Africa.”
Meanwhile, the company has announced the first individuals selected to take part in the Microtraction Venture Scout initiative. Announced last year, the initiative sees Microtraction work with ecosystem players from across the continent to help it discover more deals.
It received over 80 applications, and conducted evaluations and interviews before selecting seven Microtraction Venture Scouts. They are MEST Africa venture partner Alexis Roman, Black Adam Africa director Ato Bentsi-Enchill, Association 3535 founder Richard Seshie, investor Gossy Ukanwoke, international business development expert Wiza Jalakasi, The Subtext founder Osarumen Osamuyi, and Africa Foresight Group CTO Edem Kumodzi.
“These Scouts have a few things in common – they are highly connected in their local tech ecosystem, they have unique skill sets that make them helpful to entrepreneurs and they are interested in investing,” Microtraction said.
The firm is still looking for individuals, especially females, to join its Scout network, with interested parties required to fill in this form.