Meet the Investor: Dayo Koleowo, Microtraction

Meet the Investor: Dayo Koleowo, Microtraction

From construction, to food delivery, and finally to VC, Dayo Koleowo’s journey has not been a classical one, but he believes the lessons he has learned over his career are standing him in good stead as he backs innovative African tech startups with early-stage VC firm Microtraction.

Having studied Quantity Surveying at university, Koleowo went to work preparing bills of quantities and supervising construction work for projects in the public sector, before moving into the private sector as a project analyst with a construction consultancy firm.

The leap into the tech space, and then to investing in tech startups, was not planned.

“It was a case of opportunity meeting preparation and, of course, seizing that opportunity. I had always known about technology growing up, and even after graduating, I made sure to keep myself informed of things happening in other parts of the world as it relates to the technology industry,” Koleowo told Disrupt Africa.

“After working in construction for close to three years, I resigned and co-founded an online food delivery startup with two of my close friends.” 

That startup was ChowHub, which Disrupt Africa profiled back in 2016. Though ultimately a failure, it helped Koleowo get to where he is now.

“As first-time founders, we were naive about running a startup, but we were fearless and determined to do all we can to solve the problem. The entrepreneurship journey came with its highs and lows but most importantly it set me up for a future on the other side of the table,” he said. 

“As our startup started winding down I went down a rabbit hole understanding what it takes to actually build a startup, how to raise money, what investors look out for… Paul Graham’s essays, Mark Suster’s blog, Justin Khan’s Snapchat videos, amongst others, became my tech bibles. So when an opportunity was presented serendipitously via Twitter, I seized it and joined Yele three weeks after launching to help build Microtraction from scratch.”

That’s Yele Bademosi, founding partner of Microtraction (read his profile as part of this series here). He founded Microtraction in 2017 with the goal of bridging the pre-seed funding gap on the continent. The company’s first fund was raised from various local and international investment firms and high net worth individuals like Y Combinator’s Michael Seibel and Google’s Andy Volk, while the second one will be a mix of founders and operators, local and international HNIs, family offices, and institutions.

“We have backed 30 companies in sectors like fintech, ed-tech, e-health, and SaaS across two funds in three African countries,” Koleowo said.

Most of these investments have been at home in Nigeria, like Accounteer, Riby, Thank U Cash, CowryWise, Wallet.ng, Schoolable, 54gene, Termii and Festival Coins, but Microtraction has also backed Ghana’s Bit Sika and Kenya’s Raise. Koleowo said there are so many it is proud of.

Microtraction typically invests at pre-seed stage, though it does have plans to broaden its horizons.

“As we continue to grow as a fund, we plan to invest in the seed stage also. We are sector agnostic as long as it is a tech or tech-enabled company,” said Koleowo.

“The goal is to be pan-African and invest in as many African countries as we possibly can.”

Beyond money, Koleowo said the firm brings so much value to the companies it invests in. 

“Asides from financial capital we also provide what we like to call business capital – everything aside from money. We roll up our sleeves and work with our companies from day zero, touching on things like customer identification, product development, fundraising, customer acquisition and team building,” he said.

“The Microtraction team is made up of ex-founders that have diverse backgrounds and experience, which adds so much value to the entrepreneurs and teams that we back. We also understand the importance of helping our founders with the network that we have built individually, and as a unit.” 

One such service is the Network Partners Initiative, an exclusive and elite network of individuals and companies with specialised skillsets that Microtraction has partnered with to support its founders. 

“Once you become a Microtraction company you have access to that network,” Koleowo said. 

Having been around the tech space for a few years now, he says everything is very exciting at the moment.

“We are seeing more capital, more companies being founded, more practical experience, more talents being produced, more success stories being told than we have ever seen on the continent. It is a good time to be on the continent,” he said.

That said, African founders often lack business support while building their companies, an issue Microtraction attempts to address. 

“This is why investors need to add more value than just cash. There are so many things a startup needs help with, things like legal, hiring, fundraising, navigating regulation, distribution, growth… Startups are similar but yet different depending on stage and sector, but one thing they sure do need is the support as they build out their startup,” said Koleowo.

That support should also come from policymakers, but Koleowo said governments are not doing enough to boost local startup ecosystems.

“There’s a lot of improvement that needs to be made in regards to policies that affect startups in different countries. I believe entrepreneurs have to build with the policymakers in mind and carry them along to ensure that incentives are aligned. In short, we need more assistance from policymakers to create an enabling environment for startups,” he said.

Nonetheless, investor interest in the space is huge right now, with major progress made over the last five years. 

“We speak to a lot of people across the world and there is a lot of interest by global investors like Sequoia and Tiger Global, as we can see from their investments in Africa. For us, we are playing a critical role, coming in very early and being a feeder to later-stage global investors who are looking to come in and invest in Africa,” said Koleowo.

That won’t change anytime soon.

“Our plans are to continue to do exactly what we know how to do best – find remarkable founders very early, back, and continually support them. We intend to also invest in more African countries and expand our geographical reach.”

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