Founded in 1995, US-based VC firm SOSV has more than 1,000 portfolio companies and about US$1 billion in assets under management (AUM). Yet it is new to Africa, having made its first eight investments on the continent in 2021.
Managing partner Sean O’Sullivan founded SOSV in 1995, following the IPO of MapInfo, a startup he co-founded that pioneered computer-based street mapping. The firm operates a programme-based model, taking equity in return for access to intensive learning, on-site support, global mentors, vital introductions and a small amount of funding.
Heading up SOSV’s efforts in Africa is general partner William Bao Bean, who has previous VC experience with SingTel Innov8 Ventures and Softbank China & India Holdings, having been a research analyst previously. He says the firm backed its first eight African startups in 2021, including MarketForce and Treepz, and makes comparisons between what is happening on the continent now and what he has seen in Asia over the last few years.
“Africa shares a lot of similarities with other mobile-first markets such as India, Southeast Asia and China, where I have been investing for two decades – 300 million in Africa will get online for the first time using a smartphone, having leapfrogged the use of PCs entirely,” he said.
“The availability of low-cost smartphones, easy access to the internet, and ubiquitous digital payments make Africa a fertile ground for breakthrough technology startups.”
That said, customer acquisition is still a pain for early-stage startups, he said.
“Under the stranglehold of Facebook and Google, companies are forced to spend venture capital money on ads, effectively selling equity to acquire customers,” Bean said.
To address this, he founded SOSV MOX, an SOSV programme that invests in mobile-first, mobile-only startups, and helps them acquire users through partnership models instead of advertising.
“We have over 100 million daily active users in our internet portfolio as of August 2021. Any African tech startup backed by SOSV can take advantage of this ecosystem,” said Bean.
SOSV’s approach may be quite different, but it seems to work. Among its investments globally are crypto-product trading platform BitMEX, the first unicorn to go through an accelerator programme in Asia, and AI English pronunciation assistant ELSA, the first investment in Asia by Google’s AI venture arm Gradient Ventures. Its limited partners are corporates, financial institutions, family offices, and high-net worth individuals from around the world, including Credit Suisse, Tiedemann Advisors, Davy Group, Nan Fung Group, ZX Ventures, HP Ventures and Sumitomo Corp. Its fourth fund raised a whopping US$277 million.
“We’re interested in startups in all stages, focusing on software internet companies that are providing scalable solutions for e-commerce, education, fintech, SaaS and media,” said Bean.
“We’re committed to leveling the field for the best teams around the world: we are bullish on Southeast Asia, South Asia, MENA-Pakistan, Eastern Europe and Africa.”
Aside from simply cash, SOSV offers portfolio companies access to partnership opportunities with over 240 corporates in its global ecosystem. And Bean believes the expertise the company has built up in Asia can be extremely valuable to African startups.
“Access to funding and access to Asia’s growth models. Asia’s many mobile-first markets have developed a buzzing, cross-border ecosystem that surpasses Silicon Valley in both speed and scale. We’re bringing our network of investors and partners to Africa to help companies reach profitability faster,” he said.
“Africa’s ecosystem is ready for fundamental changes in the economy and beyond. Having seen the same patterns in China, India and Southeast Asia, we believe the continent will soon produce several more unicorns with mobile-first, mobile-only solutions for supply chain and logistics, SME digitisation, fintech, e-commerce, agri-tech, healthcare, and media.”
Clearly bullish on Africa, SOSV plans to invest in another eight to 10 more companies on the continent over the next year, and build an ecosystem of corporate partners.