In April, black Coffee, the famous South African DJ and record producer whose real name is Nkosinathi Maphumulo, made history at the Grammys. With his seventh studio album ‘Subconsciously’ he became… the first African act to win an award in the Best Dance/Electronic Album category.
His victory came when the global hunger for Amapiano, a style of house music that originated in South Africaand Afrobeats, a popular music genre that originated in West Africahad grown exponentially. It was a much needed success for the African music scene, and while it didn’t seem like it, it was a boost for the tech scene.
In recent years, there has been an overlap between technology and art, sparking a growing interest from movie, music and sports stars investing in tech startups. Some of them – including Grammy Award-winning artists like Jay-Z, The Chainsmokers, nasand others like Snoop Dogg – have launched several funds to invest in startups in the US, Europe and worldwide.
So, for Black coffeeBacking Andela, a tech talent and unicorn incubator launched from Lagos in 2015, his win meant the African tech scene could boast for the first time about having a homegrown Grammy Award-winning artist as an investor in its startups.
What attracts African music artists to invest in technology?
Before founding Marcy Ventures in 2018, Jay-Z (Shawn Carter) was involved in other companies such as longtime entertainment company Roc Nation and champagne brand Armand de Brignac. His music career gave him the resources and access to diversify his financial interests, including in startups, despite the lifestyle contrasts between the tech and entertainment worlds.
An African performer who hasn’t hidden his love for Jay-Z’s entrepreneurial moves and who seems to be taking over the billionaire’s script, Mr. Eazi (real name Oluwatosine Ajibade†
“The main motivation for me to start making music was reading a book called ‘Empire State of Mind’ about Jay-Z,” said Mr. Eazi during a phone call with gotechbusiness.com. “I had a passion for music and realized early on that the music business would give me access to where I wanted to be. It’s a way for me to have all the freedom I wanted and still get to the destination of financial independence by making different investments.”
Last August, the popular Afrobeats singer and songwriter made headlines in Africa’s tech circles after his investment in pawaPay, a UK-based Africa-focused mobile payment company through Zagadat Capital. But unlike Jay-Z, Mr Eazi had a technical background before captivating audiences with hits like “Skin Tight”, “Hollup” and “Leg Over” and producing three mixtapes and two EPs during his long music career.
In 2014, Mr Eazi launched Phonetrader, an online marketplace for used phones, backed by a now-defunct startup incubator, 440NG, which was run by two investment firms, L5Lab and 88mph. While Mr. Eazi learned the tricks of the trade of starting a business and scaling products during his time at Phonetrader, he also learned the investment dynamics from Chika Nwobi, the founder of L5Lab and the current chief executive of Decagon, a recruiting platform. for technical talent, understand after he several investor meetings.
These lessons would come in handy in 2019 when Mr. Eazi – after its presence abroad and connections in the US, UK and Europe – to launch EmPawa Africa, an outfit to accelerate the music careers of young artists. “When I started emPawa Africa, I wanted to experiment with the VC model by investing in many artists,” says the artist, who recently graduated from Harvard Business School.
The agency – which has spawned Nigerian recording artist Joeboy and Ghanaian recording artist Kwesi Arthur among others – has now spread its tentacles in marketing, distribution, publishing, management and financial services for independent artists and record labels. It also white-labels its platform for interested parties who want to invest in African music; for example the $20 Million African Music Fund (AMF) Project in the year 2020.
ajebutter22, a Nigerian-based music artist and rapper whose real name is Akitoye Balogun, agrees with Mr. Eazi’s philosophy of investing in creatives. In his view, driving artists and people into the creative space should be done in a startup/VC way. “Some of the investments I’ve made in the music space are through that mindset to see an artist or project as a fast-growing vehicle,” Ajebutter22 said in an interview with gotechbusiness.com.
Like Mr Eazi, the songwriter, well known within the Lagos party scene for hit singles like ‘Tungba’, grew up with an interest in technology. In 2013, he flirted with an idea for a platform that would allow people to pay for numbers on their phones. Though it never got off the ground due to a lack of funding, the process of getting the project off the ground and reading books like “Zero to One” and “Hard Things About Hard Things” opened up the artist’s mind. the possibilities of technology.
Ajebutter22 would work at Gamsole, a gaming startup, and Cisco before venturing into angel investments in 2020. “It was about owning something bigger than myself, which could be great one day. That was the reason for deciding to invest in technology,” says the artist who invested in AltSchool, a talent matching platform , and Nestcoin, an Africa-focused web3 startup.
From individual checks to fund launches
Personal relationships built over the years are vital to the way Ajebutter22 has made investments, a method ideal for a very early angel investor. For example, he is an old friend of Nestcoin chief executive Yele Bademosi, and he knew Adewale Yusuf, the co-founder and CEO of AltSchool, from his time at Gamsole. The AltSchool investment also recorded participation from another music artist and collaborator, Falz (real name Folarin Falana).
“I think the most important thing if you want to invest is to know the team you support, because everything can change at any time. Market size is also extremely important, of course, but for me who you support is key,” he said.
If Ajebutter22 plans to change his strategy as he makes more angel investments, it is essential to set up a formal structure like Zagadat Capital – which Mr. Eazi refers to as a collective.
As a collective, Zagadat Capital is made up of “like-minded people who are young and African who see investment in African technology companies as exciting,” said Mr. Eazi. Family offices are part of this collective, alongside founders like Shola Akinlade, the co-founder and CEO of Paystack, owned by Stripe, and Iyinoluwa Aboyeji, co-founder of Talent City.
Talent City, the urban development startup that plans to create charter cities across Africa, is one of the most daring projects on the continent and is a portfolio company of Zagadat Capital. Others aren’t as complicated: Eden Life, a concierge startup, and betPawa, an online gambling company. This deal coverage shows variation in Mr. Eazi’s choices; the artist also points out that his collective offers a unique advantage to portfolio companies, as its members, consisting of a few celebrities, can act as shareholders and influencers.
“It’s not just about money or making some agreements. We can also help the team scale when we advertise. For example, you would see me advertise betPawa. I am paid, but I am an investor and a shareholder,” he said. “Ultimately, we are more inclined to invest in companies where the flywheel can be improved. It is an ecosystem that continues to feed itself and grow to the point where it is sustainable.”
Outside of Africa, Mr. Eazi holds the checks in Mexican fintech Paisa. reduced and Ireland-based fraud prevention provider Apata. In addition to EmPawa Africa, he also has other entertainment investments: YC event company Shoobs and US-based music startup Vydia. These two investments highlight the artists’ game to increase Africans’ interest in global entertainment spheres, especially as music from the continent becomes popular. “The reason I’m investing in music technology is to make sure we have African equity in the structures that are integral to the ecosystem, because that’s where the real strength and value lies,” commented Mr. Eazi on.
Overall, it’s a sizable portfolio for an artist-cum-investor with only one year of active investment history to his name. In time, Mr. Eazi acknowledges that he will do whatever it takes to raise a fund and invest more comprehensively in checks, just as his mentor, Jay-Z, did in 2018. “For the time being, we will remain with a collective . But when it’s time to grow, I don’t need anyone to tell me. It will be a gradual process.”
Black Coffee handles its deals through Flight mode digital, a venture capital firm he founded in 2017, according to PitchBook. The company — which says it wants to invest in startup companies active in video content creation and production and software development — has backed several startups, including Yoco, a South African payments startup that has more than $100 million in VC funding. picked up; SweepSouth, a cleaning and home service startup; and Rensource, a renewable energy company.
It’s unclear whether Black Coffee has raised any solid capital to invest through Flightmode Digital, as judging by its online presence, it looks more like an investment holding company than a traditional VC firm. However, the effort of Ajebutter22, Black Coffee, Mr Eazi, Falz and a few under the radar suggests that it is only a matter of time before local artists, regardless of their technical background, launch VC firms and funds like their global counterparts like the tech scene. of the continent — which received $3 billion in venture capital funding in the first half of this year — continues to explode and more exits are taking place.
“Why artists seem uninterested in startup investment is because some still need to meet their immediate needs; some people may not understand that some issues are being solved,” said Ajebutter22. “But I also think that over time there will be more and more artists in that space. I think African artists are becoming more evolved and visible, and as if one or two success stories happen, it will inspire them to go all in.”