This month of April, black Coffee, the famous South African DJ and record producer real name Nkosinathi Maphumulo, made history at the Grammys. With their seventh studio album “Unconsciously”, they became the first African band to win an award in the Best Dance/Electronic Album category.
His victory came as the global appetite for Amapiano, a style of house music that emerged in South Africa, and Afrobeats, a popular music genre originating in West Africa, grew exponentially. It was a much-needed hit for the African music scene, and while it might not look like it, it was a boost for its tech scene.
Over the past two years, there has been an overlap between technology and art, fueling growing interest from movie, music and sports stars investing in tech startups. Some of them – including Grammy Award-winning artists such as Jay-Z, The Chainsmokers, Nas and others like Snoop Dogg – have launched various funds to invest in startups in the US, Europe And in the world.
Thus, for Black coffeewhich backed Andela, a tech talent incubator and unicorn launched from Lagos in 2015, its win gave Africa’s tech scene the first chance to boast of having a Grammy-winning local artist as an investor in its startups.
What drives African musical artists to invest in technology?
Before Jay-Z (Shawn Carter) co-founded Marcy Ventures in 2018, he was involved in other ventures such as legacy entertainment company Roc Nation and champagne brand Armand de Brignac. Her music career has given her the resources and access to diversify her financial interests, including into startups, despite the lifestyle contrasts between the tech and entertainment worlds.
Mr. Eazi (real name Oluwatosin Ajibade) is an African entertainer who has made no secret of his love for Jay-Z’s entrepreneurial moves and seems to be embracing the billionaire’s playbook.
“The main driver for me getting into music was reading a book called ‘Empire State of Mind’ about Jay-Z,” Eazi told TechCrunch on a call. “I had a passion for music and I realized early on that the music industry would give me access to where I wanted to be. It’s like a way for me to have all the freedom I wanted and to still reach the destination of financial independence by making several investments.
Last August, the famed Afrobeats singer and songwriter made headlines in African tech circles following its investment in pawaPay, a UK-based, Africa-focused mobile payments company through Zagadat Capital. But unlike Jay-Z, Mr. Eazi had a technical background before captivating audiences with hit songs like “Skin Tight,” “Hollup” and “Leg Over” and producing three mixtapes and two EPs during his tenure. long musical career.
In 2014, Mr Eazi launched Phonetrader, an online second-hand phone marketplace backed by a now-defunct startup incubator, 440NG, which was run by two investment firms, L5Lab and 88mph. While Mr. Eazi learned the ropes of starting a business and scaling products during his time at Phonetrader, he also learned to understand the investment dynamics of Chika Nwobi, the founder of L5Lab. and current CEO of Decagon, an engineering talent recruitment platform, after attending several investor meetings.
These lessons will come in handy in 2019, as Mr Eazi – having strengthened his overseas presence and relationships in the US, UK and Europe – has launched EmPawa Africa, an organization to accelerate music careers. young artists. “When I started emPawa Africa, I wanted to experiment with the VC model by investing in many artists,” said the artist who recently completed a program at Harvard Business School.
The agency – which spawned Nigerian artist Joeboy and Ghanaian artist Kwesi Arthur – now has its tentacles spread across marketing, distribution, publishing, management and fundraising services for independent artists and record companies. It also white-labels its platform for interested parties who wish to invest in African music; for example, the $20 million African Music Fund (AMF) project in 2020.
Ajebutter22, a Nigeria-based musical artist and rapper whose real name is Akitoye Balogun, agrees with Mr. Eazi’s philosophy of investing in creations. According to him, propelling 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 have gone through this mentality of seeing an artist or project as a vehicle for rapid growth,” Ajebutter22 said in an interview with TechCrunch.
Like Mr Eazi, the songwriter, well known in the Lagos party scene with hit singles like ‘Tungba’, grew up with an interest in technology. In 2013, he flirted with the idea of a platform that could help people pay for songs on their phones. Although it never took off due to a lack of funding, the process of starting the project and reading books like “Zero to One” and “Hard Things About Hard Things” opened the mind of the artist to the possibilities of technology.
Ajebutter22 reportedly worked at gaming startup Gamsole and Cisco before venturing into angel investments in 2020. “It was about owning something bigger than me, which can be great one day. This is what drove the decision to invest in technology,” said the artist who invested in AltSchool, a talent-matching platform, and Nestcoin, an Africa-focused web3 startup.
From individual check to fund launch
The personal relationships established over the years have been key to how Ajebutter22 has made investments, an ideal method for a very early angel investor. For example, he is a longtime friend of Nestcoin CEO Yele Bademosi, and he knew Adewale Yusuf, co-founder and CEO of AltSchool, from his time at Gamsole. The AltSchool investment also saw the participation of another musical artist and collaborator, Falz (real name Folarin Falana).
“I think the most important thing when you want to invest is to know the team you are supporting, because everything can change at any time. Market size, of course, is also extremely important, but for me who you support is key,” he said.
If Ajebutter22 plans to change its strategy as it makes more angel investments, setting up a formal structure such as Zagadat Capital – which Mr Eazi refers to as a collective – will be key. .
As a collective, Zagadat Capital comprises “like-minded people who are young, African and find investing in African tech companies exciting,” Eazi said. Family offices are part of this collective in addition to founders like Shola Akinlade, co-founder and CEO of Stripe-owned Paystack, 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 boldest 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 betting company. This chord cover shows variety in Mr. Eazi’s choices; the artist also points out that his collective offers a unique advantage to portfolio companies in that its members, made up of a few celebrities, can double as shareholders and influencers.
“It’s not just about money or getting meetings. We can also help the team grow when we advertise. You would see me advertising betPawa, for example. I get paid, but I’m an investor and a shareholder,” he said. “Ultimately, we’re more inclined to invest in companies where the flywheel can be improved. It’s an ecosystem that continues to feed and grow to the point where it’s sustainable.
Outside Africa, Mr. Eazi cut checks in Mexican fintech Paisa and Irish fraud prevention provider Apata. He also has other entertainment investments outside of Empawa Africa: events company YC Shoobs and US music startup Vydia. Both of these investments emphasize the play of artists to increase the interest of Africans in global entertainment spheres, especially as the continent’s music becomes more popular. “The reason I invest in music tech is to make sure we have African equity in the structures that are integral to the ecosystem, because that’s where the real power and value lies,” remarked Mr. Eazi.
All in all, this is a sizeable portfolio for an artist-investor with only a year of active investment history under his belt. As time goes on, Mr. Eazi recognizes that he will do all he can to raise funds and invest larger checks, just like his mentor, Jay-Z, did in 2018. “For now, we will always stay in a collective. But when it’s time to grow, I won’t need anyone to tell me. It will be a gradual process.”
Black Coffee handles its transactions through Flightmode Digital, a venture capital firm it founded in 2017, according to PitchBook. The firm – which says it seeks to invest in start-ups operating in video content creation and production and software development – has backed several startups, including Yoco, a South African payments startup that has raised more than $100 million in venture capital funding; SweepSouth, a cleaning and home services start-up; and Rensource, a renewable energy company.
It’s unclear whether Black Coffee has raised fixed capital for investing through Flightmode Digital because, judging from its online presence, it looks more like an investment holding company than a traditional venture capital firm. However, the effort put in by 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 backgrounds, launch Venture capital firms and funds like their global counterparts as The continent’s tech scene – which received $3 billion in venture capital funding in the first half of this year – continues to explode and grow. other outputs occur.
“Why it seems that artists aren’t interested in investing in startups is because some still have to take care of their immediate needs; some people might not understand some of the fixed issues,” Ajebutter22 said. “But I also think that more and more artists will be in this space over time. I think African artists are more and more evolved and exposed, and if one or two successes occur, it will encourage them to take the plunge.