Yewande Odumosu, a partner at HoaQ, a pan-African angel syndicate, talks about the highs and lows of raising her first “proper” $5 million fund.
There is no shortage of stories about the realities of raising a first fund for American or European VCs, but little has been said about African investors raising their first fund.
In this two-part series, we speak to two experienced African angel investors on launching their first funds and the hard lessons they’ve learnt.
Yewande Odumosu is a partner at HoaQ, an angel syndicate that counts Lemfi and Chowdeck as portfolio companies, shares the highs and lows of raising HoaQ’s $5 million pilot fund. While HoaQ has invested as a syndicate of angel investors, this is the first time it’s tapping family offices and institutional investors for funding.
(This interview has been edited for clarity)
TC: What’s the exact size of the fund you’re trying to raise?
Yewande Odumosu: The minimum fund size is $5 million, but it can move to $10 million.
TC: Was it a gap in the market, dissatisfaction with traditional VC approaches, or a unique investment thesis that made you decide to raise a fund?
Yewande Odumosu: I’ve been doing some angel investing myself, and I would say that we saw not just a gap but also a fit with our experience. It’s one thing to identify a gap; it’s another to recognise that you are suited to fill it.
Our individual experiences—working in Big Tech, VC, corporate, and startups—made it easier for us to identify and connect with tech-enabled entrepreneurs, especially operators, and we saw a lot of deal flow. It wasn’t just about a gap—we need more people to fund more entrepreneurs, especially African tech entrepreneurs.
Our thesis is supporting young Africans and technologists. We didn’t start a fund for the sake of it. The bigger funds focus on mid-stage and late-stage investments and leave early-stage to angel investing on the continent. Our fund backs early-stage entrepreneurs that operate either in Africa or the diaspora.
We felt that Africans in the diaspora were neglected, yet they were amazing individuals doing great things, and we want to support them. We didn’t see a thesis like that elsewhere.
If someone says there are already funders, we feel they are not enough. Moreover, the existing funders were supporting stereotypical profiles—people who went to great schools or fit into certain cliques or classes. We wanted anyone from anywhere to have access to funding as long as they were building something great, had a strong team, and were solving a real problem.
TC: How are you approaching potential Limited Partners (LPs), and what types of LPs are you targeting?
Yewande Odumosu: I wanted to start with a small fund because we were transitioning from doing angel investing with our own money to managing a fund with other people’s money. Starting small made sense. We quickly realised that big investors often don’t like to invest in small funds because they feel it’s too small—the effort and money to run it are almost the same as for a big one. However, to manage a big fund, they want you to have a track record and certain qualifications, so we had to start small.
Our options are high-net-worth individuals, retail investors, family offices, and maybe one or two big investors or funds of funds. Yes, it might seem like there’s a wide pool of potential investors but in reality, it’s quite narrow. There are only a few small firms, and there aren’t enough retail investors or family offices. Most investors prefer to commit to large funds, which take a longer time to establish and manage.
TC: What are the biggest challenges you’ve faced in convincing LPs to invest in a first-time fund?
Yewande Odumosu: The biggest challenge is that we’re a small fund. Because of our size, we can’t unlock access to larger pools of capital, and our dynamics differ from those of bigger funds. Sometimes an LP might be interested but because it’s a small fund, they don’t have that capital to deploy for us.
Another significant challenge is accessing capital as a first-time fund manager. Being a female first-time fund manager adds another layer of difficulty, even though I have a track record from angel investing and experience as an operator. Many say they fund first-time or female fund managers, but in reality, very few do. Sometimes, potential investors waste your time with programs that don’t lead to funding.
For example, I met someone who said they liked us but required a minimum fund size of $50 million just to start a conversation. Others set the minimum at $10 million or $20 million. Some suggest we approach them when we’re raising our second fund, which I understand. However, that’s a significant hurdle for a first-time fund.
The fund mechanism typically involves a 2-3% management fee, and some investors worry that it’s too small to manage the fund effectively.
They prefer to make big bets, whereas we wanted our first fund to be efficient and serve as a pilot. We didn’t want to raise money just for the sake of it. Many others have started with small funds to refine their theses and make early bets. We felt we could do the same.
TC: How are you thinking about solving the problem of LPs wanting to give only large funds capital?
Yewande Odumosu: We’re approaching our strategy in two parts. First, there are certain investors and sources of capital that we’ll need to wait until our second fund to access, and fund two will need to be larger. So we have that roadmap in place.
Second, within the pool of [available] investors, we’re considering how to reach more of them and secure whatever capital is available for our current fund. It’s still challenging, but that’s our plan. Instead of waiting for everything to be perfect, we’re actively deploying capital, supporting our startups, making early bets, and doing what we can with or without immediate access to additional capital.
TC: How are you convincing LPs that you are the best fund managers on the market?
Yewande Odumosu: The convincing process has been challenging because people prefer to invest in less risky ventures. Fortunately, we have built some credibility. One of our strategies is to be present in rooms and environments where potential funders are. We do the actual work and share quarterly or at least semi-annual reports on our portfolio companies to keep our stakeholders informed.
We collaborate with credible industry players and attend conferences. Often, we use our own money to fund initiatives, even when it’s hard. It’s like betting on ourselves so others can see we’re worth investing in. Sometimes this approach is enough; other times, it’s not.
We’ve invested some of our own money, and our portfolio companies are doing well. This has allowed us to enter new spaces and widen our network. For example, having investors who are not based in Africa has helped us a bit.
It’s a continuous process of convincing and working hard. Building a significant track record to attract other investors or LPs is challenging and can be discouraging for first-time fund managers. You often don’t have the money to do the work, but you need to do the work to attract funding. So you have to be resourceful, find ways to keep going, and continue pushing forward.
TC: How much of your own money did you have to put up for your fund?
Yewande Odumosu: It ranges but 2% of the fund.
TC: What type of founders and sectors are you targeting?
Yewande Odumosu: We focus on early-stage investments, including pre-seed, seed, and a few Series A rounds. While we’re sector-agnostic in that we don’t limit ourselves to specific industries, we prefer to invest in areas where we have significant experience or insights or where our investors have substantial expertise.
Our typical check size ranges from $25,000 to $200,000. We’re active across Africa and have invested in multiple countries, including companies founded by Africans based in the UK, France, Nigeria, South Africa, Togo, and others. We also have a syndicate club; sometimes we invest alongside the club, and other times we invest before they do.
Our fund is broad in terms of both sector and stage, focusing on early-stage companies with technical founders who have solid business experience. We are committed to supporting female founders as well.
TC: How did your experience as an angel investor translate into raising your fund?
Yewande Odumosu: It helps 100%. VC funds are typically run by financial people, founders, or operators. At the early stage we’re focused on, having this experience helps you understand not just the markets but also the team and the opportunity. You’re able to spot trends faster and manage issues like co-founder conflicts. You can identify both the tangible and intangible ways to assist founders.
Having a history in the market also allows you to help with talent recruiting and vetting and even assist in acquiring the first few customers because you have that experience. You can guide on processes, early finance, early HR, and structuring. At the early stage, you are essentially an extension of the founding team—not just providing capital but also helping them unlock opportunities.
There are many small tasks that a team of six or ten cannot handle on their own, and they need strategic guidance. Because you’ve built companies before and have industry experience, all these factors make you more valuable than just the small check you’re giving the founders. It also enhances your track record when you’re actually running a fund.
TC: What should every first-time fund manager know?
Yewande Odumosu: I think the only thing I’d like to add is that when I started considering running a fund, one of the things I didn’t understand—or found interesting due to the lack of existing resources—was the importance of understanding where the source of funds comes from. I feel that knowing the source of funds helps you understand why a VC fund operates in a certain way, including the behaviours of its partners and founders. People often underestimate that where the money comes from dictates to some extent the flexibility and focus of the fund.
