Dear reader,
Isn’t it a shame that solid startups, creating value for customers and generating revenue, lack funding options because their market isn’t “VC-scale”?
Are founders bound to choose between “bootstrapped” and “VC-backed”?
This Manichean dilemma is a human construct. The 10+2 VC fund model was created by humans, imperfect as we are. It is completely in our power to change it or tweak it if it doesn’t work. The VC industry seems to forget that sometimes.
The Realistic Optimist has already published a few articles that challenge the “classic” VC model, such as Adapting VCs to emerging markets and Raising a VC fund in local currency.
Today’s article is a continuation of this topic. Below is an exclusive 3,000+ word interview with Alyune-Blondin Diop, a principal at LoftyInc Capital, a pan-African VC.
Alyune recently co-authored a white paper challenging the classic VC fund structure for Africa.
In this article we speak about:
- The frustration that led him and his co-authors to write the white paper.
- Which of his initial hypotheses were validated and disproved.
- What fund structure would Alyune choose if he had $20M at his disposal.
- How LPs have reacted to the white paper.
- The role of government-linked LPs in the African context.
- Debunking the notion that Africa’s ecosystem has “no exit opportunities”.
- Rethinking DFIs’ role on the continent.
This article is available to RO paid subscribers only, because producing quality, independent writing costs money.
RO paid subscribers work at Endeavor Catalyst, Speedinvest, Seedstars, Sturgeon Capital, i2i Ventures, InDrive, Goodwell, Alaya Capital, VKAV, Octerra Capital, Shorooq Partners, Cento VC, Razor Capital, and more.
You can join them below. An RO subscription unlocks access to our entire library (100+ articles) as well as 1 new weekly RO article delivered to your inbox.
Biography
Alyune-Blondin Diop is a principal at LoftyInc Capital, a pan-African VC fund. Prior to LoftyInc, Alyune was an investment associate at Joliba Capital, a generalist private equity fund that mainly focuses on SMEs in Francophone West and Central Africa.
Alyune recently made waves by co-authoring this white paper, which challenges whether the ‘traditional’ VC fund structure is adapted to Africa or not.
The white paper was co-authored with Kartik Sharma (Launch Africa), Diego Arias García (signalworks), and Desirée Pettersson (SET Ventures).
In this exclusive RO interview, Alyune explains the impetus for writing the white paper, what he and his co-authors found, and what potential solutions they came up with.
Why did you write this white paper?
It stemmed from a place of frustration.
I was frustrated with marketing a financial product (ED: the VC, 10+2 model) that I didn’t really believe in. Spending two-three years fundraising for a vehicle you know doesn’t unlock the best value for LPs and founders takes a toll. This white paper is a quest to find solutions.
It is often said the African VC asset class underperforms and doesn’t generate competitive returns. In my view, the problem isn’t the companies themselves but rather the underlying financial product this asset class has locked itself into.