Founders-turned-investors make for a great pipeline of funding deals to help power early-stage startups, and today MAGIC Fund is proving just how much it’s paying off.
MAGIC Fund — a global collective of founders — has announced the raise of a second fund of $30 million to continue its mission of backing early-stage startups around the world in places like Africa, Europe, Latin America, North America, and Southeast Asia, TechCrunch reports.
Since launching its first fund back in 2017, the firm has had the opportunity to invest in 70 companies at pre-seed and seed stages across the above emerging markets, and now their goal is expanding to reach more startups.
In speaking with TechCrunch, managing partner Adegoke Olubusi and operating partner Matt Greenleaf shared how MAGIC Fund is opening up opportunities for founders who are now angel investors to invest in and support companies beyond their local markets. According to them, working together with a collective of founders helps them evaluate better deals and bring more value to one another.
“Instead of us investing individually because obviously, we have somewhat limited capacity in terms of how much time we have as founders because of our respective companies, why don’t we collaborate on a strategy together and co-invest together?” Greenleaf said to the outlet. “The way we thought of MAGIC was a fund of micro funds built by founders for founders.”
According to TechCrunch, MAGIC Fund’s latest move is essential in emerging markets where on-the-ground operational help is required in industries that have various unknown and uncertain factors.
“There is so much money in the market now and early-stage decision making at pre-seed and seed should be left in the hands of founders,” Olubusi says. “Because think about it really, to make an evaluation of whether I should invest in a healthcare or fintech company in Africa, it makes sense to have those who’ve spent years battling through it in the trenches make those decisions. And what we’re trying to do with the fund is publish as much information as possible and keep performing at the 100 percentile and say this is still the best strategy and is very scalable.”
The firm’s second fund will be distributing $100,000 to $300,000 checks to pre-seed and seed stage companies in the fintech, healthcare, SaaS and enterprise, women’s health and developer tools areas.
For many of these companies, it’s difficult to make informed investment decisions without enough data to review so MAGIC Fund wants to ensure the founders they chose will be able to withstand the tough times that come with getting a startup off the ground. The firm’s criteria for the fund will be based on if a founder has the “willingness, openness, the flexibility to learn and use that knowledge to succeed.”
“Most of these founders don’t view us as their investors. They view us as fellow founders who are helping them along their journey,” Olubusi concludes. “I think that also ties into them keeping it real with us and allows us to see them as people, and not just founders. That’s one of the things that have worked in our favor.”
For more information about MAGIC Fund, visit its website.