This April, Black Coffee, the famed 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 win came when the global appetite for Amapiano, a style of house music that emerged in South Africa, and Afrobeats, a popular music genre that originated from Western Africa, had increased exponentially. It was a much-needed success for the African music scene, and though it didn’t appear so, it was a boost for its tech scene.
Over the past couple of years, there’s been an overlap between tech and art, fueling a growing interest of 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 U.S., Europe and globally.
Thus, for Black Coffee, who backed Andela, a tech talent incubator and unicorn launched from Lagos in 2015, his win meant Africa’s tech scene could, for the first time, brag about having a homegrown Grammy Award-winning artist as an investor in its startups.
What’s pulling African music artists to tech investment?
Before Jay-Z (Shawn Carter) co-founded Marcy Ventures in 2018, he was involved with other businesses such as the legacy 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.
One African artist that hasn’t hidden his love for Jay-Z’s entrepreneurial moves, and seems to be adopting the billionaire’s playbook, is Mr. Eazi (real name Oluwatosin Ajibade).
“The main driver for me to go into music was reading a book called ‘Empire State of Mind’ about Jay-Z,” Mr. Eazi told TechCrunch on a call. “I had a passion for music and realized early that the music business 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 still get to the destination of financial independence by making several investments.”
Last August, the popular Afrobeats singer and songwriter made headlines in Africa’s tech circles following his investment in pawaPay, a U.K.-based and Africa-focused mobile payments company through Zagadat Capital. But unlike Jay-Z, Mr Eazi had a tech background before captivating audiences with hit songs 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 used 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 company and scaling products during his time at Phonetrader, he also got to understand investment dynamics from Chika Nwobi, the founder of L5Lab and current chief executive of Decagon, an engineering talent recruitment platform, after attending several investor meetings.
These lessons would prove helpful in 2019 as Mr. Eazi — after building his presence overseas and connections in the U.S., the U.K. and Europe — launched 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,” said the artist who recently completed a program at Harvard Business School.
Mr. Eazi (founder of Empawa Africa and investor in PawaPay)
The agency — which has spun out the likes of Nigerian artiste Joeboy and Ghanaian artiste Kwesi Arthur — now has its tentacles spread in marketing, distribution, publishing, management and finance services for independent artists and record labels. It also white-labels its platform for interested parties that want to invest in African music; for instance, the $20 million African Music Fund (AMF) project in 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. According to him, powering artists and people in the creative space should be done in a startup/VC manner. “Some of the investments I’ve made in the music space have been through that mentality of seeing an artist or project as a fast-growing vehicle,” said Ajebutter22 in an interview with TechCrunch.
Like Mr Eazi, the songwriter, well-known within the Lagos party scene with hit singles like “Tungba,” grew up interested in tech. In 2013, he flirted with an idea for a platform that could help people pay for songs on their phones. Though it never took off due to 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 the artiste’s mind to the possibilities around tech.
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 can be great someday. That was behind deciding to invest in tech,” said the artist who has invested in AltSchool, a talent-matching platform, and Nestcoin, an Africa-focused web3 startup.
From individual checks to launching funds
Personal relationships built over the years have been vital to how Ajebutter22 has made investments, a method ideal for a very early angel investor. For instance, he is a longtime 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 when you want to invest is to know the team you’re backing because anything can change at any time. The market size, of course, is extremely important too, but for me, who you’re backing is key,” he said.
If Ajebutter22 plans to change his strategy as he makes more angel investments, setting up a formal structure like Zagadat Capital — which Mr Eazi references as a collective — will be essential.
As a collective, Zagadat Capital comprises “like-minded people who are young, African and see investing in African tech companies as exciting,” said Mr Eazi. Family offices are part of this collective in addition to founders like Shola Akinlade, the 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 most audacious projects on the continent and is a portfolio company of Zagadat Capital. Others are not as complicated: Eden Life, a concierge startup, and betPawa, an online betting company. This deal coverage shows variety in Mr Eazi’s picks; the artist also points out that his collective provides a unique advantage for portfolio companies in that its members, consisting of a few celebrities, can double as shareholders and influencers.
“It’s not just money or to get some meetings. We can also help the team to scale when we advertise. You’d see me advertising betPawa, for instance. I’m getting paid, but I’m an investor and a shareholder,” he said. “At the end of the day, we have more leaning towards investing in companies where the flywheel can be enhanced. It’s an ecosystem that keeps feeding itself and growing to the point where it’s sustainable.”
Outside Africa, Mr Eazi has cut checks in Mexican fintech Paisa and Irish-based fraud prevention provider Apata. He also has other entertainment investments asides from EmPawa Africa: YC events company Shoobs and U.S.-based music startup Vydia. These two investments emphasize the artists’ play to expand the interest of Africans in global entertainment spheres, particularly as music from the continent gets popularized. “The reason I’m investing 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.
Overall, it’s a sizable portfolio for an artiste-cum-investor with only one year of active investment history under his belt. With time, Mr Eazi acknowledges that he’ll go all out to raise a fund and invest more extensive checks, just like his mentor, Jay-Z, did in 2018. “For now, we’re going to still stay at a collective. But when it’s time to grow, I’ll need nobody to tell me. It’s going to be a gradual process.”
Black Coffee handles his deals through Flightmode Digital, a venture capital firm he set up in 2017, according to PitchBook. The firm — which says it seeks to invest in early-stage businesses operating in video content creation and production and software development — has backed several startups, including Yoco, a South African payments startup that has raised over $100 million in VC funding; SweepSouth, a cleaning and home service startup; and Rensource, a renewable energy company.
It’s unclear whether Black Coffee raised a set capital to invest through Flightmode Digital because, judging by its online presence, it appears more like an investment holding company than a traditional VC firm. However, the effort displayed by Ajebutter22, Black Coffee, Mr Eazi, Falz and a few under the radar suggests that it’s only a matter of time before local artists, regardless of their technical backgrounds, launch VC firms and funds like their global counterparts as the continent’s tech scene — which has received $3 billion worth of venture capital funding in the first half of this year — continues to explode and more exits happen.
“Why it seems artists aren’t interested in startup investing is because some still need to take care of their immediate needs; some people might not understand some of the problems being solved,” Ajebutter22 said. “But I also think that more and more artists will be in that space over time. I think African artists are becoming more evolved and exposed, and if one or two success stories happen, it will inspire them to go all in.”
