Peter is a Principal at Oui Capital, a pan-African VC Fund headquartered in Lagos, Nigeria. He joined in 2019 and then again in 2022 after his MBA at Tuck. Prior to VC, Peter spent most of his career as an investment banker in the U.S. – focused on financial institutions. This would later evolve into working with clients within the FinTech industry, an area he focuses on at Oui Capital. Peter’s transition to VC occurred at a time when Fintechs started to take off in the U.S. and he was working on Fintech M&A. He was part of the team that sold the first bank to a Fintech in the U.S.

Ayobami Bello: What makes Fintech companies and their broader industry attractive to Oui Capital? And, do you think there is too much capital going in this sector?

Peter Oriaifo: When you think about what Fintech is innovating around, particularly in Africa, Fintech companies are in competition with cash. Around 90% of transactions around the continent are still being done in cash. I think there are a few issues related to that such as transparency, efficiency, and cost. It takes a great deal of manual labor to sort through cash. 

Cash also has a way of obscuring things. There’s so much efficiency that comes from moving to digitized financial services. I think the broad objective is moving from 90% cash transactions to 60% – 70%, in line with other developing countries such as Brazil. 

This move would be a significant paradigm shift. To answer your question, I don’t think too much money is going into Fintech because core infrastructure such as payments and ecommerce still needs development. For ecommerce, to get to large scale penetration, we need more smartphones, and we have startups trying to increase affordability. Some of the key bottlenecks remain in payments and shipping.

Online payments are still not reliable because not everyone has credit cards and so Fintech companies aim to alleviate these issues. Looking at Healthtech, there are elements that interact with insurers, there is a broader payment network behind the scenes as insurers must make sure they are getting paid, same with hospitals. Fintech aims to create core base infrastructure that are required before moving to a large digital economy. We still need more venture money going into the space. 

 

Ayobami Bello: What are your thoughts on the outsized portion of VC capital that Fintechs and other payments companies attract?

Peter Oriaifo: Payments continue to attract the lion share of capital because if you think about how payments work. I send a dollar to you, one transaction trip, you have that one dollar in your wallet and use it to buy something, that is two trips. Money is inherently circular. $100 might travel in an ecosystem maybe 20 times and every time that happens, there is potential revenue to be generated for companies that facilitate these transactions. This makes the market for payments very big, in line with what VCs are looking for. We are looking at payment transaction volumes being multiples of GDP and that’s why payments continue to be attractive to VCs.

 

Ayobami Bello: Pivoting to Oui Capital, can you talk about your fund and its mandate / industry focus?

Peter Oriaifo: At Oui Capital, we are a pan-African Seed fund – region agnostic. In terms of focus industries, we are sector agnostic, but we do more deals within Fintech, Digital Commerce, anything around facilitation / movement of goods and services and Enterprise Software. This is largely a result of past experiences of team members. You are better off deploying capital in industries that you understand.

 

Ayobami Bello: At what stage do you typically come in with your investments? Pre-seed, Seed, or Series A?

Peter Oriaifo: We invest predominantly in the pre-seed stage. Sometimes at the seed stage. For context, we have two funds. Fund 1 was $4mm and now Fund 2 has a $30mm target – we are currently investing out of Fund 2. For our second fund, we have expanded our scope to include Seed follow-ons. Looking at the current market environment, there are several startups that see the goal post has moved and need additional capital before seeking Series A capital. We see ourselves as partners to the companies that we invest in. We have companies in our portfolio that we are still very involved with that have gone beyond Series A. But to your question, our skillset lends itself to pre-seed / seed investments.

 

Ayobami Bello: How do you review companies this early in their lifecycle? Do you mostly focus on the management team?

Peter Oriaifo: The focus on team resonates with me. How well suited is the team, how well do they understand the space and how comfortable are they with dealing with the unknown. The team should be able to test their hypothesis and refine their assumptions. We also focus on markets and how big the opportunity can be. This is crucial because of the number of businesses that fail. In a typical portfolio of 30 companies, maybe 1-3 investments can make up for most of the fund’s return. Particularly in a market like Africa that has huge risks.

We also look at founders that understand the nuances of different markets in Africa – so not assuming that each product will work across the continent. And, if you have a product that wins in a big market like Nigeria, there is potential for the company to be very big. We have data on companies that haven’t had the need to move on to other markets because they operate predominantly in Nigeria. Finally, customer knowledge and underlying technology. For example, looking at companies in the B2B space that aim to lean out and reorganize the supply chain up to the informal sector. Some of these first movers didn’t have the benefits of built out delivery services that they can work with. They had to move into delivery, which isn’t their core competency. If you look at how Jumia has performed, the public market is signaling that the company shouldn’t be operating in every part of the value chain.

Customer knowledge is also key. Has the company interacted with customers to have a good understanding of the problem? A key part of our diligence process is talking to customers that startups have won / lost and what the key pain points are. Finally, customer enthusiasm, are people excited to use the product and would they pay for it, this drives adoption. Seeing a company with revenue at the early stage is a good metric we look at.

 

Ayobami Bello: What company in your portfolio has created outsized returns and dominated a large market like Nigeria and continues to create value for its customers?

Peter Oriaifo: Moniepoint (formerly TeamApt). This is a payment company that builds financial services solutions for small businesses. They made huge waves by leveraging agency banking. This is a highly localized solution in Nigeria that came about due to low bank branch penetration in Nigeria. These agents have become walking ATMs and provide other services like paying bills and cable. The company gained traction during Covid as transactions took off from about $10 million a month to about $10 billion. This is testament to how you can innovate around a key customer problem. We invested in the seed stage and that has returned almost 70x.

 

Ayobami Bello: What advice would you have for founders looking to raise capital?

Peter Oriaifo: Being intentional. I look for founders that can navigate the noise surrounding the capital raising process, not invested in getting featured on Forbes and are focused on their product. For example, the founders at Moniepoint are engineers first and foremost. Finally, knowing your market is very important and clarity of mind around product strategy is important, particularly in Africa where check sizes are smaller than in the U.S., so founders must extend their runways.

 

Ayobami Bello: Finally, what advice do you have for folks looking to break into VC?

Peter Oriaifo: Having grit and learning about the space. Reading the news, following new technology, networking and talking to folks and thinking / analyzing companies that you could potentially invest in. Networking is key, seeking mentors that have similar backgrounds that can relate to your process. Johnson has a special place in my whole journey because while I was applying to business school, I was talking to people along the way and remember visiting Johnson. I had a conversation with Marlon Nichols, who was doing his professorship at Cornell, we talked about the emerging manager journey. For people of color who operate in industries where not many people look like you, having a tangible role model makes the goal all that much more obtainable.  

Thought leadership is a big thing. The internet is a great platform for connecting. I met my partner over a cold LinkedIn DM in 2019 and several years later we are still working together. Leveraging social media platforms is crucial, having thoughtful discussions and getting your brand out there helps in building your network.