Anatomy of Angel investing. I sold 50% of iROKO for £500

Angel investors don’t really exist in their usual format in Nigeria. This will change in the very near future but today, angels don’t really exist. And by angel I mean wealthy private individuals who are willing (and able) to depart with $1–100,000 for small stakes in high growth high risk ventures.

Usually, angels don’t require a thousand meetings and 2 inch pitch decks to make investment decisions, they have an area of core competence, (mine being consumer Internet — advertising and subscription — freemium models) and just fund. Angels can help with startup strategy, hiring, future fund raising, building teams and early business development efforts. The more savvy the angel, the more valuable they can invariably become in coaching young, usually first time founders and help to focus them on the actual important drivers of their business. Without the angel networks which exist in any developed market, US, UK, Germany etc. most of the Internet companies we have today (Google, Facebook, Twitter, Instagram, Zynga etc.) couldn’t exist. Angels exist to help companies go from early demo prototype, to version 1.0 launch, first signs of traction, team building, buying groceries and market validation. Not many internet businesses manage to go massive by bootstrapping alone. Some definitely do but sometimes market conditions don’t allow that. Paying for rent 2 years upfront and generating your own electricity, like we do in Nigeria, is a prime example.

My story. My angel. Bastian Gotter.

Bash and I have been friends for over 10 years now. We were flat mates at the University of Manchester where I read Chemistry and Bastian read Management. Back in those days I was a budding night club promoter who always somehow managed to rope him into helping me hand out flyers to unwilling members of the public on the streets of Manchester. Usually at night in the pouring rain. God knows why he did it but he must’ve taken a special kind of pity on me. Invariably my promoting days usually ended with Bastian and I standing crest fallen in an empty nightclub. I graduated in 2005, Bastian did a year later in 2006. Bastian went on to become a successful oil trader at BP in London, whilst I stayed in Manchester and went on what became my 5-year MBA in Failure.

Fast forward Dec 2009, I had just been forced to return to London to live with mum, penniless and brutalised by my 5 year misadventures, I was at an all time low. The year before I had visited Nigeria (Imo state from where I hail) and had brought back 300 CDs of Nigerian music and kept going on and on to Bastian about how Nigerian entertainment was going to be huge. Having failed at 10 ventures previously, Bastian had literally heard it all before from me. Perhaps out of pity or just to give a down and out brother a chance, we were sitting in Reebok’s gym Canary Wharf and he asked me how much it would cost to get this new venture off the ground. £500 was my answer. He replied ‘that’s nothing, just do it’. I responded that I never had any money. He wired me £500 that evening. That was the beginning of what became iROKO Partners.

No business plan, no market research just a conversation between two friends and hope that this time would be different. We started as an online reseller of Nigerian music CDs. It literally failed. Surprise! Familiar territory for me. Over 3 months we didn’t sell anything. Not 1 single CD. £0,000 revenue generated. But the more I read and kept up to date with the goings on in the space, the more I felt an opportunity still existed. (side-note my latest start up RNetwork was really struggling at that time) iROKO was a side project.

Bastian suggested we kill the music ecommerce play and try something else. I suggested, perhaps taking a look at Nollywood? Mum had become engrossed with this new form of movie watching so it seemed like the natural first step. Over the course of 2010 iROKO remained an expensive side project. I was still 90% focused on my new media news network. Which was failing to gain any traction at the time. A couple of fact-finding and business development trips to Nigeria had ultimately grown Bastian’s initial £500 investment into approximately £30,000. To put it into context, Bastian was 27 at the time and this was after tax earnings. He had started at £500 and slowly built his exposure across 15+ trips to the ATM to £30,000. It wasn’t easy, we were literally burning his hard earned money and spinning in circles.

By July 2010 we had reached a turning point. Nothing appeared to work. Ecommerce just didn’t seem to click for us. Music didn’t sell online, movies didn’t sell online. Nothing worked. One amazing thing had emerged though. Full length Nollywood movies could be licensed for $100–200 per year. Madness. Bastian suggested perhaps throwing the movies on YouTube as I had had earlier mentioned to him the existence of the newly launched partnerships programme. YouTube partners.

I resisted massively. It was the dumbest idea I had ever heard.

Part II coming soon>>