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From Frustration to Venture Capital: Adeyemi Adegbayi’s Journey
Adeyemi Adegbayi, a senior investment associate at Catalyst Fund, discovered his passion for venture capital through a personal experience. Witnessing a talented former classmate struggle to scale his innovations due to insufficient funding, Adegbayi recognized a critical gap: investors were unable to identify promising startups effectively.
Motivated by this challenge, Adegbayi initiated a structured pitch competition designed to act as a startup pipeline. The competition aimed to discover early-stage founders, refine their value propositions, and connect them with potential investors. However, as he engaged more deeply with entrepreneurs, he realized the problem was twofold: not only were investors struggling to find startups, but the ecosystem itself was overwhelmed by the sheer number of entrepreneurs, many of whom required substantial support before becoming “VC ready.”
Bridging Tech and Finance: A Strategic Pivot
To better understand how technology could enhance traditional industries, Adegbayi joined ARM, a financial services firm. There, he explored how software and capital could synergize to improve business efficiency. This experience laid the foundation for his future work in venture capital, where he would focus on leveraging both technology and funding to scale impactful businesses.
After leaving ARM, Adegbayi committed to a one-year trial at TLcom, a $154 million fund. Contrary to his initial plan to pivot to a technical career if it didn’t feel right, he found immediate alignment with venture capital. His first major deal, leading Pula‘s Series A funding, cemented his commitment to the field.
Investing with Impact: The Dual Mandate
The Pula investment exemplified Adegbayi’s belief that scalable business models can provide essential services-like crop insurance and risk management-that are often unavailable in emerging markets. This deal also highlighted how venture capital’s role varies by region, requiring tailored approaches.
Adegbayi’s investment philosophy rests on two pillars: targeting large commercial opportunities and ensuring measurable, positive impact. He is pragmatic, skeptical of traditional VC structures fitting Africa perfectly, and uninterested in philanthropy masquerading as investment. He warns that chasing returns without regard for social consequences leads to exploitative models, while pursuing impact without a sustainable business model fails to scale.
Catalyst Fund: Empowering Early-Stage Innovators
Now at Catalyst Fund, Adegbayi works with a firm that embodies his investment principles. Catalyst typically invests around $200,000 initially, with the capacity to follow on with up to $2 million through Series A rounds. The fund aims to back 40 pre-seed startups, doubling down on those that demonstrate strong growth potential. To date, Catalyst has invested in over twenty startups and retains capital to support at least ten more.
Spotlight on African Innovators: Examples of Success
When asked about ideal companies that fit his thesis, Adegbayi highlights three distinct examples:
- Pula: Innovates by bundling insurance with other services to make crop insurance accessible to African farmers, addressing the challenge of low direct uptake.
- M-KOPA: Pioneers mid-value asset financing in East Africa, moving beyond microloans to provide affordable credit for larger purchases, such as solar energy systems.
- Swap: A Nigerian startup transforming the tricycle (keke) transport sector by enabling vehicles to run on compressed natural gas (CNG), reducing operational costs and environmental impact for drivers.
These companies demonstrate how impact can be seamlessly integrated into profitable business models, rather than being an afterthought or margin sacrifice.
Climate Tech: A Growing Frontier in African Venture Capital
Contrary to some investors’ skepticism, Adegbayi asserts that climate tech in Africa presents significant commercial opportunities. Startups like M-KOPA, Spiro, and BasiGo are thriving climate-focused businesses expanding across sectors. Catalyst Fund actively seeks solutions addressing climate-related challenges for both consumers and enterprises, such as climate-resilient agricultural inputs, pest outbreak forecasting, and innovative financing for electric vehicles.
Given that agriculture employs over half of Africa’s population, scalable climate tech solutions in this sector represent vast market potential. Adegbayi emphasizes the importance of educating investors unfamiliar with climate tech to recognize its growth and impact prospects.
Investment Criteria: What Makes a Startup Stand Out?
Catalyst Fund employs a rigorous due diligence process, prioritizing startups that demonstrate both strong climate relevance and commercial viability. Key factors include:
- Clear understanding of scaling requirements
- Positive customer feedback and product-market fit
- Market share and competitive positioning
- Strong founding team and execution capability
Engaging with all stakeholders, including customers, is essential to validate the startup’s value proposition and growth potential.
Beyond Capital: Catalyst’s Holistic Support for Founders
Catalyst Fund offers more than just funding. Their “venture building” approach involves embedding experienced executives within startups to co-develop strategic initiatives and operational frameworks. This hands-on support helps founders navigate challenges and accelerate growth.
The investment team prides itself on founder-centricity, providing ongoing mentorship, strategic advice, and leveraging extensive deal experience from pre-seed to Series B rounds. This breadth of expertise enables Catalyst to anticipate common pitfalls and guide startups toward sustainable scaling.
Expectations for Founders After Investment
Adegbayi stresses the importance of a growth mindset combined with intellectual curiosity. Founders should be open to feedback, willing to adapt their business models, and maintain transparent communication with investors. Timely reporting-covering financials and operational metrics-is critical to building trust and enabling informed decision-making.
The State and Future of Africa’s Venture Capital Ecosystem
Reflecting on Africa’s VC landscape, Adegbayi concurs with peers like Ido Sum that the market remains nascent compared to global ecosystems. While growth is accelerating, significant gaps persist, especially in later-stage funding. Few African investors currently lead Series B rounds, with development finance institutions often filling this void.
Exits remain limited, with local acquisitions rare and capital markets underdeveloped. Adegbayi envisions the emergence of secondary markets and smaller-ticket acquisitions as vital for ecosystem maturation. He highlights the need for patient capital attuned to Africa’s unique context and points to promising trends such as the rise of experienced founders mentoring the next generation.
He also identifies “next markets” like Ghana as undercapitalized regions ripe for venture activity, suggesting that broadening geographic focus will be key to scaling the ecosystem.
Perspectives on Exits: What Will Drive Liquidity?
Adegbayi anticipates that secondary markets will gradually develop, though likely not until later this decade. In the meantime, smaller acquisitions and early exits at moderate valuations will provide crucial proof points. He advocates for exits that generate cash flow, not just equity transfers, to fuel reinvestment and market expansion.
He encourages founders to consider exit scenarios from day one, identifying potential acquirers and aligning growth strategies accordingly.
Emerging Sectors to Watch: The Untapped Potential of Carbon Markets
Among sectors flying under the radar, Adegbayi singles out climate-related opportunities, particularly carbon markets. These markets offer innovative ways to subsidize access to essential products and attract capital focused on sustainability. He recommends investors explore reports like those from Novastar to deepen their understanding of this space.
Advice for Founders Seeking Catalyst Fund Investment
To capture Catalyst Fund’s interest, founders must convincingly demonstrate their ability to build a robust business, possess deep market insight, and hold a distinct competitive edge-whether through technology, market access, or other advantages. Adegbayi emphasizes the importance of articulating why the startup will succeed where others might falter, aligning with the venture capital principle of backing potential market leaders.
