Between 2018 and 2022, Silverbacks Holdings, an Africa-focused personal fairness agency, made a collection of investments in a number of tech startups primarily within the fintech and e-commerce sectors.
These investments are paying off. Up to now month alone, the agency has secured two exits by promoting a part of its shares in Lemfi and Omniretail. Lemfi delivered a 29x return, whereas Omniretail delivered a extra tempered however nonetheless robust 5x return.
Although not structured as a conventional enterprise capital agency, Silverbacks Holdings invests with a VC-style threat urge for food, and its portfolio displays that. The agency backs a few of Africa’s most beneficial startups, together with Flutterwave and Wave, alongside high-growth startups like Moove, Sabi, Kuda, Shuttlers, and Reliance. It additionally backs 9 enterprise capital corporations like Launch Africa and LoftyInc.
Fintech has been its standout performer, producing a 13x a number of on invested capital (MOIC), a measure of unrealised returns, whereas e-commerce investments have returned a still-impressive 4x MOIC. The agency additionally invests in Africa’s media, sport and leisure sectors, backing creator platform AMAKA, the Cape City Tigers, and the African Warriors Preventing Championship (AWFC).
“We view sports activities and leisure as defensive property,” Ibrahim Sagna, the agency’s government chairman, instructed TechCabal. “Whereas the multiples are decrease than tech, these companies have recurring income, particularly since they’re tied to platforms like Netflix or leagues just like the NBA.”
Nigeria has been Silverbacks’ most rewarding geography, with its native portfolio returning a mean 10.7x MOIC, whereas Egypt has delivered a 9.7x MOIC, although over a shorter holding interval. Total, the agency’s African investments have returned practically 4 occasions the capital deployed on the continent, far outpacing its international efficiency. Outdoors Africa, Silverbacks’ exits have yielded a extra modest 1.3x MOIC.
I spoke to Sagna to grasp how the agency thinks about investing in Africa, its technique of partial exits, why it prefers household places of work as LPs, the way it balances tech and non-tech companies in its portfolio, and why it invests in VC corporations like Launch Africa and LoftyInc.
This interview has been edited for size and readability.
What do these exits say about timing and liquidity occasions in Africa?
First, these exits are indicators that follow-on rounds and liquidity are taking place throughout a number of sectors. A lot of the exits we’re seeing are tied to investments made between 2018 and 2022. That interval, pre- and post-COVID, coincided with an exponential surge within the adoption of expertise, each on the African continent and globally.
The worth being unlocked now’s a mirrored image of that timeframe. In some ways, it exhibits us the facility of timing: most of those positive factors are from that COVID period, and we’re now three to 4 years faraway from it. These exits inform us not nearly timing but in addition present that startup companies, when well-positioned, can ship liquidity inside a comparatively brief window.
You’ve accomplished partial exits in LemFi and OmniRetail as an alternative of absolutely exiting. Why does this technique make sense to Silverbacks?
Silverbacks operates in a different way from most conventional fund managers. We use what’s finest described as a everlasting capital mannequin. Most managers you observe function inside fund cycles—elevating capital, deploying it, exiting, then elevating a brand new fund. However Silverbacks is structured extra like what’s known as a continuation fund.
Continuation funds are constructed to permit current restricted companions (LPs) who search liquidity to exit, whereas giving new LPs the chance to switch them. So once we do partial exits, it’s typically not about taking chips off the desk. It’s about permitting one LP to depart whereas bringing in one other. In actual fact, in lots of of those partial exits, we improve our place if we imagine within the firm.
That’s been the case in names like Flutterwave and Moove. We had partial exits however then re-entered and even elevated our publicity once we believed within the long-term potential.
How do you resolve how a lot to promote and the way a lot to retain?
First, most of our LPs are household places of work (the personal wealth administration agency of a high-net-worth household), and the overwhelming majority will not be African—they’re primarily based within the Center East, Europe, and the U.S. We’ve got a number of African household places of work, however they’re the minority.
We’ve constructed a course of internally: yearly, we maintain a divestment committee assembly to determine which exposures might result in divestments and which LPs are requesting liquidity. It’s a bespoke course of—we don’t have a one-size-fits-all rule. We assessment the preferences of our LPs, then resolve which portfolio firms might create liquidity to satisfy these wants.
So once more, it’s not nearly valuation. It’s additionally about matching LP preferences. Regardless of this, we’ve managed to return over 4x the capital we initially invested, and in a number of instances, we’re nonetheless in these companies. In actual fact, we’ve typically accomplished a partial exit, after which later, repurchased shares in the identical firm, simply on behalf of a distinct LP base.
How is that this totally different from a typical VC agency?
Most common companions (GPs) handle one or a number of funds with totally different vintages. We function as a holding firm, and right here’s one thing not everybody is aware of: we’re LPs in 9 enterprise capital corporations, together with well-known ones like LoftyInc and Launch Africa.
We do three issues with our GPs. We offer them with capital as restricted companions. Once we see a powerful firm of their portfolio, we deploy extra capital for follow-ons. We additionally purchase firms from them outright by direct secondaries.
In actual fact, in a number of instances, we’ve even exited a portfolio firm and offered it again to one of many GPs we backed. This creates a decent ecosystem. We collaborate with our GP community on the bottom. We do numerous secondary transactions with them and even with angels. So a lot of our partial exits will not be opportunistic; they’re engineered. We offer our GPs and their LPs with DPI, and we use these secondaries to provide our personal LPs publicity or exits. It’s a really energetic, intentional mannequin.
Consider it this manner: the GPs we again are like excessive colleges, and Silverbacks is the college. We choose one of the best “college students” from their “graduating courses”.
We discovered Flutterwave, Wave and Moove by individuals like Idris Bello. These GPs have invested in 200+ firms. We’ve co-invested in at the very least 10 from them.
So consider our mannequin as one which graduates firms from our VC companions, then scales them additional inside our holding firm. And from this “graduated” pool, we’re in a position to engineer partial liquidity for our household workplace LPs.
You talked about most of your LPs are household places of work. Why select that construction?
As a result of they’re faster, sooner, and higher. Household places of work are often run by particular person decision-makers, CEOs of insurance coverage firms, building corporations, or enterprise teams. Lots of them are long-time shoppers or enterprise companions from the final 20 to 30 years. They wrote many of the preliminary cheques alongside my capital and the capital of our companions.
The important thing right here is velocity and belief. Their decision-making is quicker; there’s no drawn-out bureaucratic course of. Additionally, our mannequin doesn’t require them to take part in a blind pool fund, the place they don’t know what they’re getting.
As an alternative, they will choose at inception—do they need publicity to Flutterwave, Moove, Wave, and so on.? That bespoke strategy makes it extra environment friendly. And it’s labored: we’ve returned capital to them yearly for the previous three years. A few of them have realised positive factors of 5x to 29x. It’s sooner, tailor-made, and extra pragmatic.
You’ve posted a north of 80% inner fee of return (IRR) in Nigeria and over 300% in Egypt. However as your portfolio firms mature, are these returns being compressed?
Sure, positively. Our preliminary aim was all the time to return 3x to 5x on a holistic foundation to our traders. Proper now, we’re overshooting that by hitting 13x in fintech. However we all know this can normalise over time.
We concentrate on figuring out firms that may scale rapidly past Africa, appeal to export-oriented revenues, and produce industrial gamers onto their cap tables. These are sometimes in fintech, particularly remittances or these working international operations.
We began investing in 2018 (Silverbacks included in 2019), and we caught many firms early, beneath $10 million in income. However immediately, a few of these firms are making over $100 million. Moove, for example, is doing $300 million in income.
As we take extra publicity in later-stage firms, we count on our MOIC to fall from 13x down to five–6x over time. It’s a traditional J-curve dynamic: early on, steep returns; over time, the curve flattens.
You’ve a number of non-tech firms, like AWFC and Cape City Tigers, in your portfolio. How are you balancing these along with your tech investments, particularly by way of efficiency and horizon?
First, to make clear: numerically and proportionally, we’re nonetheless closely invested in tech. Undergo our website, and also you’ll see extra tech firms than sports activities, leisure, or vogue. We’re uncovered to three sports activities firms, 4–5 leisure firms and 1 vogue firm.
However tech, particularly fintech, remains to be the dominant a part of our portfolio, each straight and not directly through our VC companions. Now let’s speak efficiency: fintech is producing 13x realised positive factors, e-commerce is at round 4x, and leisure and media (like film manufacturing and gaming) are doing 2x, whereas sports activities has no exits but.
That hierarchy guides our capital allocation. We are going to proceed prioritising fintech as a result of that’s the place we see the best medium- to long-term upside. That mentioned, we view sports activities and leisure as defensive property. Whereas the multiples are decrease, these companies can develop into everlasting fixtures, particularly in the event that they’re tied to platforms like Netflix or leagues just like the NBA.
For instance, our sports activities groups are affiliated with the NBA, and our leisure firms work with main streamers. These international relationships make the companies USD-earning and steady. They might not scale like fintech, however they endure.
What’s your inner benchmark for fulfillment when underwriting a deal in Africa? Given your large portfolio—spanning fintech, e-commerce, sports activities, and gaming—what makes you say, “Sure, this can be a deal value backing”?
For us, all of it comes down to at least one sentence: we put money into companies which might be in a position to seize rising swimming pools of U.S. greenback income. In the event you have a look at our portfolio, you’ll see a variety of manufacturers. However after 5 years available in the market, we’ve seen that the businesses that constantly outperform have a tendency to satisfy two standards.
First, they’re often based by serial entrepreneurs. This isn’t their first rodeo. Founders who’ve constructed earlier than are likely to outperform 100 occasions over. That sample is dominant within the firms we again straight.
Second, and most critically, the companies that rise above the remainder are these in a position to generate sizable and recurring U.S. dollar-denominated revenues, even whereas being African-led and headquartered.
That’s the sting behind a lot of our prime fintech bets—firms like Moove, Wave, Flutterwave, and LemFi. Their energy lies of their capability to construct from Africa however earn income globally and, most significantly, in USD. That offers them base resilience, particularly amid the depreciation.
And this logic isn’t unique to expertise. In leisure, our films are offered to Netflix in USD. Our basketball crew earns USD taking part in within the NBA and the China Basketball Affiliation. Even African Warriors, our battle sports activities funding in Nigeria, is sponsored by teams in Dubai and London, who pay in GBP and USD.
So once more, our core funding immediate is: how a lot U.S. greenback income can this enterprise generate on a recurring foundation? That one line defines how we take into consideration threat, return, and choice.
Your returns have been very spectacular from an Africa-focused funding lens. How do these returns examine to what your LPs anticipated? And are you seeing comparable returns in different rising markets, or has Africa clearly outperformed?
Sure, you’re proper to level that out. By way of geographies, our protection is centred round Africa and the Center East. A few of our portfolio firms function in Europe or the U.S., however essentially, the continent has been our major funding tunnel.
And to be very clear: Africa has outperformed by far. Inside the classic we’re discussing, roughly 2019 to 2025, these numbers are superior to most comparable markets. We are able to’t examine our efficiency to Asia or Latin America, as a result of we don’t make investments there. However primarily based on our thesis and operational focus, Africa has delivered.
That mentioned, it’s not simply in regards to the geography. I believe our returns are a mix of timing and methodology. We have been very lucky with the momentum, notably throughout COVID, when tech consumption surged and capital flooded into startups on the continent. However we have been additionally very intentional about who we partnered with.
As I’ve talked about, we work intently with 9 GP corporations, and that collaboration is a cornerstone of our mannequin. So sure, we’ve accomplished nicely—however it’s as a result of we partnered with the appropriate individuals on the proper time. I wish to be very clear: we don’t take full credit score for this. It’s the results of a collaborative, intentional, and data-informed strategy.
Is there any vital presence of native capital in your funds?
Very sadly, the reply isn’t any. The overwhelming majority of our LP base is worldwide, from the Center East, Europe, and the U.S. We do have a number of traders from Nigeria, South Africa, and Egypt, however they’re the exception, not the rule. The capital base remains to be overwhelmingly exterior.
Are there any sectors you’re avoiding proper now?
Sure, however not in a blanket means. We don’t get up saying, “Let’s keep away from the XYZ sector.” As an alternative, it’s a operate of our core funding thesis: how a lot recurring USD-denominated income can this enterprise generate?
That’s the core immediate we interrogate each alternative with. If the enterprise can’t generate FX-protected or dollar-denominated income, we see larger threat, particularly in African markets the place native foreign money devaluation is a persistent concern.
So sectors like fintech are likely to cross this filter simply. However e-commerce, for example, typically collects in native foreign money and remains to be very domestically rooted throughout the continent. That mentioned, some e-commerce gamers are beginning to adapt. Sabi, certainly one of our portfolio firms, is pivoting towards mechanisms that permit it to earn extra USD.
We’ve seen healthtech and edtech wrestle extra on this space, as their income remains to be largely native. And since most of our capital is FX-denominated, we’ve got a accountability to guard it from native foreign money publicity.
So, in abstract, our avoidance isn’t primarily based on sentiment; it’s pushed by our threat administration framework.
Wanting again, what’s one funding you exited too early or a deal you handed on that later grew to become a breakout?
I believe we’ve been very pleased with our “horses”, so to talk. But when I needed to title a pair we missed, it might be Moniepoint; we had alternatives to get in a few occasions and didn’t.
We additionally missed out on Paymob, Nala, and TymeBank. We’ve had a number of that slipped by. It occurs.
You talked about earlier that numerous your LPs are worldwide. What’s the largest false impression they have a tendency to have about backing high-growth firms in Africa?
Truthfully, we’ve been very fortunate with our LP base. Nearly all of our household places of work have accomplished enterprise in Africa earlier than. And that makes an enormous distinction.
{Our relationships} with them are deeply private, constructed during the last 20 to 30 years. All of us at Silverbacks are African, from Cairo to Mauritius, and people private ties are what introduced these LPs into the fold within the first place.
Now, for the few U.S. household places of work who hadn’t labored in Africa earlier than, sure, we needed to do some instructional work. However even there, our aim was easy: give them liquidity early. That’s what aligned their conviction with ours.
At the moment, due to our partial exits and returns, they’re as excited as we’re. We have been all the time clear about our strategy; we needed to do one thing totally different from different fund managers. Now, with efficiency on our facet, we’ve confirmed that it really works.
What would want to alter to get extra African capital, say from HNIs or pension funds, into enterprise?
Look, nothing is absolute. There are already some encouraging indicators. The Authorities of Nigeria, for example, is experimenting with new automobiles aimed toward tech. And whereas we’re circuitously working with them, the Nigeria Sovereign Funding Authority (NSIA) has accomplished a good quantity by backing native fund managers.
I imagine Egypt is forward of the curve. They’ve created platforms and insurance policies that contain native banks funding startups. One of many GPs we backed has even partnered with a construction like that. South Africa additionally has a comparatively energetic ecosystem on this regard.
However the reality is, we want extra observe data and extra liquidity occasions to actually shift issues.
Although rules permit pension funds to allocate 5–10% to PE or VC, these are people’ financial savings, and so they’ll all the time see enterprise as dangerous, particularly once they can earn 14–20% yearly from authorities treasuries with zero threat.
So what must occur? Demonstration of outcomes. It’s on us to show that this asset class can generate returns and liquidity. That’s the one means we’re going to earn their confidence.
OmniRetail’s CEO has invested in certainly one of your portfolio firms. Was that intentional?
Very intentional. That’s the brief reply.
From day one, we’ve been constructing a closed-loop ecosystem. We don’t have a devoted investor relations operate. Most of our capital is raised by phrase of mouth, and our group is extremely collaborative.
Right here’s the way it works. LPs typically begin by backing one firm. Over time, they double down, generally backing 5 or extra of our portfolio firms. CEOs from our tech firms generally put money into our sports activities portfolio, and even among the GPs we again have invested in our leisure or sports activities firms.
That is by design. It’s not unintentional. What retains this ecosystem wholesome is the energy of the businesses themselves. Our method is straightforward: mix privileged entry (through our GP companions) with veteran funding perception (from our crew, which has 200+ years of collective PE expertise). While you compound these two components, the result’s a flywheel of belief and collaboration.
You’ve invested throughout sectors. How are the teachings you’re studying shaping your funding thesis?
Completely. Even earlier than AI hype cycles, we have been already data-driven. We rely closely on the GPs we again, their portfolio information, and our metrics to information choice.
However sure, we’re continually studying. Our crew spans from 30 to 65 years previous, bringing maturity and perspective. In the meantime, most of our GPs are of their 20s to 40s, extremely tech-savvy and on the bottom.
That blend is highly effective. We’re making use of what we’ve learnt in expertise to conventional sectors which have been handled extra like SMEs—media, leisure, and sports activities. Tech is the layer that permits these companies to scale and go international.
So sure, our studying loop is powerful, and it’s bi-directional. Our GPs are studying from us, and we’re studying from them. That collaboration between youth and expertise is the place the magic occurs.
You’ve had a number of exits. Over the subsequent 2–5 years, what sort of exits are you betting on?
We’re betting on secondaries. That’s our major liquidity engine.
Sure, IPOs will occur. However globally, IPOs have gotten rarer and tougher to drag off. And we don’t advocate African startups to checklist within the U.S. The observe document is poor. Have a look at Jumia, Swvl (which we invested in) and Anghami within the Center East. All of them are listed within the U.S., and all of them struggled primarily on account of brief promoting. That’s an unlimited threat for younger firms. Even when the corporate performs, brief sellers can drag it down.
Fawry, which is listed domestically in Egypt, is a good counterexample. Had it been listed within the U.S., it might have suffered the identical destiny.
So we imagine IPOs, in the event that they occur, ought to be on native markets however provided that native governments help them with coverage safeguards, liquidity from sovereign funds and safety from brief promoting. That’s what they do within the Center East. If a startup goes public, the federal government, sovereign wealth funds, and banks again them. That’s the extent of coordination required.
Our complete liquidity technique is engineered round secondaries. It’s what we all know, and it’s what we imagine will proceed to work.
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