In the dynamic world of venture capital and blockchain technology, gaining insights from experienced professionals is invaluable. Andre Ayotte, a partner at Modus Capital, recently shared his thoughts on venture capital investments in Africa and the potential of blockchain technology in the region.
In a candid interview during World Blockchain Summit Dubai, Ayotte sheds light on Modus Capital’s approach, the regulatory landscape and the future of blockchain in Africa.
Ayotte is no stranger to the African venture capital scene, having worked in the Middle East for seven years and invested in both the Middle East and Sub-Saharan Africa during that time. When asked about the stage of companies they invest in, Ayotte mentioned that Modus Capital focuses on early-stage startups but follows a dual mandate. This means that they are committed to supporting their investments for as long as necessary.
One common challenge in the venture capital industry is the ambiguity of startup stages. Ayotte acknowledges this by stating that they prefer to invest in companies with some traction. They define their entry point as when a product or product development aligns well with the market, often referred to as seed or seed plus stage.
When it comes to investment amounts, Ayotte reveals that Modus Capital typically invests between $250,000 and $750,000 initially, with follow-on investments potentially reaching up to $3million. The follow-on amounts vary depending on the round, but Ayotte highlights that they usually cap it at $3million.
The conversation shifts towards the purpose of their involvement in blockchain events. Ayotte stresses that its primary goal is education – showcasing the opportunities in Africa for distributed ledger technology, emphasising that blockchain can genuinely add value by solving significant problems in the region. This focus on real-world problem-solving differentiates Modus Capital’s approach from the global trend of chasing non-existent issues in the blockchain space.
Discussing the regulatory landscape, Ayotte is unequivocal about following regulations. He states that investors should adhere to regulatory frameworks, ensuring they operate in regions where crypto and token investments are legal. South Africa, with its robust legal framework for crypto startups, is a prime example.
However, Ayotte also stresses that they consider opportunities in blockchain outside of the crypto space, focusing on data management, privacy, and traceability, which widens their perspective and allows them to work in regions where crypto regulations are less defined.
When asked about the future of blockchain in Africa, Ayotte shares his insights. He mentions a shift from grant money to equity investments in the blockchain space, making it essential for investors to align their capital with a purpose. Ayotte is optimistic about the global south, where he sees vast untapped potential and use cases for blockchain. This shift towards the region could bring not only technology and know-how but also much-needed investment and a thriving ecosystem of investors.
In the final part of the interview, Ayotte addresses their current investment status. He confirms that Modus Capital is actively investing, and the market is currently in favour of investors, with a higher demand for capital than supply. He encourages founders and entrepreneurs to focus on the fundamentals when seeking investment, emphasising the importance of solving real problems over simply incorporating buzzworthy technologies like AI and blockchain.
In the blockchain space, Ayotte highlights the merging of Web2 and Web3 technologies. He suggests that investors should look beyond token economics and focus on unit economics and the profitability of the business. Moreover, he advises potential partners to seek out significant opportunities in areas like fintech, agritech, and edtech, where significant potential for blockchain solutions is yet to be realised.
As Africa’s blockchain landscape continues to evolve, Ayotte’s experience and vision offer a glimpse into the future of innovation and investment opportunities on the continent.