Angel Group Case Study: Mo Angels
Date founded: April 2021
Number of members: 20
Number of deals pitched: 16
Number of deals being assessed: 4
Number of investments: 1 (in process of being closed as of May)
Isabelle de Melo and Nassima Sadar met through the SAIS-funded African Angel Academy programme in late 2020. They brought together their backgrounds in diverse investment environments to found Mauritius’s first syndicated angel investment group together with two other co-founders, Marc Israel and Michel Cordani, active players in the startup ecosystem in Mauritius.
Isabelle has been an angel investor for over 11 years, starting her journey with the GoBeyond network while she was still living in Europe. She worked in audit and finance for 20 years in fast growing companies. She is currently a non-executive director in AfrAsia Bank and the IBL Group as well as Go Beyond Investing.
Nassima Sadar has 16 years of experience in private equity and M&A advisory, and is currently Head of Strategy and Partnerships at the Living Labs Federation in Mauritius.
About the Group
After moving to Mauritius three years ago Isabelle attended the ABAN Early Stage Investor Summit in Cape Town, with the aim of replicating her GoBeyond experience in Africa. At the Summit she realised “The quality was there and the market is definitely there” when it comes to African startups. At the time, the Mauritian startup ecosystem was underdeveloped and despite keeping up her networking, she struggled to find deals or other angels to invest with.
It was at an information webinar for the African Angel Academy, says Isabelle, where she finally met like-minded people. Nassima Sadar was on that call too, as were several other Mauritians – they began meeting as they went on the African Angel Academy journey. These like-minded people brought others along and there were twenty to thirty people at each of the three events that were held during this time. The end result was 10 angels signed up by the group’s launch and 20 to date including 2 corporates..
The ideal Mo Angels recruit has extensive business experience and can contribute beyond just the financial: “If you want to be part of the journey and contribute – because that’s part of being an angel, otherwise you’ll just invest in a fund – you need to be knowledgeable about all these bricks that make an entrepreneur successful.”
The initial idea for a group structure was to pool funds to make investments, but the new angels were hesitant. Isabelle was also wary of opening them up to regulation as a fund, which would make it too expensive to launch. Mo Angels therefore launched with a membership model, with a fee of 15 000 Mauritian rupees a year and a 200 rupee onboarding fee. The first ten people who signed up got a 50% discount on the annual fee in order to build up a core group. Members are free to choose which deals they want to invest in with the group.
The group has experienced ongoing delays in fully onboarding members as it has faced challenges finalising its structure: the current Covid environment has slowed down the local registrar. The group’s name also took some time to settle – they were unable to register Moris Angels, as Moris is a creolisation of Mauritius and reserved, so they settled on Mo (Business) Angels.
Their mandate emerged quite quickly and is relatively broad: Mo Angels will consider innovative companies that have started generating revenue in any sector (not including those on the IFC’s exclusion list) and from anywhere in Africa or with a strong Africa focus. Investments into startups outside of Mauritius will be done in syndication with a local angel group partner, some of which Mo Angels has connected to via the AAA programme.
A core team of four meets weekly to oversee the administration of Mo Angels. The group’s website was launched in April 2021 and is being used as a platform to recruit members as well as potential investees.
Mo Angels has made connections with local incubators – Isabelle is a mentor on the Turbine accelerator programme – and Mo Angels will become a member of the Mauritius Africa FinTech Hub, which is positioning itself as an ecosystem co-ordinator for the continent (partially off the back of Mauritius’s very favourable incorporation environment). Mo Angels has also applied to join the African Business Angels Network (ABAN).
The group has also organised co-investment from the local SME Equity Fund for some of its deals. The SME Equity Fund is using this as an opportunity to play in the early-stage space, without over-taxing their resources: Exact terms are still to be fine-tuned but Mo Angels hopes to take a 20% discount on the price that the Fund comes in. They will also sit on the investee’s board and provide regular insight to the organisation..
Deal-flow and Management
Mo Angels started sourcing deals early on, with leads coming through their wide networks, including Jozi Angels in South Africa and a VC in London. By May 2021 they looked poised to close their first deal.
The startup landscape has also started changing in Mauritius, with more local startups launching and an ecosystem developing. “There’s a sense here now that the future of our economy is about entrepreneurship, not only the big legacy companies that have been here, like textile , sugar or financial services,” Isabelle notes. One aspect that is lagging behind are the IP skills, structures and policies – while Mauritians are very comfortable with trademarks, they don’t have a long history of inventions, says Isabelle. There are too few patents for an active local office and the country hasn’t fully ratified the Patent Cooperation Treaty. Isabelle is trying to work around this via South Africa or use her European network to connect the startups with European IP lawyers.
Mo Angels’ first deal is a taxi app. Uber had failed in setting up in Mauritius due to union action, so this is a local solution focussing on connecting users with registered taxis that could eventually be bought by the global player.
Mo Angels take managing deal flow seriously and are using free spreadsheet database software Airtable – it works for other international venture firms, says Isabelle. Mo Angels has an intern helping on administration and communication, but acknowledges that it’ll soon need to hire a person for that role.
Pitching sessions are short but not too short: fifteen minutes to pitch, fifteen minutes to take questions from the angels. As for due diligence, Isabelle champions the approach of keeping the process quite light – “it’s not a corporate M&A!” – and rather budgeting to spend a good amount of time with the entrepreneur once the deal has been made. “It’s about getting your standard process down really well and not becoming over-invested too early,” says Isabelle, whose experience as an angel investor has shown her that becoming too attached to making a deal work can often result in lower returns.
The investment process is taking a bit longer than anticipated due to lack of experience on the part of both the angels and the entrepreneurs: “Our experience with the early-stage businesses we’ve been talking to is that they know how much they want, but they don’t know how much they are willing to give up for it,” says Isabelle.
But the pipeline is robust; other deals being assessed include an African influencer platform and a solar computer manufacturer. These have mostly been sourced by Isabelle and Nassima through their own networks, but are also coming via the AAA connections and members, as well as LinkedIn. Isabelle notes that the investment ecosystem is growing and becoming more active: “Mauritius is a small place and soon we’ll all be fighting over the same deals!”
She adds: “We are also seeing VCs focusing on African early-stage startups and not wanting to bother with smaller investors in the round. We need to leverage the extensive network of our community to make a difference and try to get in early.”
How African Angel Academy helped
Although she’d done angel investing courses before, Isabelle found that the course content was integral to the development of Mo Angels group: “I think it is an important part of the journey, learning to have a common ‘spine’ of references and ways of doing things.” Importantly, the network of Mauritians she was introduced to was a critical component of the group starting at all – there was no other way to meet these people available to her. “And because it was multi-country,” says Isabelle, “it has created a broader network, which we will activate at some point” – referring to the pan-African deals Mo Angels plans to make.
“Currently two out of three deals we present to our community are from outside Mauritius but we try to always have a local one at our events.”
As the group’s assigned mentor, Jozi Angels’ Abu Cassim brought some fresh insights to Mo Angels. Tips like making sure to get alignment on deal terms early in the process to avoid unnecessary work have been valuable for Mo Angels to implement.