On April 1, 2024, Sim Shagaya, Group CEO of the uLesson Group and erstwhile CEO of eCommerce startup, Konga, announced the launch of The Honey Badger Fund via his X handle.
“Eager to use all I’ve learnt to help extraordinary Africans build great businesses and navigate the tough yet most fulfilling transition to business leadership,” the post read.
Shagaya has a long and storied entrepreneurial career having built and led E-motion, DealDey, Konga, uLesson, and Miva. By launching an investment vehicle, he joins a growing list of African founders who have created vehicles to help with their investment activities.
PiggyVest Co-founder, Odunayo Eweniyi is one half of FirstCheck Africa, an early-stage investment firm for female founders. Meanwhile, Opeyemi Awoyemi of Jobberman fame launched Fast Forward Venture Studio in 2022.
During the week, we sat down for a chat where Shagaya shares his motivation for launching The Honey Badger Fund and some of the lessons he learnt building Konga.
This article captures the first part of our discussion and focuses on The Honey Badger Fund.
Supporting resilient founders
Commonly seen in most parts of Africa and Asia, the honey badger is a resilient animal with skin thicker than a buffalo’s. Its thick and rubbery skin protects it from predators and allows it to wriggle out of a predator’s grip.
That resilience is a quality that Shagaya intends to encourage through his fund, but there’s also an interesting story behind the name.
Before settling on the name, he had shared it with his wife over the phone. While driving out of the uLesson building in Abuja one day, he saw a man walking a honey badger. That settled it for him.
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Last week, Shagaya turned 49, but he’s been weighing his options for the future for some time.
There were two major options, he tells me reflectively. He could venture into public service like Bosun Tijani, Founder of CcHub, did last year, or he could continue in his role as president at uLesson, but he’s chosen the latter, at least for now.
“I think I’ll be good at the operating aspect of it,” he says, explaining why he abandoned his plans for public service, “but I think I’ll be really bad at the process of acquiring the position. Not that I couldn’t do it, but I think there are other people who would be better at it.”
A few factors helped him arrive at this decision. As an entrepreneur, some of his best moments have come while helping other entrepreneurs find solutions to business challenges.
He’s also fairly confident that he won’t be starting another business soon and argues that entrepreneurs are change agents in society. Thus he is eager to pass on the knowledge he’s gained to younger founders.
“Everything is here because of entrepreneurs. I’m looking all the way back and beyond tech. Entrepreneurs are engineers. Every societal change is driven by innovation. The reason everybody has a Bible now is because someone invented the printing press; the reason Britain became imperial is because a number of people gave them a suite of technologies to project power. It’s always been the case but at the end of the day, we’re the ones that make society.”
Throughout his time as an entrepreneur, he’s made a few mistakes and is eager to prevent the next generation of founders from repeating them. That doesn’t mean they’ll be coddled.
“As an entrepreneur, there are some mistakes that you have to make. Even as an investor, there are some tactical mistakes that I’d see you make and I’ll keep quiet and let you make them because it is important for your development.
“But there are some mistakes that we don’t need to make, so if I can help folks not make certain errors, if I can be a sounding board based on experience, if I can provide a network that can enable an entrepreneur to go from a small business to scale, I think it’s almost an obligation to bring that to the table.”
Structure of The Honey Badger Fund
The Honey Badger Fund won’t be raising external funding for a while with Shagaya preferring to invest with personal funds. That would help him move faster when making investment decisions as there isn’t any investment committee to report to.
Thanks to this approach, most investments are going to be early-stage investments and cheque sizes would depend on a startup’s needs and the founder profile.
The firm would be sector-agnostic, but startups have to be tech-enabled businesses or pure technology plays.
Three factors influence whether a startup gets into The Honey Badger Fund. First, the founder must be “incredibly adaptable, smart, and resilient,” a nod to the firm’s vision. Secondly, they must demonstrate a clear market need.
“Only startups that need to be built will be accepted,” Shagaya says. The third component is the team, as the fund will place great value on an in-depth understanding of markets and excellent execution abilities.
He’s also keeping the cohort size small as he intends to work personally with each founder. Four or five startups would be chosen each year to receive funding, mentorship, and operational support from Shagaya.
“I don’t want to do too many transactions because I want to be very high-touch. I value these very deep relationships with people and I want to be able to have these deep conversations and talk about things that matter. I think that’s something I’ve found lacking.”
Evolution of the VC-founder relationship
Venture capital and VC-backed startups have been casualties of the end of the zero interest rate phenomenon as fundraising has gotten harder and profitability become attractive.
Shagaya expects the effects to be felt for a long time and believes investors are going to be more discerning. However, that won’t influence how he approaches investments at The Honey Badger Fund.
“It’s not like I’m investing to exit next year. There would always be opportunities and there would always be great entrepreneurs pursuing opportunities.”
He also predicts that the current investment climate will lead to the rise of operator-led and indigenous funds as some founders begin to see returns from secondaries. Meanwhile, large funds would focus on Series A investments and beyond.
“I think that the trend here is an entrance into the environment of folks who’ve built here and have seen some exits through secondary rounds. That’s incredibly potent. You combine that capital with the experience, then magic really starts to happen.”
