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Eghosa Omoigui, EchoVC’s founder || Image source: NODO

Eghosa Omoigui has a reputation in Nigeria for being a hard investor; a tough guy that seems to see beyond a pitch deck into the founder’s soul, scanning its depths for conviction about the business problem being tackled. “Fancy metrics are never enough for me,” the EchoVC founder had said in a chat with me earlier this year. “I love to see founders fully committed to sensible, market-validated business models. That’s when I sign cheques.” 15 years of investment experience may have taught Omoigui to be careful and prescient with money, but it certainly did not give him a traditional outlook on investments. The lawyer-turned-venture capitalist has signed checks for about seven blockchain startups, and, earlier this year, launched an $8 million blockchain fund—something he describes as “early days”.

EchoVC Chain, as the fund is called, is betting on the future of blockchain functionality in Africa, from DeFi and NFT use cases to DAOs and crypto B2B infrastructure. Over the years, the venture fund has restated its commitment to lead Africa’s expanding blockchain industry. “For African markets, we believe blockchain functionality is more of a need, rather than a want, and our thesis is to leverage these functions to enable new leapfrogs or unlock novel market opportunities across the continent,” reads the fund’s page.

💡 DAO is an acronym for Decentralised Autonomous Organisations. These are communities that are created around a specific purpose and leverage blockchain technology for transparent internal processes.

Tsendai Chagwedera, a principal at EchoVC who actively manages the blockchain fund, spoke to NODO effusively about the prospect of EchoVC Chain. “We already have an exit from our portfolio of seven blockchain startups, and that’s one of many to come,” he said. NODO can independently confirm that the exit is Fuhlstack, a B2B startup that builds infrastructure plug-ins for fintech and crypto companies in Africa. However, Fuhlstack, now owned by another African fintech, is yet to announce this deal publicly.

EchoVC’s investment in Fuhlstack was in December 2022, which means it may not be getting large returns on its first blockchain startup exit, but something about this deal will make it continuously memorable for the VC: Fulstack’s reported acquisition will be the second acquisition of a blockchain/crypto startup in Nigeria. The first—Blockfinex’s acquisition of Fluidcoins—was an acqui-hire widely reported as a desperate sell-off. But that’s not the case here. Chagwedera maintained that the startups in EchoVC’s portfolio were carefully handpicked and are well positioned to lead the continent’s blockchain utility solutions.

In addition to Fuhlstack, EchoVC Chain has bets in Stakefair, a no-loss blockchain-powered betting platform; OneLiquidity, a startup that provides fiat and crypto liquidity solutions for businesses; and MUDA, a solution that powers over-the-counter (OTC) crypto exchanges alongside a suite of payment solutions. The other blockchain startups in its portfolio—which includes Fonbnk, an airtime to crypto on and off-ramp solution, were investments made before the blockchain fund was launched. “We are looking at investing in about 11 more startups at an average ticket size of $400,000; half of that will go into West Africa,” Chagwedera said, highlighting East Africa and Francophone Africa as other promising regions for the fund.

While EchoVC Chain was publicly launched in Q1 2023, most of its portfolio companies got their investments from the fund the year before: 2022, a record year for venture activity in Africa’s web3 ecosystem. According to the Africa Blockchain Report, venture funding in 2022 witnessed an unprecedented 429% YoY increase, peaking at $474 million and minting two unicorns—Kucoin and Scroll.io—in the process. With this surge came an expanded interest in blockchain-focused investing on the continent, but that steam seems to have cooled off this year, as the bearish venture market reacts even more coldly to a crypto ecosystem rocked by scandals and shutdowns.

“The market for crypto funds is clearly more bearish than we’d like,” Omoigui said in a chat with NODO, sharing that his firm’s success in closing venture funds in a bearish market can be attributed to their strong theses, which, despite being perceived by some as contrarian, is now being validated by the market.

Bullish on blockchain in Africa

Africa’s blockchain promise is quite paradoxical. Mobile connectivity is, by far, the most prominent means of accessing the internet on the continent, yet only 22% of sub-Saharan Africans were connected to mobile internet by the end of 2021. Such low levels of connectivity and digital exposure of the greater population percentage explains why the web2-powered internet is yet to gain continent-wide adoption. These issues are again compounded by the abstractness of web3 storytelling on the continent, which adds to the fraud-linked narrative and aversion of African federal governments to the financial ecosystems powered by blockchain.

However, despite these contradictions, the world seems to maintain faith in the ability of blockchain to scale in Africa. “I must say that I am excited about the future of blockchain technology on the continent [Africa]” is how Gideon Greaves, the managing director at CV, a global venture capital firm, puts it in a 2022 report on blockchain in Africa. A good question at this point is: What is fuelling such optimism across the continent?

Omoigui believes that Africa-specific problems are in fact, the main reasons why blockchain adoption will thrive on the continent. “The lack of physical and digital infrastructure [in Africa] creates a vacuum; the lack of trust in centralised authority creates an opportunity. Also, the demographic arc offers an inquisitive, increasingly digitally native and community-focused user population that desires the standardisation and truth that blockchain arguably provides,” he said. With this point, Omoigui drives home a famously quipped message in the tech entrepreneurship world: problems are market opportunities waiting for innovators. And blockchain, by all means, is innovation—on steroids, perhaps.

“The categories we think about in African contexts are compelling narratives around distributed wallets, DeFi, decentralised social connector platforms, and DAOs,” Omogui said in response to where EchoVC Chain is looking to put its money, going forward. Like Chagwedera, he hammered on the opportunities that DAOs and NFTs can offer in African markets, adding that the latter may have stronger adoption cases in industries like sports and music, which have continent-wide attraction and fandom. “We also like to see founders build products that can seamlessly flex between web2 and web3,” he added. This last point may suggest why Stakefair is one of the companies EchoVC is betting on; the company runs a web3-powered solution that runs on a web2 interface.

Africa and blockchain may very well have a paradoxical relationship, the continent may still be falling behind in the level of infrastructure that has characterised blockchain adoption in Western climes. But one thing is certain: innovators and funders are getting their hands dirty with the work it takes to leapfrog the continent, and players alike Omoigui and Chagwedera are testament to this. “We are confident that the freneticism that accompanied the last 5-6 years of blockchain activity will give way to thoughtful, high-impact products and services across the globe,” Omoigui said.