Frequently Asked Questions (FAQs)
Question: Is there a membership fee to join the Investors Forum?
Answer: We do not currently charge a membership fee to join the forum. However, we do encourage participation with meaningful discussions from all members mainly within our Telegram group. The purpose is to engage in the exchange of mutually beneficial ideas.
Question: What type of investments do we make?
Answer: We typically invest in startup companies that are started by Africans or have a special interest in investing in Africa. We usually invest at the early stages of investment called the “seed” and “series” stage. At these early stages of the investment, the risk of failure of the company is higher than when the company has become established in doing business. However, there is also usually a higher rate of return if the company becomes successful. Please note that we do not and cannot guarantee that any investment will be successful and not lose money. You are responsible for reviewing and understanding the investment before investing.
Question: How much is needed to invest?
Answer: The minimum investment would often depend on the amount that is being raised for that specific investment. Usually the higher the amount, the higher the minimum investment would be. Our minimum investments range from $2000 – $5000 USD for each investment.
Question: How are these investments structured?
Answer: Investments are made into a startup company by forming a company which serves as a Special Purpose Vehicle (SPV). In the United States, the SPV is usually an LLC. Using an SPV is advantageous because it allows investors to pool their money together, even if investors individually do not meet the minimum amounts stipulated to invest in the startup company. The LLC then purchases the shares of the start-up company, and provides all the legal and tax documents to its investors. Upon selling the shares of the startup on exit, the SPV distributes the proceeds to investors on a pro rata basis. We have partnered with one of the industry leading platforms to organize these investments for you from start to finish.
Question: How much are the fees when the investment is made?
Answer: Fees are charged when the investment is made, to cover the costs associated with organizing the investment, maintaining the legal compliance, regulatory compliance, due diligence, maintaining the platform for several years, providing all the tax documents and organizing the accounting and banking services from start to finish. We have partnered with one of the leading platforms to make this as seamless as possible for you. Fees are about 7 – 10% of the total amount invested depending on investment. A breakdown of the fees can be found here --- All fees paid up with the initial investment and no other fees would usually be necessary throughout the life of the investment.
Question: Can I sell my investment at any time?
Answer: You cannot sell your investment at any time. After the investment closes, the organizer (VSC) of the fund LLC will monitor the startup and make the best decision when to sell the shares. Most of the time, the organizing managers are also investors as well. Following any sale of shares, the profit is distributed to the shareholders of the LLC in amounts proportional to the initially invested amount into the LLC. VSC then retains a portion of the proceeds after the sale of the shares (called the carry, see below ), according to the initial terms of the agreement.
Question: How much do I get when the investment is sold?
Answer: Following the sale of the investment, the first 100% of the initially invested amount is returned to the investor. After that, 17.5% – 20% of any additional amount due to the investor will be retained by VSC depending on the initial terms of that particular investment deal. Let us examine an investor who invested in $10,000 with terms of 20% carry and makes a return of $50,000. This investor would first get $10,000, then an additional (80% x $40,000 ). So, the investor will get $10,000+ $32,000 for a total amount of $42,000. The 20% of $40,000 = $8,000 is retained by VSC and is called the “carry” amount.