Something you’re unclear about? We've got you covered!
What is HoaQ?
HoaQ club is a community of creators and operators backing entrepreneurs in building scalable businesses for Africa and its Diaspora.
What is our investment philosophy?
We invest in founders and teams with domain expertise, and technical know-how, and have attained some traction within a largely defined opportunity.
What is our value proposition?
For the founders we back: funding, expertise, and network.
For the HoaQ Club members: returns on investment, enablement as an investor, a sense of purpose and access to a thriving global ecosystem.
What do we invest in?
Early-stage tech and tech-enabled startups looking to attain a large scale of growth (in the hundreds of millions $).
- Technical team or cheap technical cost.
- African (incl. Diaspora) Co-founders.
- Pre-seed, seed, or Series A participation only.
- Revenue-generating companies with traction.
What do we NOT invest in?
SMEs, Non-Profits, Stocks, and Real Estate.
What stage do we invest in?
We invest early at the pre-seed and seed stage, intending to follow up until series A.
How do I become a HoaQ Member?
Our community is spread around 30+ countries with diverse and rich backgrounds. We are founders, creators, doctors, accountants, artists and professionals working across multiple sectors ranging from tech, education, art, health and finance.
What are the fees involved?
- We charge an annual recurring fee of $100 per investor.
- We leverage PLTFM as our operating system. PLTFM charges a 2.5% transaction processing fee on your investment. For example, when you invest $1,000, the transaction processing fee will be $25, which is charged at the time of commitment.
- We charge a 15% carried interest (carry) on successful exits.
How do I invest?
We scout for investment opportunities, work out participation options with the startups or co-investors, modify to a contribution requirement, and notify investment club members to subscribe till the minimum target is reached. You don’t have to invest in every startup the club brings forward. You pick and choose the startups you want to invest in.
How much contribution do I need to bring?
This varies for different investment opportunities. The minimum investment amount is $1,000 and you can invest multiples of $1,000. There is no limit to how much you can invest.
What else do you expect of me?
You can choose to be a passive investor, where you simply provide funds and get updates. You can also choose to be an active investor - to source deals, and portfolio management (providing your expertise and leveraging your network for investor success). Please reach out to email@example.com if you want.
How do I get returns on investment?
This usually happens at a liquidation event such as further fundraising, acquisition/sale, or initial public offering (IPO). At this point, net returns are returned to members after the carried interest deduction (15%).
When can I get my money out?
You can only get your money out during a liquidation event. HoaQ is currently not set up to buy and sell investments or facilitate secondaries.
What are the risks?
Early-stage investing is one of high risk and high rewards. You can lose all funds invested. While we rigorously pick founders we want to back, this doesn’t guarantee a positive outcome. We have seen a couple of startups go down to 0 since we started.
For new investors, we recommend starting with the minimum investment amount and only increasing this amount when you have gained experience in reviewing startups. We also recommend investing in sectors you know and understand, as well as diversifying across a mix portfolio. Please note this is not investment advice.
Please note: All funds invested can be lost. Do not invest anything you are not willing to lose.
How does HoaQ underwrite founder integrity during the diligence process?
- Sourcing: most of the companies we speak to come through referrals. We get inbounds but have only invested in one inbound to date.
- Thesis check: we review the companies in line with our thesis and anything outside of that thesis isn't reviewed further. This filters the companies to the ones that are only a fit for the community.
- First call: for companies that are a match, we have a call with them to ensure they what we believe to be true is true.
- We connect them with a venture partner to review further before bringing it to the community. Venture partners get a carried interest and therefore are incentivized only when the investment turns out positive.
How does HoaQ audit the accuracy of reported revenue and income figures of African startups, especially Nigerian startups?
At a high level, we do not audit their revenue and do not have the capacity to audit their revenue. The risk appetite is already relatively high for anyone who invests in a startup so while audits may be useful, it's something that's done when the company grows to significant revenue.
Tips for a first-time investor
1. Attend Meet the Founders’ sessions. It is an event that is done for most companies introduced to the community. The founders explain what the company is about and the problem they are trying to solve, and also you will be able to ask them any questions.
2. Invest only in what you are familiar with. Ideally, a product or mission that you are passionate about and understand.
3. Conduct your own research. Study trends and industries that are of interest to you and then spot opportunities and founders going after said opportunities, This way, you're able to support them beyond just a check.
4. Broaden your horizons. It is preferable to make a series of minor investments rather than a single huge one. It will also assist you in learning more.
How do I locate open deals?
You can view deals in the portfolio tab when you log into PLTFM.
What are the steps involved in investing in a HoaQ Deal?
Step 1: A prospective investor completes the commitment form appended to the deal details if interested
Step 2: Once the minimum allocation is met, HoaQ will inform the founder and issue a capital call
Step 3: HoaQ collects funds
Step 4: HoaQ performs one last round of due diligence
Step 5: HoaQ wires funds to the company and signs the deal documents
Step 6: HoaQ issues each individual investor an investment document
Do I get Investor updates?
When you invest in a company, you are added to a closed Slack channel for regular investor updates that HoaQ receives from the company. HoaQ will share these updates when they receive them.
When does HoaQ exit?
At HoaQ, we aim to invest from pre-seed to series A. We want to invest for the first time at the pre-seed level and follow up until series A. We want to exit when there is a liquidation event at the series B or later. Liquidation events typically happen when the company IPOs or is acquired by another company. For early-stage investors, liquidation events present when institutional investors come on board and decide to exit early-stage investors. This happens when there are priced rounds and institutional investors want to own a bigger share of the target company.