Tega Oghenejobo and Linda Oramasionwu Analyze the Anatomy of the Mavin - Kupanda - UMG Deals

THE ORIGIN STORY

The floor opened with the origin story of the deal, shedding light on initial interactions between Kupanda Capital and Mavin Records. Tega recounted the first communication in September 2016, emphasizing the role of Rima Tahini, then a senior associate at Kupanda Capital, who initiated contact with Don Jazzy via IG DM. 

This marked the beginning of a two-year courtship between the two entities. Mavin Records, at the time, was not actively seeking investment, and the idea of raising capital was foreign to them.

What is Term Sheet

In Venture Capital, a term sheet is used to outline the basic terms and conditions of an investment deal between a startup and a venture capital firm. It covers key aspects like the investment amount, company valuation, ownership stake, investor rights, and other provisions shaping the relationship between the startup and the investor. Term Sheet acts as a non-binding agreement, subject to further negotiation and due diligence before finalizing the investment deal. 

I wrote about Term Sheet last year; read more on it here

Linda mentioned the importance of trust and value creation, noting that Kupanda Capital took the time to understand Mavin's business model, which was heavily cash-based and naira-denominated at the time. Together, they built the financial infrastructure necessary for growth, transforming Mavin into a digital-first company with a strong foundation in hard currency—a vision that proved crucial during the COVID-19 pandemic.

They both emphasized the importance of transparency, patience, and cooperation in bringing the deal to fruition. Tega noted that not many business owners would be willing to disrupt their systems for an uncertain future, but Don Jazzy’s willingness to embrace change and trust the process was key to the partnership's success.

INCEPTION OF THE MAVIN - KUPANDA - UMG DEALS

First, Kupanda’s offer stood out for Mavin. Unlike typical music industry investments, which often come with rigid terms and acquisitions, Kupanda’s approach was ecosystem-oriented. They valued the broader picture rather than just the product. This trust and understanding of the importance of the ecosystem were rare and led to a strategic alignment between both parties.

Linda explains that the business first took several operational steps, including critical hires like Rima as Head of A&R, as well as key roles in Operations and Finance. These hires were important in driving growth, which she likens to a 'hockey stick' curve, fueled by a mix of preparation and some luck.

Mavin leveraged Kupanda’s investment to gain distribution deals without relying on advances or long-term licensing deals. This strategy of maintaining independence and securing short-term deals positioned Mavin as a formidable player.

Linda further explains that Mavin's ability to penetrate the difficult US radio market with a viral song [Calm Down - before Selena Gomez] took people by surprise. This success led them to seek counsel from Shot Tower Capital, helping them navigate the market and understand the true value of their business.

Tega adds that having support from a banker [Shot Tower Capital] and Kupanda in managing the UMG conversation was important. It allowed Mavin to focus on daily operations which was critical in recording more growth even during due diligence.

DUE DILIGENCE STAGE

In 2019, when the Mavin-Kupanda investment happened, it was mutual education with Mavin teaching their investors how their business model worked, which would differ from global norms.

For UMG, key focus areas for due diligence were corporate governance, tax efficiency, HR, financial management, and overall business strategy, which includes their executive talent program. Mavin’s approach to contracts [no long licensing deals] and in-house capabilities [such as internal content team] also stood out.