Africa-focused funds find their feet amid a downturn


In the midst of a funding downtime last year, and with conditions getting tougher for fund managers raising capital as backers (limited partners) enhanced their focus on strategy and track record, some new African and Africa-focused funds still emerged, with several of the existing ones receiving fresh backing.

Among the notable VC funds that came up last year include the $300 million Partech Africa II, the largest Africa-focused fund to date, and Africa People + Planet fund by Novastar Ventures, an over $200 million pool that will invest in agriculture and climate sectors. Meanwhile, Norrsken22, one of the biggest VCs in Africa, got fresh backing for its Norrsken22 African Tech Growth Fund, alongside the final closing of its debut fund.

New VCs also continued to surface, including Chui Ventures, which has a gender-inclusive focus in its plan to back founders in Africa focused on mass-market products. Its maiden fund bagged $9 million backing from Mastercard, to serve a market that has recently received clamor for local capital.

Africa’s venture capital and private equity fund managers secured $2.4 billion across 43 deals across the year, according to data tracker and market insights firm Briter Bridges latest report.

Looking ahead, in 2024, what investment opportunities are new funds and VCs tapping in Africa? Brian Odhiambo, a partner at Novastar Ventures said opportunities abound in fintech and climate sectors.

“We believe that the megatrends in Africa are the reason to keep investing. Africa has the world’s youngest and fastest growing population, all of whom are increasingly tech savvy. We currently have the largest available arable land and the largest carbon sink in the world outside of the Amazon. Urbanization in Africa is also the fastest growing in the world.”

Odhiambo, particularly, sees enormous scope for disruption in the energy and agricultural industries noting that “much of the continent’s population is still underserved by existing energy providers and will need alternative sources of power for domestic and productive use. As the continent continues to diversify, agriculture presents a big opportunity for technological disruption. We are especially interested in technologies that help make food production efficient and sustainable.”

Chui Ventures managing partner, Joyce-Ann Wainana, an ex-Citi executive, who launched a gender-inclusive VC fund last year, also sees an opportunity to tap world’s largest intercontinental free trade area, and African women, who she says are “the most entrepreneurial in the world.”

 

More to come

As the year progresses, Ms. Wainaina expects new funds to emerge and existing ones to get capitalized. Already, Seedstars Africa Ventures has received $40.5 million fresh backing from EIB Global and AfdB and Rally Cap, an early-stage venture capital firm focused on emerging markets in fintech, has made inroads into the climate sector with a new fund.

“I believe that we will see a lot more local VC funds emerging in Africa, to meet the capital needs in the market. There is a real need to support local entrepreneurs as formal employment opportunities in Africa cannot absorb the large numbers entering the job market each year. The continent will need a lot more VC funding to address this gap. Local VCs will provide stability particularly when global market sentiments are low. I remain hopeful about the future of VC in Africa,” said Ms. Wainana.

Below we outline funds that emerged or got capitalized last year.

VC funds

Partech Africa II

Partech Africa is one of the most active VCs in Africa that invests in series A and B tech startups building solutions for economic sectors that are usually highly fragmented and informal in Africa.

The Partech Africa II fund reached its first close of $263 million last year, in startups in various sectors including fintech, health tech, logistics, mobility and edtech. The second fund succeeds its first fund announced in 2018.
Fund size: $300 million
Target: Series A and B companies

Africa People + Planet Fund

Novastar Ventures’ new fund will back sustainable, planet-positive, mass-market business models across Africa. The fund got $25 million backing from the U.S International Development Finance Corporation (DFC). The pan-African VC firm also got $40 million in multifund commitment from SBI Holdings, a Japanese financial services conglomerate and one of the largest venture capital firms in the East Asian country.
Fund size: over $200 million
Target: The fund targets climate and clean techs, marketplaces and initiatives that contribute to community resilience through the delivery of financial and supply chain services.

Founders Factory Africa
Founded in 2018, FFA provides funding and hands-on support to early-stage founders building local solutions to local challenges in South Africa, and it is backed by corporate and impact investment partners.

The South African early-stage accelerator and investor raised $114 million funding last year. It plans to continue investing in startups in its main fields of focus that include fintech, agtech and health startups but are also keen on others that include logistics tech, e-commerce clean tech, enterprise tech, and HR recruitment.
Fund size: $114 million
Target: Early-stage startups.

Africa Innovation & Healthcare Fund 2
The AHF2 fund is managed by AAIC Investment, which has supported investment activities of Japanese CVCs since 2017. It launched the Africa Innovation & Healthcare Fund 2 in 2022, which attained a second close last year to reach $40 million. Its initial fund reached $47million.
Fund size: $150 million
Target: The Fund will invest in Series A and B companies in Kenya, Nigeria, South Africa, and Egypt in medical and healthcare sectors and tech companies in social infrastructure fields including finance, insurance, and logistics.

Al Mada Ventures
Al Mada Ventures (AMV) is a venture capital firm spin-out of Morocco’s Al-Mada holdings, one of Africa’s largest private investment funds. Its portfolio companies include Susu, a French- and Ivorian-based health-tech
Fund size: $110 million
Target: The evergreen fund will address a gap in growth-stage companies in financial services, health, logistics, renewable energy, mining, distribution, retail, education and telecom sectors.

Saviu fund II
Saviu Ventures is a Francophone Africa VC, launched in 2018. Its second fund made an initial close of €12 million last year, and has so far backed Waspito, a Cameroonian health tech; Rubyx, a Senegalese digital lending SaaS provider; and Workpay, an HR-payroll provider.
Fund size: $32 – $54 million
Target: seed-stage startups mainly focussed on fintechs, health techs and climate techs.

Chui Ventures
Chui Ventures is a pan-African VC investing in early-stage startups. It was launched last year and its maiden fund has already gotten $9 million backing from Mastercard’s Africa Growth Fund
Fund size: over $10 million
Target: It has a gender-inclusive focus and is backing African founders building mass-market solutions.

Sony Innovation Fund: Africa (SIF: AF)
Sony Ventures Corporation (SVC), the Japanese tech giant’s venture arm, last year set aside a $10 million fund to invest in African entertainment startups. It recently invested in African gaming startup Carry1st.
Fund size: $10 million
Target: Early-stage startups in gaming, music, film and content distribution.

P1 Ventures
P1 Ventures was launched in 2020 and reached the first close of its second fund at $25 million last year. Its investees from the first and second fund include, Gameball, Reliance Health, Nkoloso.ai, Chari, Djamo and Yassir.
Fund size: unknown
Target: P1 is investing in e-commerce, fintech, insurtech, health tech, and SaaS and AI startups. The VC firm regards itself as a multi-stage investor.

E3 Low Carbon Economy Fund for Africa (E3LCEF)
The E3LCEF is a climate-tech fund by early-stage VC E3 Capital (formerly Energy Access Ventures), and emerging markets-focused investment bank Lion’s Head Global Partners. It reached a first close of $48.1 million last year.
Fund size: $100 million
Target: It targets solar providers and EV startups in sub-Saharan Africa.

Equator
Equator is a climate tech venture capital firm focused on sub-Saharan Africa keen on seed and series A startups. The VC firm, which emerged publicly last year, had an initial $40 million close last year and has so far invested in SunCulture, Apollo Agriculture; Odyssey Energy Solutions, and Roam.
Fund size: unknown
Target: Equator is backing seed and Series A startups in energy, agriculture and mobility sectors.

Catalyst Fund
The pan-African early-stage fund was founded in 2016 as a pre-seed accelerator addressing challenges such as funding, talent and market access for startups, however, in 2022 it switched from an accelerator to a VC fund and reached a first close of $8.6 million last year. Its investees include Octavia Carbon; a direct air carbon capture startup, and Sand to Green, which is transforming deserts into arable lands.
Fund size: $40 million
Target: Climate related startups including agtechs, insurtechs, climate fintechs and startups in fishery management, food systems, cold chain, waste management and water management.

Verod-Kepple Africa Ventures
VKAV is a pan-African fund launched in 2022 as a joint venture between Verod Capital, a private equity firm and Kepple Africa, a Tokyo-based venture capital firm. It reached a $43 million second close in March last year and secured a further $10 million investment months later from Japan’s ICT and Postal Services (JICT). It has so far invested in 11 startups including Cloudline, Chefaa and Moove.
Fund size: $100 million.
Target: To invest in series A and B fintech, e-commerce and logistics ventures across Africa.

VestedWorld
VestedWorld is an early-stage VC that mainly invests in Ghana, Kenya, and Nigeria. Last year it got $10 million backing from Mastercard Africa Growth Fund.
Fund size: unknown
Target: It mainly invests in agribusinesses, consumer products, and technology-enabled businesses mainly in Ghana, Kenya, and Nigeria. Its secondary target markets are Ethiopia, Rwanda, Tanzania, and Uganda.

DisrupTech
DisrupTech fund was launched in 2021 to back fintech and fintech-enabled companies like insur-techs and e-commerce startups. French DFI Proparco announced a $5 million backing into DisrupTech Ventures last year.
Fund size: $36 million
Target: To back early-stage ventures in Egypt’s fintech sector.

Enza Capital funds

Enza is a pan-African multi-stage VC investing in The VC firm closed $58 million across two funds, including Enza Growth Capital launched in 2022, last year. To invest and provide follow-on funding to startups digitizing key industries in Africa
Fund size: unknown
Target: fintech, logistics, health, human capital and climate tech companies.

REdimension Real Estate Technology and Sustainability Fund I

It is the first fund by South Africa proptech VC REdimension Capital that reached a first close of $10 million last year after its launch in 2021.
Fund size: unknown
Target: Proptechs digitizing the real estate sector in South Africa.

SA SME Fund
It is a fund for funds providing much needed liquidity to later-stage VC funds in South Africa to foster entrepreneurship in the country.
Fund size: $30 million
Target: VC fund managers in South Africa

Funds that had final closes

Norrsken22 African Tech Growth Fund
Norrsken22 African Tech Growth Fund was launched in January 2022, and reached the final close of $205 million last year. Its investees include digital banking platform TymeBank, B2B commerce retail platform Sabi, identity verification solution Smile Identity, auto financing platform Autochek and SME lender Shara.
Fund size: $205 million
Target: To invest in Series A and B companies developing fintech, edtech, medtech [health tech], and market-enabling solutions.

Knife Capital III
The South African growth-stage investor Knife Capital announced a final close of its third fund, launched in 2021, last year to invest in 10-12 firms. The firm said it plans to invest an average cheque of $3 million. It has so far invested in DataProphet, a South African AI-as-a-service business, and Kasha, a Rwandan health access platform.
Fund size: $50 million
Target: To invest in B2B companies mostly edtech, healthtech, fintech, AI and agritech ventures, and bridge series B funding gap in South Africa.

Gaia Energy Impact Fund II
The fund, which is a brainchild of Gaia Impact, Capital Croissance, Schneider Electric, Capelan, and Investisseurs & Partenaires (I&P) is investing in “sectors encompassing decarbonized energy access, productive energy utilization, electric mobility, new energy solutions, and enabling technologies.”
Fund size: €80 ($86) million
Target: GEIF II will invest in seed, Series A, and Series B startups and SMEs in the renewable energy value chain, with 85% of them from sub-Saharan Africa.

Energy Entrepreneurs Growth Fund
EEGF is an initiative by Shell Foundation and FMO, launched in 2019, and provides mezzanine, equity, and debt investments. The fund is jointly managed by Dutch impact investment manager Triple Jump, and off-grid sector venture builder Persistent. The fund reached a final close last year.
Fund size: $125 million
Target: early and growth-stage companies in the energy sector in Africa.

Seedstars Youth Wellbeing Ventures
Seedstars Capital and Swiss philanthropic foundation Fondation Botnar launched Seedstars Youth Wellbeing Ventures fund last year. The evergreen investment vehicle will back startups including those that advance health services, environmental sustainability and ecological resilience (like access to clean energy), local food security, water and sanitation, waste management, affordable housing, access to employment and safe and sustainable transportation in Tanzania, Ghana, Senegal, Morocco, and Egypt.
Fund size: $20 million
Target: pre-seed to Series A startups

Pepea fund
Impact investor Goodwell Investments and Oxfam Novib, a Dutch foundation and Oxfam International affiliate, set up Pepea, the fund, to provide financing to early-stage startups in Kenya, Uganda and Ethiopia. The fund, created with the backing of Oxfam Novib Impact Investments, will mezzanine finance, which is a debt that can be turned into equity.
Fund size: €20 million
Target: Early-stage businesses that have been in existence for one to five years. It will invest in businesses in sustainable agriculture, energy, clean mobility, logistics and waste management sectors, which produce basic goods and services that represent a huge proportion of household spending for lower-income communities.

Private Equity Funds

Alterra Capital Partners
Alterra Capital, an Africa-focused private equity firm backed by Africa’s richest man Aliko Dangote, secured $140 million. Its investees include Nigeria online travel company Wakanow, regional banking institution Access Bank, and logistics company J&J Africa.

Fund size: $500 million.
Target: It invests in a number of sectors including consumer goods, telecommunications, technology, logistics, healthcare.

Convergence Partners Digital Infrastructure Fund
The fund, launched by PE firm Convergence Partners, hit a final close last year, and plans to play a pivotal role in ensuring sustained growth of digital technologies across sub-Saharan Africa.
Fund size: $296 million
Target: The fund will mainly invest in “digital infrastructure opportunities” and this includes investments in fiber networks, data centers, wireless, towers, cloud, Internet of Things (IoT), artificial intelligence (AI) and others that are essential in the growth of the African digital economy. Additionally, besides investing in physical assets, it is keen to support tech-enabled businesses that support access to education, financial services, healthcare, and other essential services.

uMunthu II fund

uMunthu II fund, by Goodwell Investments and Alitheia Capital, both impact private equity firms with extensive experience in Africa, reached a first close of €57 million ($61 million) last year.
Fund size: $150 million (minimum target)
Target: local entrepreneurs and providing local solutions to local issues, particularly those “ensuring high-quality, reasonably priced goods and services for underserved low-income groups.”

Sanari 3S Growth Fund
Sanari 3S Growth Fund is by prominent South-African private equity firm Sanari Capital, that had a second close of $65 million last year.
Fund size: $100 million
Target: It invests in “founder-run, owner-managed and family-owned businesses across the mid-market segment.”

You have an update about new or funds listed above? Reach out to the writer via [email protected]



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