Venture Capital Scan

Verod-Kepple: A Rare Peek Inside One Of Africa’s Most Active “Quiet” VCs

By  |  September 28, 2022

The year 2019 saw a Japanese fund with around USD 20 M in its coffers take the African venture space by storm. Kepple Africa Ventures was the most active VC during the pandemic period, where many VC funds opted to wait and watch. 

The rate at which the fund infused money in early-stage startups was quite remarkable as there had been a lot of talk about inaction in early-stage venture space in African tech, but not enough action to match the words apparently.

Kepple Africa Ventures, however, spotted the venture capital opportunity in Africa, like the other Japanese funds: Samurai Africa Fund and Uncovered Funds. The renowned Toyota Group trading arm, Toyota Tsusho, also began investing in African companies through its CVC arm Mobility54 in 2019. But what set Kepple Ventures apart was its speed.

Kepple Africa Ventures was launched by Satoshi Shinada and Ryosuke Yamawaki. In a podcast interview with The Flip, the duo explained how the idea of the fund was conceived. It was difficult for Japanese companies to launch their business models into African markets. So, it was necessary for them to innovate their products as per local demography. This birthed the idea of funding companies that could bridge the gap between the markets. 

Satoshi and Ryosuke, who had known each other for some time and given their stint in Africa, were perfect to act as catalysts for bridging the gap between Japanese companies and African markets. This led to the launch of the Africa-focused VC fund Kepple Africa Ventures, which focused on creating new industries.

Within two years, Kepple Africa Ventures invested in 102 African companies across 11 countries and over 20 industries ploughing between USD 50 K and USD 150 K.

Earlier this year, Kepple Africa Ventures partnered with Nigeria-based Private Equity Firm Verod Capital Management and formed a new entity, Verod-Kepple Africa Ventures. The new fund reportedly has a corpus of USD 100 M. In August, Toyota Tshuso Corporation committed investments to the VKAV fund. Through this fund, they added the 103rd company to their portfolio.

What pulled interest towards this fund was their speed and lean team. Kepple Africa joins ranks with other African VCs like Launch Africa and Future Africa, who seems to have cracked a formula for efficiently identifying early-stage startups. Like Kepple, the other teams are lean, and decision-making is swift. 

The analysis of the VKAV portfolio is based on publicly available information and data from WT Premium Elite. We take an overview of startups’ status, the funding they have raised, and estimated valuations.

Regional Analysis

The VKAV data shows a clear preference for Nigeria and Kenya, followed by Egypt. One of the more significant reasons is the rising number of early-stage startups in the region. The regional location of the General Partners could also be a contributing factor. For example, Shinada is based out of Lagos and Ryusuke holds court in Nairobi.

Industry Analysis

Investments made by VKAV spread across both tech and non-tech sectors, and a few brave moves by the fund managers can be seen in their choice of sectors in the list of companies. Like most early-stage venture capital funds, affinity to fintech is quite visible, with ~24 per cent of portfolio companies providing financial solutions.

The total disclosed funding raised by the portfolio startups stands at a little over USD 754 M. Acces Affya, Africa Health Holdings, and Anka (previously Afrikrea) are the top 3 funded startups in the VKAV portfolio. A unique investment in the portfolio is Kenya’s Mobius Motors. Mobius Motors raised substantial funding in 2018 to set up a manufacturing and assembling unit for automobiles.

There’s a drinking water-supply company, Jibu, in the portfolio too. The company is based out of Nairobi and works like a franchise model for water supply (operating as a social impact business).

Shuttered companies and startups with unknown status constitute around 7 percent of the total portfolio size. While this data still needs to be clarified by the Fund’s Managing Partner, as per secondary available data, Capagri Africa Limited, HeriOnline, XOKO, Emploi, Pinpong and Haraka Home seem to have closed shop.

Kepple Africa Ventures were also the first to recall investment into Kenya/Singapore-based fintech startup Wapipay. The founder brothers of the startup were allegedly involved in a public assault of women in Nairobi. The incident had caused a stir and uproar on social media at the time, and Kepple Ventures released a statement revoking its support for WapiPay.

Also in the Verod-Kepple portfolio are Kenya-based Boya and South Africa-based Floatpays which have both gotten into the famous Y Combinator accelerator programme. Boya works as an expense analyser for businesses by giving a view of spending made by a business to have more control over finances and make informed spending decisions.

Floatpays, again a fintech, is focused on employee financial wellness and enables employers to ensure team motivation by having a chance at solving the money needs of an employee.

Although there have been no disclosed exits for VKAV, two of its portfolio companies CoinAfrique and Autocheck merged. Autocheck, a Nigerian startup operating a marketplace for cars and one of the continent’s fastest-growing startups, took over CoinAfrique to raise its business in the Francophone region in July this year. CoinAfrique is a digital ad listing platform founded in 2016.

Interestingly, another startup in the Kepple lineup, Kenya-based digital media company Mdundo went public in 2020 and listed its shares on the NASDAQ First North growth market in Denmark. It had announced a pre-sale oversubscription of USD 6.4 M.

Information on the combined estimated valuation of companies remains unclear, and it would be inappriopriate to put a number on it without consulting the stakeholders of these companies.

We had reached out to the representatives of VKAV at the time of compiling the data to seek confirmations and clarifications but have not received any response at the time of publishing.

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