Racing Ahead – These VCs Were The Most Active In Africa in Q1 2019
Even though conversations centred around resisting the lure of VC money or doing away with it all together are just beginning to pop up in the West, it is a well-known fact that startups in this part of the world are still almost exclusively reliant on funding from VCs for growth and expansion and can ill-afford to tow a similar line as their western counterparts at this point in time.
As can be culled from Techcrunch, most recent data made available by Crunchbase, has it that there are no less than 51 “viable” Africa-focused VC funds globally – viable, in this case, implying formally established entities with 7-10 investments or more in African startups, from seed to series stage.
While there’s no gainsaying that foreign VCs still pull most of the weight with regards to startup investments on the continent, the proliferation of local VC funds and the impact registered these past few years have not gone unnoticed.
Upon further evaluation of the data from Crunchbase, Techcrunch points out that 22 out of the 51 viable funds (about 43 percent) investing in African startups have strong ties to Africa in terms of headquarters and managers – and can be, thus, described as African VC funds.
Beyond the growing number of local funds the continent, another emerging trend can be found in Africans taking up senior positions in funds located elsewhere – including the three that gobbled up the most capital between 2016 and 2017. Names like Omobola Johnson of TLcom Capital, Yemi Lalude of TPG Growth, and Tidjane Deme of Partech are worthy of mention in this regard.
Of course, a lot more than 51 VCs can be linked to African startups, especially as the submission from Crunchbase gave preference to organisational viability and number of investments over fund round and ticket size. But it does paint a certain picture – one that has a significant number of homegrown and foreign VCs throwing money at the continent’s startups.
With diverging figures supplied at various ends for the total amount of VC funding raised in the past couple of years, it’s kind of a blessing that there is, at least, some degree of agreement on the notion that the figure has only moved more and more northward with each passing year.
And 2019 seems to be following pretty much the same trajectory as a good number of VC funding deals have already been closed with only a quarter of the year gone. With the funds seemingly coming in from just about anywhere these days, here’s a look at who’s done the most on the continent’ startup ecosystem so far – the most active VCs in Africa in Q1 2019.
Local VC Funds
Algebra Ventures (Egypt)
Algebra Ventures prides itself as the leading technology VC firm in Egypt, partnering with exceptional entrepreneurs to build transformative businesses. With USD 50 Mn in investment capital, it is considered the largest VC fund in Egypt.
And true to that, over the last two years, it has thrown significant weight behind the likes of La Reina, iCommunity, Filkhedma, POSRocket, Eventtus, Halan, and several other businesses – boasting a portfolio that spans up to 15 companies in such sectors as consumer marketplaces, core technology, transportech, fin-tech, and business software.
The VC firm is showing no signs of slowing down in the current year as it has already recorded a trio of investments in the first quarter of 2019 with two of those coming in February and the most recent making headlines in March.
Having already backed GoodsMart; an Egyptian app-based grocery store, with USD 750 K during its Series-A round in April 2017, Algebra Ventures made a second investment in the startup by pumping in an undisclosed amount as additional funds – which is suggestive of its satisfaction in the growth recorded by the startup and confidence in its model.
Before the dust completely settled, Algebra Ventures followed up with another investment in Egypt’s B2B trucking marketplace, Trella – participating in the USD 600 K pre-seed round that featured other strategic investors, global VCs, and notable angel investors including Esther Dyson and Jambu Palaniappan.
The third investment was an undisclosed amount of funding into Dsquares; an emerging B2B loyalty solutions provider in the MENA region. Algebra Ventures partnered Ezdehar Management – an emerging growth equity investor – in the deal, having keenly monitored the performance of the startup and convinced by its growth and impressive track record.
With these three investments, the Egyptian VC firm can be said to have had a pretty busy first quarter of the year and building on that, the outlook for the rest of the year seems promising.
Outlierz Ventures (Morocco)
This Morocco-based VC firm considers itself one of the pioneer early-stage VC fund from Francophone Africa dedicated to early-stage, tech-enabled companies across the continent.
Backed by private investors from Silicon Valley, Middle East and Africa, the fund invests in tech-enabled companies solving a fundamental problem across key industries in Africa, which include fintech, insurtech, agritech, healthtech and logistics – with a primary focus on the most dynamic African ecosystems in Nigeria, Kenya, South Africa, Egypt and Morocco.
Although the fund has existed since 2017, it wasn’t until a few days ago that it caused ripples in the ecosystem by announcing its first five investments across different markets.
The VC firm revealed investments in Moroccan B2B marketplace; WaystoCap, Kenyan retail distribution chain; Sokowatch, Egyptian B2B grocery e-commerce platform; MaxAB, UK/Anglophone African data platform; Asoko Insight, and French logistics company; TousFacteur,
While the specifics of the respective deals are unclear, it could be deduced from the VC firm’s investment strategy that the ticket sizes are anywhere between USD 50 K and USD 500 K in Seed-Stage and Pre-Series A funding.
“We see tremendous opportunities at the intersection of technology, Africa’s young and fast-growing populations, and the continent economies. Our mission is to back extraordinary founders that leverage technology to transform African traditional economies,” stated Kenza Lahlou, co-founder and Managing Partner at Outlierz Ventures.
To make these investments, the team at Oulierz Ventures claim to have reviewed over 1,000 investment opportunities, engaged in conversations with more than 350 entrepreneurs across the continent, and invested in 5 of the most promising ones.
Although the timeline on the investments is unclear, it does seem like the folks at Oulierz Ventures have been neck-deep in work these past months.
Microtraction (Nigeria)
Microtraction was set up by Yele Bademosi in July 2017 and the VC firm has wasted no time in making its presence felt in the Nigerian startup ecosystem – recording some nine investment deals so far in companies such as Wallet.ng, ThankUCash, CowryWise, Accounteer, and several others.
Having already exceeded expectations within its first year of operations, the investment firm has continued in much the same manner in 2019, recording two deals in the first quarter of the year.
The Nigeria-based investment firm made its first investment of the year in January when it backed advanced diagnostic startup, Stack Dx, with an undisclosed amount of funding. This investment is said to have been buoyed by the uniqueness of the startup’s team, as well as its performance and wealth of experience in the healtech sector which puts in a good position to solve some of the continent’s most-troubling health challenges.
Microtraction describes itself as a “sector-agnostic” fund that invests in smart, relentlessly-resourceful funders who are building high-growth, technology-driven businesses in billion-dollar markets.
And this is epitomized in its second investment of the year in Nigeria’s Sendbox; a tech-driven provider of delivery, escrow payments and authentic reviews for people who use social media platforms for e-commerce. Again, information on ticket size is unavailable but you get the feeling that the Lagos-based VC is becoming a force to reckon with.
Knife Capital (South Africa)
One of South Africa’s most active VCs, Knife Capital, got in on the act in February when it made an undisclosed amount of Series-A investment in Cape Town-based beverage startup, Pura, for a minority stake in the company.
This was Knife Capital’s fifth investment through its KNF Ventures Fund with investments in ticketing platform; Quicket, machine learning startup; DataProphet, tutoring platform; SkillUp, and Internet-of-Things (IoT) temperature monitoring platform; PharmaScout, representing similar money moves of the past two years.
This deal also represented the first investment of Knife Capital in a ‘non-tech’ company – something Knife Capital Partner, Andrea Bohmert, clarifies by reiterating that the focus of the investment firm is on “innovation-driven ventures with proven traction rather than just tech.”
Knife Capital also joined forces with the SA SME Fund and Deloitte in March to launch its Grindstone Accelerator programme in Johannesburg, which targets startups ready to take their businesses to the next level.
Knife Capital launched Grindstone in 2013, and it facilitates growth for South African innovation-driven entrepreneurs, with previous cohorts featuring the likes of the already-mentioned Quicket, augmented reality animation and gaming company; SeaMonster, and recently-funded transport data company WhereIsMyTransport.
Kalon Venture Partners (South Africa)
In January, South African venture capital firm, Kalon Venture Partners, announced it led an investment of R10 million (USD 1.46 Mn) in local proptech startup, Flow; an app that rewards tenants for good behaviour.
Kalon venture Partners CEO, Clive Butkow, said in a statement that the investment committee’s decision to invest in Flow was strongly motivated by the quality of the entrepreneurs and their proven track record. This combined with the tech offering that they have built and continue to develop, made it an easy decision for the VC.
The investment saw Flow become the latest addition to a portfolio that includes the likes of FinChatBot, i-Pay, SnapnSave, and SMEasy.
In March, the investment firm unveiled its Section 12J Disruptive Technology Fund which targets entrepreneurs solving African problems with the potential to scale into global markets. That said, it’s been a fairly eventful Q1 at KVP.
Names like Ingressive Capital also popped up in Q1 funding conversations. The Nigeria-based VC firm which has previously backed the likes of Tizeti and Paystack threw its doors open to African startups to tap into its newly-launched USD 5 Mn Africa fund. The firm is looking to invest ticket sizes of between USD 50 K to USD 100 K in tech startups from Sub-Saharan Africa, with a possibility of USD 250 K in follow-on investments.
There was also great endeavour from South Africa’s Paper Plane Ventures which invested an additional USD 2 Mn in the expanded Series-A round of Aerobotics.
Other names like Verod Capital, Lill Ventures, Kingson Capital, Syntaxis Capital, 4Di Capital, Hannover Re, Lireas Holdings, Compass Venture Capital, Zephyr Acorn, and CRE Venture Capital (which participated in the biggest funding round of Q1; Andela’s USD 100 Mn Series-D ), are amongst local VCs that have played some part in funding proceedings thus far.
Foreign VC Funds
Goodwell Investments (Netherlands)
So far, it’s been a fairly busy year for the Dutch VC firm which is known to have played a part in two funding deals in Q1.
Earlier this year, it took part in the USD 1.85 Mn Series-A funding round of South African public transport data and technology startup, WhereIsMyTransport, in a move that also saw the startup announce expansion into Asia, and Latin America.
A couple of weeks later, Goodwell Investments was again in the news. This time, making its presence felt in East Africa. Through its uMunthu Fund, the impact investing firm backed Kenyan e-commerce venture, Copia, with USD 2 Mn in January, acquiring an undisclosed stake in the company.
Partech Ventures (U.S.A)
Partech got the year started by announcing the final closing of its Partech Africa fund at USD 143 Mn above its hard cap and the opening of its offices in East Africa. The Partech Africa Fund achieved a final closing at more than double the size of its first closing a year ago at USD 70 Mn.
In March, it was reported to have weighed in significantly in the presumed USD 5.8 Mn Series-A round of Nigeria-based YCombinator-startup, Kudi. As part of the deal, Tidjane Deme, a General Partner who is co-leading the Partech Africa fund, was reported to have also joined the startup’s Board of Directors.
SunFunder (U.S.A)
Since 2012, SunFunder has positioned itself as a solar energy finance business with a mission to provide financing for solar assets in emerging economies.
The US-headquartered solar energy investment firm has had a pretty busy 2019. First, it closed a USD 9 Mn receivables financing facility with Kampala-based off-grid solar company, SolarNow, in January. Then, it went on to close a USD 2 Mn multi-currency debt facility in Mozambique with MFX Solutions For SolarWorks a few weeks later.
February came with the news of the USD 42.5 Mn first close of its new Solar Energy Transformation (SET) Fund with anchor investors in Overseas Private Investment Corporation (OPIC), Calvert Impact Capital, Ceniarth and the IKEA Foundation.
The first close of the new USD 85 Mn solar energy debt fund means that SunFunder has now closed a total of USD 104.5 Mn in its debt funds from 65 investors.
Last month, it provided PEG Africa; a leading West African home solar company, with USD 2.5 Mn in partnership with the UK’s CDC Group (on a $15m multi-currency debt facility). SunFunder has basically been buzzing all year long.
Generation Investment Management (U.K.)
Andela; a training and outsourcing platform for African software developers, roped in the largest amount of funding so far for an African startup in Q1 and London-based VC firm, Generation Investment Management, was at the centre of it all.
The investment company led the USD 100 Mn Series-D round which brought Andela’s total funding to USD 180 Mn, with participation from existing investors in the mould of the Chan Zuckerberg Initiative, CRE Venture Capital, GV, and Spark Capital.
Saviu Ventures (France)
Saviu Ventures; a France-based, Mauritius-incorporated micro venture capital firm, was launched in 2017 with the aim of bridging the gap that exists when it comes to African startups ready to absorb Series-A funding.
Although not much has been heard of this relative newcomer, it’s been a particularly busy first quarter of the year for the micro-VC. In Q1, it made two investments – a USD 565 K seed round in Ivorien fashion startup, Afrikrea.com, and a USD 1 Mn seed investment in Mauritius-based HR startup, Talent2Africa.
Last month, a Mauritius-based private equity firm, Kibo Capital Partners, structured a new investment via its second fund Kibo Funds II. And this investment was made in Saviu Ventures.
There’s certainly been a fair influx of foreign venture capital into the continent’s startup ecosystem in first quarter of the year. GreenTec Capital Partners, Quantum Capital, Tofino Capital, VestedWorld, Proparco Investments, Techstars, Cox Enterprises, GreatPoint Ventures, Polaris Partners, EWB Canada, AFD France, Beyond Capital Fund, and PG Impact Ventures are some of the other foreign funding routes that have been part of the conversation in Q1 2019.
